The economics of the knowing doing gap

In which I take an economist’s look at The Knowing Doing Gap.

This is the seventh (and final!) post on The Knowing Doing Gap. The first set out the concept of the knowing doing gap and why most knowledge management projects fail. I then looked in turn at each of the five factors that contribute to the gap:

1. We respect talk more than action
2. We get into bad habits
3. Fear squashes experimentation and challenge
4. We don’t measure our knowledge
5. Internal competition sets us against each other

If I look at the whole thing through an economics lens, the critical issue is the nature of knowledge, which has properties of  a public good. Economists mean two things by this. First, if I have an idea, it is difficult to exclude others from using it. Second, one person’s use of an idea does not much diminish its usefulness to someone else. The upshot is that ideas tend to be under-supplied. People becomes less likely to create or share knowledge because they don’t benefit when others use their ideas, and instead they look to ‘free-ride’ on the work of others.

Economics has a standard toolkit to deal with this kind of problem (or ‘market failure’) and it is deployed extensively in the authors’ suggestions, although under less technical descriptions. The main approach is to increase the incentive for people to create and share knowledge.This means demonstrating that these behaviours are valued and rewarding those who do them. It means changing the way in which we assess, value and reward people, so that the organisation encourages pro-knowledge activity and discourages behaviour that limits knowledge:

• Encourage pro-knowledge activity: trying new things; making and learning from mistakes; sharing knowledge and working collaboratively.
• Discourage behaviours that limit knowledge: information hoarding; short termism; emphasising sounding clever rather than doing things; playing safe and focusing solely on individual contributions.

Some of this can be embedded within individual rewards, but as I emphasised throughout, leaders have a crucial role in modelling the right behaviours. There is a nice quote in the book which I will quote in full:

Leaders create environments, norms and set expectation – by actions more than words. A leader’s role is not to make decisions but to build systems that reliably transform knowledge into action.

This in turn reminds me strongly of Jonathan Haidt’s idea of ‘moral capital’ (discussed here), which is the set of norms, customs and traditions that enable communities to co-operate and solve the free-rider problem.  For Haidt, moral capital is just as important to material progress as other forms of capital – physical, human, social and intellectual. And I believe the same is true of organisations. In the long run, it is not enough to have clever people and a great product – organisations need the ‘moral capital’ that will encourage people to share their knowledge and work for the good of the whole, rather than their own advancement.

That’s the biggest message I’m taking away from this book and the blog posts over which I’ve digested it. I’ve thoroughly enjoyed writing the series and I hope it has provided some stimulation for you too.