Hack:
The Pretense of Knowledge

Introduction

 “In the early 1900s, Taylor, who believed businesses were being run in an inefficient, haphazard way, invented what he called “Scientific Management”… Workers, this approach held, were like parts in a complicated machine. If they did the right work in the right way at the right time, the machine would function smoothly. And to ensure that happened, you simply rewarded the behavior you sought and punished the behavior you discouraged. People would respond rationally to these external forces – these extrinsic motivators – and both they and the system itself would flourish”⁶ (Dan Pink, Kindle Locations 245-247).

This is the foundation for modern management and is an ideology, in the words of Gary Hamel, “…that was invented to solve the problem of how to turn human beings into semi-programmable robots” (what Dan Pink calls algorithmic work)⁶. However, the problem management needs to solve today is how to garner creativity, lateral thinking, engagement, and innovation from employees (all of which are qualities of intrinsic motivation where you can only create the conditions for engagement). For the first time in history, Gary argues, you can’t build organizations that are fit for the future without building organizations that are fit for human beings.

The problem is that we have an ideology that is keeping us from moving into the new reality Dan Pink and Gary Hamel refer to. You can call the current ideology whatever you want. I call it Reductionism. Rory Sutherland calls it Newtonian solutions. Sumantra Ghoshal calls it a combination of Liberalism and Scientism. And Friedrich von Hayek calls it the pretense of knowledge. Whatever it is called, it has parts that are keeping us from moving on. These parts are:

• Belief that logic is its own answer.
• A gloomy view of human nature.
• Belief that only that which can be measured matters.
• Belief in causal determinism.

Belief that Logic is its Own Answer

Because of the enormous success of the scientific method in illuminating the physical sciences we’ve developed a bias toward deductive thinking, and to quote Rory Sutherland, have begun to “feel that actually logic is its own answer.” Friedrich von Hayek has stated that in fields of organized complexity our job in shaping social organization is much like that of the gardener. We create the environment in which social organization can flourish. The problem with believing that logic is its own answer is that problems are often complex enough (especially when people’s choices and intentions are involved) that you often end up simplifying the problem and the solution to the point where you ignore that which actually matters.

Take the example of the London underground. For 6 million pounds European engineers built a faster train between London and Paris. They did it because the trains were too slow and passengers needed a quicker route. The problem the passengers had was an engineering problem, but was the problem of the London underground really an engineering problem? Was the problem really the physical speeds of the trains? What about the perceived length of the trip or the perceived painfulness of taking the trip? Don’t they matter just as much as the duration of the trip? Is it really about the physical length of time it takes a train to move between the two cities or is it about the perceived length of time? Imagine that instead of the problem being the real length of time, the problem were the perceived length of time. What solutions would you create if you knew the problem was the perceived length of time? You could, argues Rory, instead of spending money building a new dedicated line put WIFI on your existing trains. Then the perceived length of the trip would decrease and you would have solved the problem while spending .01% of the money. Imagine, he says (taking the idea one step further), for one tenth of the money you were to hire all of the world’s top male and female super models to serve Chateau Petrus. Then people would ask for the trains to be slowed down. You see, it’s not the actual length of the ride that counts, although that plays a part, but the perceived length of the ride.

What stands out to me about the example above is that not only does Rory illustrate how we over simplify our problems (by ignoring psychological value) but how we believe that logic is more valid than creativity. It was logical to whip out a spreadsheet, to perform a cost benefit analysis on the amount of time that would be saved (and thus productivity) of all of the passengers that would ride the train, and to show a neat ROI. But was it right? Putting WIFI on the trains was a lateral move. It was a creative move. And it took a belief that psychological value matters. That solution couldn’t be put into a spreadsheet, at least not as readily.

Not convinced? He goes on further to point out that the single largest measurable factor for reducing frustration in waiting for a train at the London Underground was the addition of dot matrix display boards that count down the amount of time you have to wait. Again, a solution that recognizes the value of lateral thinking. You couldn’t deduce your way to a dot matrix display board, you had to think creatively about the type of problem you wanted to solve and how you might solve it. You had to be aware of common sense.

Maximizing shareholder value is another belief in logic as its own answer. Why do we believe in maximizing shareholder value, Sumantra Ghoshal argues, because it’s logically efficient – because the math is simple. After all, capital is a commodity that is arguable in overly abundant supply, and the markets for capital are highly efficient. Whereas, the other input in business value creation, labor, is in a significantly less efficient market. As the argument goes, because people can seamlessly change jobs if their salary doesn’t reflect their worth to an organization (and thus a person is always paid fairly) shareholder value must be the return maximized. Does it sound right that it’s easier to change jobs than stocks in the stock market? It shouldn’t. Then why don’t our theories center on maximizing value to laborers, asks Ghoshal? The only honest answer, he says, because there aren’t simple mathematical models that allow for it.

Here’s another one for you. Ken Robinson speaks out against the ideology that logic is its own answer when it comes to education. It’s logically efficient to organize kids by age, teach them a standardized curriculum, create national performance standards, and to move a kid through the system sequentially by year. It makes sense. The logic is easy, but is it right? Why is it that we focus on deficit remediation in kids when we know it’s psychologically much more beneficial for a kid, in the long-run, to focus on his strengths? Why is it that we discourage curiosity and exploration in lieu efficiency? Why is it that we treat our kids like robots by making them comply with a rigid system? Think of the tremendous harm we are doing. Remember, by definition, a standardized process can’t handle non-standard inputs (non-standard kids). Think of how we try to standardize our kids and what effect that has on our outliers. To believe that logic is its own solution is to reduce the world to a zero-sum kind of physics in which there is no room for human creativity, and worse a belief that human being should conform to systems and processes not truly built for them.

It’s Scientistic to believe that just because we can make education reducible and modular that it’s somehow right this way. This is the belief that logic is its own answer, instead of a belief in logic as a tool.

Dan Ariely puts it well. In his TED talk⁸ he argues that we build our physical world by taking into account our physical limitations (elevators, stairs, cars, door knobs, locks…) but when it comes to the tools we’ve built to govern our society we build them without regard for our psychological limitations. What if we believed that the role of social organization was to create tools for society that are built for human beings? If we did this we’d still be able to recognize the role logic plays in creating solutions and understanding our society, but we’d also recognize that we are creating a society meant for the peculiarity of being human, and we’d be more willing to recognize that creative solutions make as much sense as deductive solutions do.

To put it another way, once we realize that our problem solving must take into account human psychology we are then open to realize that in fields of organized complexity (meaning fields where solutions are solutions only as they are accepted by human psychology and human beings) lateral thinking is just as important as logic because human behavior, thoughts, leanings, ideology, likes, dislikes, and cares can’t be reduced to a kind of spreadsheet analysis. In a world where you are creating solutions for people you have to think like a person.

Gloomy View of Human Nature

The view of human motivation has been that people are lazy, inert beings that will shirk at any opportunity they get³ (Kindle Locations 262-263). Thus the role of management must be to properly align external incentives (after all, we’re simply motivated by external rewards and punishments) in a way that aligns the individual with the organization. Thus enters Agency theory and theories on stock options and corporate governance.

However, there is a new view of human motivation put forth by Mihaly Csikszentmihalyi that argues that human beings are motivated by autotelic experience⁵ – autotelic experience being the drive to seek complexity in ones actions and in doing so to be motivated from an intrinsic desire instead of extrinsic motivators. Sumantra Ghoshal’s takes the idea further by arguing that it is a mistake to believe that the drive powered by external rewards and punishment is more fundamental than the autotelic drives (pg. 83). This is echoed by Dan Pink in his book where he notes that Edward Deci noted that the drive for autotelic experienced seemed to be more basic and motivating than the reward / punishment drive (Kindle Locations 93-95).

If it’s the case that people can be motivated by a strong desire for autotelic experience, then where did this gloomy view of human nature come from? In the 1920’s B.F. Skinner found that rats where motivated by extrinsic rewards and punishments, and idea was applied to the field of scientific management. We applied the idea in the way we created management structures, setup incentives, and crafted our theories, and a result the proof of B.F. Skinner’s work became valid in a de facto way and we developed a blind spot toward new models of human motivation. We all know that extrinsic motivators aren’t perfect but we’ve become so accustomed to them we can’t imagine a life where their power as a tool would be seen as an inferior option.

Take Ken Robinson and education again as an example. For whatever reason we believe that it is the role of education to remediate deficits. Instead of believing that the role of education is to create an environment of engagement in which people can pursue their passions and interests, we believe that a highly-controlled centralized process will do the trick. We do the same for our teachers. What teacher wants to teach children when she has no latitude and no autonomy? You can’t create autotelic experiences for the child or the teacher when you have systems setup the way we do. Again, we go back to the difference in belief between the role of autotelic experience and the role of external motivators.

Gary Hamel argues that Management 2.0 is about re-aligning with human nature and about moving with the grain of humanity instead of against it. This shift comes from a change in the nature of work. Previously work was about compliance in a clearly defined industrial process – an environment that makes extrinsic motivation highly effective. The nature of work changed. We moved from routine work to complex work requiring lateral and divergent thinking, and complex problem solving. In this new environment worker engagement is critical and the only way to accomplish the tasks of new-age work. This requires engagement. But engagement can only come from intrinsic motivation. Therefore you can only create the environment for autotelic experience, you can’t force it.

From this stems a new paradigm. Instead of believing that social organization is about keeping bad people from doing bad things you are forced into believing that social organization must be about enabling good people to do good things, and then trusting that you setup the right environment and that people want to do good things – that they are intrinsically motivated.

Belief that Only that which can be Measure Matters

The belief that only that which can be measured matters can be seen as a culmination of the two views discussed at length above. If you believe that human behavior can be perfectly controlled by external incentives, have a gloomy view of the human being, and believe that logic is its own answer (even when dealing with fields of organized complexity) then you naturally move to the belief that that which can measured is all that matters.

Take Ken Robinson again as an example. In our educational system we measure how well kids do on standardized tests, we measure how well our incentives are in line, we measure how many kids graduate and how many don’t, we measure how much teachers get paid, and on and on and on. We measure what is easy to measure and then we manage to it. We make sure that teacher salaries are as low as possible and that as many kids pass the standardized tests as possible and we focus on raisings standards. Like anyone is going to say, “No I think we should lower them.” None of what came up in our measurement was that side of being human. None of our focus was on how well we create an environment for autotelic experience – both for our kids and our teachers. None of our focus was on how we could build off of our kid’s strengths. None of our focus was on how we could pay teachers fairly – because it matters. None of our focus has been on how we can truly make a difference in this world. We think so small with our small metrics.

Benjamin Zander and his wife Rosalin make a good point. We need to reframe the situation. Instead of a maniacal focus on the numbers. We need to lift our heads to realize that what we should be doing is meeting each other as human beings. We pretend that what we measure is all that matters. That’s the problem, and that’s my point.

Shareholder value is another belief in the that which gets measured is all that matters ideology. Because we can measure shareholder value in terms of dollars it’s a convenient model for organizational design, but as I’ve argued earlier it doesn’t make any sense. It’s so ingrained that we can’t imagine a world that could be otherwise, but that doesn’t make it true or better than other alternatives. That simply makes it dominant. When did we lose our desire to, I don’t know, make a difference, and to do something of real social value.

This is where the wisdom of common sense is so often ignored.

Here’s another one for you. I work with a colleague who used to run a collections center. Management one day decided they wanted to break up the center into calls, foreclosures, and appeals. They figured that by doing this they could reduce their unit costs and gain efficiencies from specialization of labor.

My colleague disagreed. He didn’t want to break the group into calls, foreclosures, and appeals. He thought that calls where the most boring part of the job and that he could keep people happy and interested in their jobs by keeping them engaged in the whole process. Keeping them engaged in the whole process would create ownership while splitting the tasks would create burnout. This is a wonderful illustration of the problem with the uncritical application of habits of thought that Hayek mentioned in his Nobel address.

Say you built a spreadsheet to prove that you organization would be more efficient as a result of standardization, specialization, and economies of scale. You would be guilty of that science of falsification of which Hayek spoke because you would trick yourself into believing that only that which can be measured matters. What about the loss of productivity from the boring nature of calls? What about the fact that you don’t take ownership of a customer because you don’t walk that person through the process? What about the loss of human empathy because you don’t walk an individual through the process? What about the lack of engagement and ownership you feel? That doesn’t work into the spreadsheet so you pretend it doesn’t matter and by doing so actually do a disservice to society.

In the example above the argument that management made for the standardization and specialization of labor in the call center was that the call center would achieve economies of scale. John Seddon⁹ argues that while the concept of economies of scale is a valid framework you can’t actually tell where your organization is on the efficiency curve. And as Hayek points out, “[Measurable magnitudes] has led to the illusion … that we can use [mathematical economic] technique for the determination and prediction of the numerical values of those magnitudes; and this has led to a vain search for quantitative or numerical constants. This happened in spite of the fact that the modern founders of mathematical economics had no such illusions … as Vilfredo Pareto, one of the founders of this theory, clearly stated, its purpose cannot be “to arrive at a numerical calculation of prices”, because, as he said, it would be “absurd” to assume that we could ascertain all the data.” Our theories (like economies of scale) should serve as a guide, but they should override the wisdom of common sense, lateral thinking, or other methods for creating effective organizations. We cannot give away our practical wisdom for the pretense of knowledge and the false security we feel from creating easily justifiable deductive solutions.

Belief in Causal Determinism

Causal determinism is the belief that we can control our fellow man, and more importantly is our belief that we are subject to impersonal forces and by extension have no choice in our actions.

Causal determinism isn’t the belief that you can explain all of human behavior. It is the belief that you can control it through external forces. It is the difference between the chair maker and the gardener. Hayek recognized in his Nobel address that you can only create the conditions under which engagement exists. You can’t control it. It’s the difference between compliance and engagement. Management toward compliance is about believing you are in control and that if you properly manipulate human beings, in accordance with psychology, that you can control their actions. Management toward engagement is a realization that you don’t have that control and that the best you can do is create the environment for engagement.

“If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants. There is danger in the exuberant feeling of ever growing power which the advance of the physical sciences has engendered and which tempts man to try, "dizzy with success", to use a characteristic phrase of early communism, to subject not only our natural but also our human environment to the control of a human will. The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men's fatal striving to control society - a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.”²

Causal determinism is the belief that Sumantra Ghoshal pointed out when he said that executives claim that they have no choice but to dehumanize work because they are subject to impersonal market forces that leave the individual bound to market will. A great example of the belief in causal determinism that has been shaping our society is the role of the Gulag in 20^th century Russia. During the 25 years of Stalin’s power he murdered between 10 and 20 million of his own citizens. Many of the people who died were Gulag prisoners who were forced to build canals and railroads, cut timber and mine gold. What’s interesting in the context of this article is that the Gulags eventually became an economic imperative. “A lot of the major construction projects, plants and factories, and transport arteries, were built by prisoners. Nearly 200,000 prisoners worked on the Moscow-Volga canal, according to official records. That’s twice as many as worked on the Egyptian pyramids. So it was a major economic machine.”¹⁰ Once it became an economic machine it was even easier to rationalize and harder to get rid of. After all, you could argue, we have no choice but to continue with the forced labor of the Gulag’s because economic prosperity depends on it. This is a strong example of a societal belief in causal determinism (that we aren’t free to make our own choices and we’re simply subject to impersonal forces) that can lead to dehumanization in practice.

Ghoshal would argue that there is no overarching causal theory in the social sciences that can govern and align all functional theories (refer to his paper for an explanation of the difference between causal and functional theories). I agree, but I also disagree in that there is a perceived overarching causal theory at work. The ‘causal theory’ is that all human motivation can be predicted and explained through external motivation. This is the idea that you can perfectly predict a person’s action based on proper external incentives. I think this is the idea that Hayek takes issue with when he says that human intentions cannot be known. From the frame of causal determinism you can get to shareholder value maximization, agency theory, game theory, and the like. You can reduce human choice down to a kind of physics. The idea is that we believe we have access to and know all of the external factors relevant to predicting human behavior. Our belief in causal determinism has led us to view human being as self-preferring rational utility maximizing individuals. We’ve come to believe this because it’s the data we have access to – it’s what we can predict. And in developing this belief we’ve come to fool ourselves into believing that this is all there is to being human. When you realize that people’s drive for autotelic experience may perhaps be more fundamental than the drive of external motivators you gain a more holistic view of what it means to be human and you begin to recognize the role human choice plays in social organization.