The value of Practical Wisdom in organisational governance

Wisdom is a state of the human mind characterised by profound understanding and deep insight. It is the consciousness of wholeness and integrity that transcends rules, often referred to as common sense in an uncommon degree.

2400 years ago, Aristotle identified two types of wisdom – the esoteric/metaphysical and practical wisdom – more recently psychologist and author, Barry Schwartz has been discussing the importance of Practical Wisdom (see the book) and the ‘right way to do the right thing’.

Aristotle believed that to do the right thing, and ultimately to be happy, required you to be a person with the right character – courage, honesty, perseverance, etc; but that having these virtues wasn’t enough, because, you need to decide how courageous should you be and when to be courageous? You need to use your judgment. And the virtue of good judgment is what Aristotle called practical wisdom. Practical wisdom is knowing when and how to display the other virtues and how to choose when two virtues or requirements conflict.

Whilst rules are important in the governance of organisations they are not enough. Practical wisdom requires the use of wise improvisation! In the service of the right aims, the wise person will ‘bend the rules’ in the service of good. As the proverb suggests: Rules are for the guidance of wise men and the blind obedience of fools. Or more usefully, Rules are for the obedience of the inexperienced and the guidance of wise men. (WW2 British RAF Ace, Sir Douglas Bader).

What this means is standard conduct is justified in most situations. However, the rules should not be followed blindly particularly where following the rules will cause disadvantage or be detrimental to a key objective. In these circumstances, there may be a more effective procedure. Effective leaders need the moral skill and the moral will to improvise effectively at the appropriate times. Virtue and wisdom are almost inseparable.

The challenge facing organisations and society at large is that developing wise people requires a degree of freedom to make mistakes and learn. This freedom is progressively eroded as the reaction to each unvirtuous action is almost universally the creation of new rules and the removal of the freedom to make judgements. Unfortunately, rules will never constrain the actions of the unvirtuous.

The challenge is to move away from a hide bound ‘rules based’ approach to governance to a place where there are sufficient rules to provide effective guidance linked to sufficient freedom to allow people to apply practical wisdom to achieve the strategic objectives of the organisation. More on this next time……