The FINANCIAL — CEOs know that it’s vital for them to keep on top of what’s going on in their organisation, and almost all have developed a ‘personal knowledge infrastructure’ to help them do just that – but they rarely pause to consider its effectiveness and fit, say a team of academics from Warwick Business School and Saïd Business School, University of Oxford. As a result, CEOs often only discover the inadequacies of their information infrastructures after a failure or breakdown.
A paper published in the MIT Sloan Management Review, Staying in the Know, by Davide Nicolini, Maja Korica, and Keith Ruddle, describes findings from a two-year study of the day-to-day work of seven CEOs of hospital- and mental-health-based organisations in England. It describes how CEOs assemble a ‘personal knowledge infrastructure’ to keep them abreast of organisational developments, and reveals four potential traps that they need to avoid.
Activities such as checking the morning news, running review meetings, dropping by offices to ask ‘just a quick question’, walking around and occasionally even going to the cafeteria ‘to check how things are going’ are all part of how CEOs find out what they need to know, along with carefully cultivated strategic relationships within and outside the organisation. Most CEOs also use some form of electronic reporting system or audit-based dashboard that helps them track critical performance indicators, but the sophistication of the tools varies substantially, according to Saïd Business School.
‘We found that the weight that individual CEOs gave to each of these types of activity depended on factors such as their own experience, the executive team and board, the external environment, and the kind of manager the Chief Executive wants to be,’ said Dr Keith Ruddle, Associate Fellow, Saïd Business School. ‘If they don’t get the balance right, though, they can end up inside an “information bubble” and create information biases and blind spots.’
The researchers identified four traps that inhibited the effectiveness of CEOs’ personal information infrastructures:
1. Not obtaining the information you need
Although conventional wisdom suggests that the main problem for today’s executives is too much information, the real problem is not enough relevant information. Due to insufficient monitoring, an inappropriate mix of monitoring practices, inadequate or insufficient social relationships, and information overload, managers can find themselves without the information they need.
2. Developing a personal knowledge infrastructure that points you in the wrong direction
A typical problem with personal knowledge infrastructures is that they can be poorly aligned with the demands of the job. For example, if a CEO wants to foster innovation but the infrastructure informs him or her about operational issues only, the CEO is likely to focus on things that aren’t of primary importance. Managers should avoid focusing on the wrong information — or information about the wrong things.
3. Setting up a personal knowledge infrastructure that is not ‘you’
A manager’s personal knowledge infrastructure can clash with his or her management style. For example, in the study, researchers observed a CEO who wanted to be a manager who delegated. However, his personal knowledge infrastructure systematically drove him to focus on details, which led him to take a hands-on approach — against his best intentions.
4. Starting with technology rather than personal need
Last, some managers make the mistake of considering technology first rather than later. Personal knowledge infrastructures need to be geared towards personal development, not towards buying new technologies. Rather than asking, ‘Is this technology good?’ CEOs should ask, ‘Will it do any good for me?’
‘Becoming and remaining practically knowledgeable is a critical task,’ said Professor Davide Nicolini, Co-Director of the Innovation, Knowledge & Organisational Networks research unit at Warwick Business School. ‘It is a capability that managers need to learn, develop and continually refine, and it becomes increasingly important as the manager moves through his or her career and up the corporate ladder, when the risk of information overload significantly increases.’