Management's Worldview: Four Critical Points About Reality, Language, And Knowledge Building To Improve Organization Performance

Abstract

From the perspective of hindsight, many researchers have ascribed plausible reasons as to why various firms have prospered and others failed. Some have gone further and worked at understanding how a specific management viewed the world at the time decisions were being made. But, the real challenge is to make progress toward useful guideposts so management can develop a worldview that better equips them to improve firm performance in the future. Without such guideposts, organizational computing, analytics (i.e., fact-based problem solving), and other modern initiatives may lose their way or not reach their full potential for improving firm performance. In the direction of useful guideposts, this article advances four points about reality, language, and knowledge building, which have been underutilized as a means to develop insights for solving business problems and constructing viable strategies. The rationale for these four complementary points is explained in terms of the management decisions behind the growth of Walmart, the successful restructuring of IBM, and the eventual bankruptcy of Kmart. Ideally, leaders should be mindful of these points and strive to ingrain them in the firm's culture. Doing so can lead to improved effectiveness in both strategies and the systems to implement those strategies --- ultimately paying dividends in terms of firm performance.

For a video presentation of this article, see "Management's Worldview" at YouTube. For the Powerpoint slides used in the presentation, see http://ssrn.com/abstract=2053320.

Keywords: Reality, Feedback, Knowledge Building Loop

JEL Classification: D21, D83, G30, L21, M41