Crisis, Which Crisis?

7 October 2008

Choose Your Own Explanation

Crises are caricatures of the everyday, erratic farce pushed against the dull certainty of life. They mock the knowledge we thought we had, leaping around, squirting water in the face of experts, who ironically look a little too much like clowns. But no-one likes being played for a fool, so we rally, seeking various explanations for the way things are now, forgetting that we really know very little at the best of times. We are all too often ignorant of our own ignorance.

Take the current financial crisis, for instance. What is it? How will it affect you? What will the world economy look like in a year’s time? Three questions that could be answered in three lines, if we really knew what was going on. The problem begins with a euphemism – ‘sub-prime lending’ – which means mortgages for those who, on the balance of possibilities, were never likely to pay them off. Not a good start.

But then the situation deteriorates because various banks insure against those dodgy loans by selling the risk of non-payment, now labelled ‘mortgage-backed securities’, as bonds to largely unsuspecting superannuation funds. Naughty banks? Well, maybe, but any business is about reducing risk and increasing profits. Insurance companies issue policies against the risk, which seems a good back up. But when housing prices start to drop the actual value of mortgaged homes falls below the amount of money still owed and the chance to refinance favourably evaporates. Failures to make mortgage payments rise, dramatically.

In other words, the banks – and the two federal mortgage agencies – took a huge risk, thought they could get away with it in a buoyant US housing market, and had their pants pulled down by circumstance. When the insurance companies started paying out for bonds that no longer had any backing they started to lose money, with their credit ratings tanking. Bankruptcies ensued, banks started to fall over, trouble spread throughout the financial world.

Do I really understand this? No, it’s just information hurtling by. You might have noticed that the initial explanation was more substantial than the description of how the problem in America has spread elsewhere. After a point I really have to trust the explanations of others, because like most other people I’m a generalist and understanding the minutiae of world finance would involve time, effort and interest that I don’t really have.

So I ask – I speak to people, seek opinions, read what I can. Interestingly enough, the answers are not often the same. Allow me to offer three brief examples.

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Of Numbers and Knowing

4 April 2008

Social Group Size and Knowledge Management Concerns

Spiekermann House Numbers, by stewf, with creative commons licenceNumbers have a curious way of popping up in the most unlikely places. Think of social groups and their optimal dynamics and you’re likely to imagine somewhat fuzzy amounts. Large groups might be difficult to manage, but that shouldn’t be the case for small groups. This has been important for me lately as I’ve argued against the need for knowledge management in self-organising systems. But one number I’ve missed might well make a difference, and it’s rather precise.

Debating me on a range of issues under the broad rubric of knowledge management today, Patrick Lambe mentioned what is often described as Dunbar’s number: 150. It seems dubiously even, but it’s rounded up from 148 and is only then the upper limit of individuals with whom you’re likely to maintain close personal relations.

Robin Dunbar is an evolutionary psychologist who studies the size of the neocortex in primates – that part of the brain governing consciousness, sensory perceptions and language – and relates it to optimal group size. It turns out that our brains might be hardwired to work best in smaller organisations.

Actually, I should have known that. Malcolm Gladwell mentions Dunbar’s number in Tipping Point, which I read a few months ago, and I remembered the subsequent discussion about W.L. Gore and Associates (of Gore-Tex fame). Gore has broken itself into small units of what it calls “multidisciplinary teams” with largely horizontal staff structures to counteract organisational inefficiency. When I raised this issue today, Patrick recognised it as a “good example of organising to meet cognitive constraints”.

In that light it might also be an alternative to knowledge management, disaggregating a large organisation that’s cutting too many links between its members. Patrick thinksUnique Group! by Thiru Murugan, with Creative Commons licence “even those optimal size tea[m]s need to coordinate with each other if the organisation is to operate as a coherent whole”. Yes certainly, and it will be interesting to find out exactly what form of coordination would be needed, given that employees would be neurologically more capable of doing the inter-group organising for themselves.

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Knowledge Management Revisited

3 April 2008

In Reply to Patrick Lambe

I got trouble, by ndemi, with Creative Commons licenceIt seems I caused a stir with my comments on knowledge management a few days ago. Patrick Lambe, who featured on the second YouTube video in my post, took exception to my position in general and use of ‘snake-oil’ to describe his field in particular. Patrick’s response is over at Green Chameleon, and raises a number of issues beyond the scope of my initial concern, but equally valid.

I’m republishing my counter-comments here largely verbatim, with a few links added, so the debate can be taken to as wide an audience as possible.

Still questions to answer

Patrick, let me begin by saying that I very much appreciate you taking the time to respond in detail to my post on your own blog. But before I reply in kind I just want to clarify one small matter there was no ire to be raised in my post. Not everyone needs an agenda to be critical.

In framing my initial comments on knowledge management under the snake-oil rubric I merely meant to challenge what I see as a poorly defined field, to highlight one important challenge to it, and to say something about photocopier salesmen posing as anything but just that. I notice that you barely touch upon this final point, although I am glad to see that you acknowledge the charlatans on the edges of your field. Given my comments to come, you’ll have to forgive me for continuing to think that they are in the public eye far more than you might imagine.

In any case, therein lies the reasoning that you failed to detect in my post: knowledge management is not a field that shouldn’t have questions asked of it by outsiders.

2008 #50 Getting Clarity, by Jeroen Latour, with Creative Commons licenceInterestingly enough, your response passes over the variety of knowledge management definitions Ray Sims mentioned without giving any proof that they are “not as varied as the sheer number” suggests. Why not? How many definitions would you support?

I acknowledge that your field could well be grappling with problems of classification many are but failing to recognise a lack of clarity as a significant problem seems to me short sighted.

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Snake-Oil for the New Millennium

30 March 2008

The Knowledge Management Scam

Red Shoes & Walking Bags, by moriza, with Creative Commons licenceIt’s been a busy week for the information overlords. No, I don’t mean Bill Gates or whoever it is keeping the Internet’s main servers chugging along, although they’ve probably been busy too. Who I actually mean are the snake-oil salesmen of the Cyber Age – those who utter the term ‘knowledge management’ with illogical conviction.

Here in Hong Kong we’ve just had the local Knowledge Management Society’s forum, desperately attempting to ride in the ill-defined wake of Web 2.0. And one of the local newspapers ‘featured’ a thinly disguised advertisement for associated services this week. Not a good start, but let’s broaden our consideration for a while. One question is just begging to be asked: what the heck is knowledge management?

Over the last 20 years we’ve had tortured managerialisms like 360-degree assessment, Six-Sigma (though still with many defenders), business process re-engineering (from the ashes of methods and procedures analysis) and downsizing – that earnest attempt to re-focus business that became a vicious excuse to sack people. Downsizing is still alive and well, with major banks like HSBC excelling at it even though they’re earning record profits, despite claims of hard times after the sub-prime mortgage fiasco. The other methods are faltering, and will eventually fall behind newer fads, one of which is already fading. That’s knowledge management. But it’s not going down without a fight.

If You’re Not Confused, by B Tal, with Creative Commons LicenceSo much for the background – what does ‘knowledge management’ actually mean? Ray Sims recently posted an answer in cyberspace. Well, many possible answers really. Fifty-three all told. These aren’t similar, hairsplitting overviews, but “substantially different. There are only five attributes that are seen in 30% or more of the definitions”. At the Information Research blog, Tom Wilson commented that “in spite of all this he still calls ‘knowledge management’ a discipline!” Indeed.

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