The high cost of accurate knowledge

Resource type
Authors/contributors
Title
The high cost of accurate knowledge
Abstract
Many business thinkers believe it's the role of senior managers to scan the external environment to monitor contingencies and constraints, and to use that precise knowledge to modify the company's strategy and design. As these thinkers see it, managers need accurate and abundant information to carry out that role. According to that logic, it makes sense to invest heavily in systems for collecting and organizing competitive information. Another school of pundits contends that, since today's complex information often isn't precise anyway, it's not worth going overboard with such investments. In other words, it's not the accuracy and abundance of information that should matter most to top executives--rather, it's how that information is interpreted. After all, the role of senior managers isn't just to make decisions; it's to set direction and motivate others in the face of ambiguities and conflicting demands. Top executives must interpret information and communicate those interpretations--they must manage meaning more than they must manage information. So which of these competing views is the right one? Research conducted by academics Sutcliffe and Weber found that how accurate senior executives are about their competitive environments is indeed less important for strategy and corresponding organizational changes than the way in which they interpret information about their environments. Investments in shaping those interpretations, therefore, may create a more durable competitive advantage than investments in obtaining and organizing more information. And what kinds of interpretations are most closely linked with high performance? Their research suggests that high performers respond positively to opportunities, yet they aren't overconfident in their abilities to take advantage of those opportunities.
Publication
Harvard Business Review
Volume
81
Issue
5
Pages
74-82, 129
Date
May 2003
Journal Abbr
Harv Bus Rev
Language
eng
ISSN
0017-8012
Library Catalogue
PubMed
Extra
PMID: 12747164
Citation
Sutcliffe, K. M., & Weber, K. (2003). The high cost of accurate knowledge. Harvard Business Review, 81(5), 74–82, 129. https://www.researchgate.net/publication/10760111_The_High_Cost_of_Accurate_Knowledge