Foundational Thinking for Good Business

Good epistemology is the foundation for Good Business

High-level conceptual thinking is a critically important skill for successful business leaders. This skill consists primarily of the process of observation and logic to form concepts of increasing integration and complexity. When done right, lower-level concepts become embedded in higher-level concepts, with each rising conceptual level being an integration of appropriate and valid lower-level concepts.

The structure of higher-level concept formation is one that moves from lower level perceptual observations and concepts that can be affirmed from the direct evidence of the senses, to highly abstract concepts that subsume multiple levels and broad integrations of lower and intermediate level concepts. This process of concept formation allows us to embrace and manage the increasing volume of information and complexity embedded in higher-level concepts and work.

One can conceptualize the difference here in the context of business if, for example, one thinks about the connection of work tasks through the division of labour.

Starting with a simpler clerical task, it is likely linked to a larger project that is part of a managerial unit initiative linked to a business unit objective taken to help bring about a corporate strategy objective to fulfill the purpose of the corporation to gain and keep customers in alignment with the organization’s vision and mission.

The same kind of layering of complexity of tasks and information can be seen in every aspect of business operations, for example: from collecting payables that feed into bookkeeping transactions that get rolled up into financial reports, audited financial statements, investment analyst assessments, financial capital structuring analysis, and government economic indicators.

At each level, the information requires an ever-widening context and integration of knowledge and principles. And at every level of the organization, the people that fill those jobs must have the knowledge and requisite cognitive capability to handle the level of complexity of information required weigh information, imagine paths of work execution, and coordinate resources and time to achieve the desired results at that level. You can’t ask a young accounting clerk to assume the role of the CFO. It is too early in her career to have mastered and have integrated the depth and breadth of the chain of concepts required to link her clerical work to the conceptual knowledge required by a CFO to understand and ensure a properly functioning financial management system to ensure the day-to-day and future financial and reporting requirements of a large scale organization.

Business people don’t typically think about these matters and how information, concepts, systems, and organizational hierarchies all fit together, and what the consequences may be when there are missing or broken links in these chains (i.e., when non-integration or improper integration is allowed to exist and persist).

At the root of this very important thinking about valid methods of concept formation is a rather obscure branch of philosophy called epistemology.

The Knowledge of Knowledge

Epistemology concerns itself with the validity and requirements of human knowledge by asking an essential question: what do we know and how do we know it? The word comes from the Greek “episteme,” meaning “knowledge,” and “logos,” meaning, roughly, “study, or science, of.” (Internet Encyclopedia of Philosophy, “Epistemology,”

This discussion of concept formation and epistemology sets the context for an excellent quote I encountered in the book Good Business: Leadership, Flow and The Making of Meaning, by Mihaly Csikszentmihalyi, who is the founding father of the theory of Flow, and Professor of Psychology at the Peter F. Drucker School of Management at Claremont Graduate University.

Csikszentmihalyi provides a quote by Linus Pauling, Nobel Prize winner in Chemistry and Peace, in which Pauling astutely describes his methodology of integrating concepts to ensure a coherent worldview. It is instructive, because it is the methodology that must be adopted by all people who take seriously the need to maintain a coherent approach to truth and reality that is necessary to link human intentions to successful outcomes, be it in business or otherwise.

Pauling states:

I have a picture, a sort of general theory of the universe in my mind that I have built up over the decades. If I read an article, or hear someone give a seminar talk, or in some other way get some piece of information about science that I hadn’t had before, I ask myself, “How does that fit into my picture of the universe?” and if it doesn’t fit, I ask: “Why doesn’t it fit in?” (Good Business, 179)

Csikszentmihalyi provides commentary:

Pauling’s is a good account of how a complex consciousness functions. You start out with a “general theory” (or core value, or vision) that is developed over time; then you integrate into it all the relevant information, whether it supports or challenges the theory. In this way one keeps growing from a stable base, ever expanding a circle of connections while maintaining a unique perspective. (179)

The key to knowledge and successful action is to integrate without contradiction. Contradictions represent a clash of presumed knowledge, and are evidence of an error. A proper methodology requires that when one discovers a contradiction of knowledge – something that doesn’t fit into what one knows to be true about the universe – one must engage in discovery to figure out they the pieces don’t fit, as Pauling did. Discovering a contradictory conclusion and trying to hold on to both horns of the contradiction, or arbitrarily flip-flopping between the two to justify your conclusions, it a psychologically self-destructive form of evasion best articulated in cognitive dissonance theory (see for example, Caroll Tavris and Elliott Aronson, Mistakes Were Made But Not By Me, or the 1957 classic by Leon Festinger, A Theory of Cognitive Dissonance).

You Need to Avoid “The Swamp of Subjectivism”

The attempt to integrate contradictory premises brings an end to valid concept-formation everywhere downstream from the contradiction, whether it is simply unnoticed or willfully embraced. Invalid and non-veridical concepts are detached from reality, making such concepts unreliable as links in the chain of cause and effect. Relying on unverified or false concepts destroys the logical connection between the facts of reality wherever such invalid concepts are used, thereby sabotaging effective thinking and problem-solving.

Philosopher and epistemologist Harry Binswanger writes in his recent book How We Know: Epistemology on an Objectivist Foundation, that “accepting a contradiction undercuts the whole structure of one’s knowledge. It forces a puzzle-piece into a space it does not fit, spoiling the overall picture (and leaving no place to put the right piece)” (p. 314).

Binswanger further explains why evading contradictions or worse, embracing them as a form of post-modernist hubris, is so destructive to any attempt to link cause and effect in achieving one’s desired goals:

Clinging to the contradiction undercuts method as well as content: one becomes unable to check ideas for consistency with all that one knows. Without that consistency checking one cannot distinguish knowledge from mere belief or feeling. The contradiction leads one into a swamp of subjectivism, bereft of epistemic guidance. The only way out is to renounce the attempt to “get away with a contradiction, repair the damage done, and resume the task of non-contradictory integration, as a matter of principle.” (315)

“A contradiction,” warns Binswanger, “if maintained, paralyzes thought. One can proceed only by abandoning logic and just making up an answer as an arbitrary dictum. Ultimately, the alternative is: adherence to logic or cognitive paralysis.” (315).

One business leader who embraces the power of epistemology and philosophy when thinking about business is former BB&T CEO, John Allison.

Allison writes in his latest book, The Leadership Crisis and the Free Market Cure:

Concepts are fundamentally hierarchical. They build on each other. … Higher-level concepts are dependent on lower-level concepts. … [Y]ou need to be certain that you fully grasp these concepts before you try to claim knowledge. Even the most complex concepts must be traceable back to reality or they are not valid. … [C]oncepts are the tools we use to think effectively. Well-integrated concepts are necessary to achieve mastery in any field of endeavor. … If you are to be successful in this new competitive world, you need to become a master in your field of endeavor. To achieve mastery requires developing integrated concepts that can become decision tools for the application of deductive reasoning. … [M]asters develop concepts that enable them to integrate more complex data and make better decisions. They can often ‘see’ solutions based on subconscious integration of the concepts they have grasped from other experiences, that is, from inductions.” (36- 37)

Be Master of Your Cognitive Domain

As a master business leader or manager, when you encounter something that doesn’t make sense –when you encounter contradictions in what you think is knowledge – you must check your premises.

If you or somebody else has reached a conclusion you believe is false or mistaken, then you should take note and investigate why you think there is an error. Ensure that the concepts upon which the questionable conclusions stand are valid. When people encounter things that don’t make sense, it can be from a lack of knowledge, or a lack of understanding or ability of how to integrate lower level concepts in to more complex higher-level concepts, or it may be that the things they are trying to understand, like so many management fads, really don’t make sense.

Or worse, there may be a psychological or ideological desire to believe two contradictory premises and to evade such knowledge.

Advice for Business Masters

Heed the good advice of Nobel-winning scientist Linus Pauling. If you are introduced to a new concept or receive advice that doesn’t fit with your world-view, ask yourself, “How does that fit into my picture of the universe?” and if it doesn’t fit, ask: “Why doesn’t it fit in?”

Perhaps your world-view is wrong and needs correcting. Or perhaps the new information you are receiving is unsubstantiated. If you can’t integrate new higher-level concepts and integrations of information into your existing world-view without contradiction, you should not accept those concepts as proven until such time as you are able to do so. The identification of a contradiction means that more discovery and validation is needed. This is a perfectly rational and common response to new – and often disorienting – information and questionable claims of scientific, and especially social, veracity.

Ongoing and active philosophical detection is the only way to substantiate and confirm valid, and therefore knowledge expanding concepts, and to identify and eliminate false, and therefore destructive, concepts.

Mindful and purposeful integration is the basis of clear thinking and value creation


Barry Linetsky is a Partner with The Strategic Planning Group, a Toronto-based consultancy. He is the author of The Business of Walt Disney and the Nine Principles of His Success (Theme Park Press, 2017) and Free Will: Sam Harris Has It (Wrong). His articles have been published by Ivey Business Journal and Rotman Magazine. Visit his website to find original articles and blog posts on Walt Disney and other management topics. Follow Barry on Twitter @BizPhilosopher and on LinkedIn.


© 2017, Barry L. Linetsky. All Rights Reserved

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