Managers and information: have times changed?
“The way managers process information seems to be locked inside their brains, like a black box,” Henry Mintzberg wrote in 1984. Do we know more now? Not really, and that lack of understanding could lead us to ignore deep shifts that redefine the manager’s very role, through what they do with information.
What is information for? Making decisions, of course. As Auguste Comte said, “Foreknowledge is power”. But the role of information in decision-making is perhaps overstated, and it’s not always very clear. Are all decisions really well-informed?
More simply, we could say that information helps to reduce uncertainty. Uncertainty is everywhere and information is the antidote, as well as one of the main goods provided by the economy, Frank Knight, the economist who introduced the distinction between risk and uncertainty, explains. This also opens up fundamental questions such as freedom of the press and pluralism, as well as technical, high-impact questions such as financial information and the quality of public statistics.
Information can also help solve problems, advance on a project, formulate results or maintain skills. This relates to the big question around indicators and, more generally, feedback when strategies are being implemented. Information can help improve an organisation’s performance.
Information is not only used to check and correct past decisions.
It’s also connected to the future. Information seems crucial to steer a company in a world where playing catch-up is no longer an option. In this Schumpeterian world, innovation can make all the difference and, ultimately, enable companies to survive. It allows them to adapt to their environment, assess ongoing changes, avoid errors, save time and conserve not only the organisation’s resources, but the manager’s as well. “Greater knowledge allows you to save your power,” Philippe Baumard wrote in his pioneering work on economic intelligence, Strategy and Surveillance of Competitive Environments (1991). The role of monitoring new developments can be delegated or even externalised, but it must stay connected to the decision-maker, as a major element of strategic orientation.
Information allows managers to adapt to their environment, assess ongoing changes, avoid errors and save time.
Categories of information and managerial roles
In an oft-quoted article (“The Design School: Reconsidering the Basic Premises of Strategic Management,”1 1990), Henry Mintzberg established that managers distinguish between three kinds of information: firstly, one-off pieces of information that shed light on a particular problem; secondly, information needed to steer a company; and, thirdly, general information to understand what’s going on in the company and beyond, and place the company with relation to strategic evolutions and power redistribution processes.
Humbert Lesca created another typology, classifying information according to their purpose on the one hand, and their origin and trajectory on the other. In the first category, he included information that is essential to the running of a business, influential information that positions how various players act, and anticipatory information through which decision-makers can foresee certain changes in their environment. In the second category, he distinguished between information with trajectories from one part of a company to the other, internal-to-external trajectories and external-to-internal trajectories.
A third classification by Bengt-Åke Lundvall breaks down economic information into “know-what” (facts), “know-why” (scientific knowledge) and “know-how” (tacit knowledge).
Finally, a fourth classification established by Bruno Henriet and Maurice Imbert2 distinguishes between operational information, which enables action to be taken, and evocative information, which enables a company’s representation to be built.
The day-to-day and the future
That last classification seems to be the most effective. Company managers must operate on two levels, and two alone: the day-to-day and the future. They must take care of the most trivial details relating to the running of the company but also think ahead. So, they need both operational information and evocative information. Henriet and Imbert’s classification fits the reality of the manager’s role. It also has the bonus of combining Mintzberg and Lundvall’s categories.
Operational information combines Mintzberg’s first two categories (one-off pieces of information to shed light on a particular problem and information needed to steer a business) and Lundvall’s first two categories (know-what and know-why). Evocative information comes under Mintzberg’s third category (general information to understand what’s going on in the company and beyond) and Lundvall’s third category (know-how).
These classifications demonstrate the link between information and the three tasks traditionally assigned to company managers: maintaining connections with shareholders, organising the company to successfully complete projects, and defining a strategy. Classifying roles in this way shows the difference between CEOs and manager (even senior ones) when it comes to information. Executives also receive, process and use a considerable amount of information. But, unlike CEOs they do not have a decision-making role in these three tasks (if they are involved in them). While this simple observation may seem trivial, it changes the entire perspective on information.
Managers must present specialised, confirmed information to shareholders to convince them. For a company to run smoothly, information needs to be regularly passed on to monitor what is going well, but also (mainly) what is not. The aim of this political role is to assess the company’s operation. The key point is clearly to build company strategy, which can only be perceived by planning for the future, using information acquired in the past and processed in the present.
Truly useful information changes your vision of reality
The information needed by managers must correspond to the year-long perspective (e.g. launching a new mass consumption product), years-long perspective (e.g. company purchasing and restructuring) and even decade-long perspective (e.g. building a jumbo plane). Managers need to be able to anticipate events through this information. Sometimes, it comes from the company or from research, of course, but also, perhaps more importantly, from highly varied data, collected in uncertain contexts.
Creating a vision, structuring a story
This varied data can be ignored. It only exists through the will of company managers, Lesca stresses. On the other hand, information with high added value, which is very different to that flooding the entire organisation, shows managers’ proactive work to acquire, process and make use of information.
The way information is being used has evolved and, with it, theories that underpin its analysis and processing. Information that is useful for managers is no longer an immediate target, as it was in the past and still is for lower levels of an organisation.
Truly useful information will provoke a change in how the manager sees the reality surrounding them, James G. March noted. “Information is used more for vague changes in optics rather than to have a direct impact on decisions. Most information gathered and recorded in organisations is not used to provide direct assistance in decision-making as a priority, but rather as a foundation to interpret facts and edit them into a coherent story. As a meaningful structure emerges from information and decision-making processes, each particular decision becomes a part of it. Modern research on data processing seems to show that exploratory analysis of data collected without a specific use is clearly more common than determining needs for information beforehand.”
March highlights the consequences of this analysis – information gives meaning to a decision-making situation and changes the way both options and sought preferences are structured. It becomes a conversation topic and eventually contributes to changing decision-making strategies.
A good informational strategy moves forward “information, desires, options” in a productive direction by simultaneously developing ideas of what is “productive” and the tools to get there. Information provides a knowledge and meaning base that can be used for possible actions, or to explain experience. It’s an investment in collecting knowledge and an aid in defining and choosing preferences and options.
But does the manager’s use of information fully fit into this analysis? Isn’t the main advantage of information to help predict the organisation’s future and give it meaning? We could rephrase things thusly, in a way that may seem paradoxical: the manager doesn’t process information to make decisions, but rather to turn this information into knowledge, to say it and make it part of the organisation and its created future. Nowadays, and even more so into the future, the manager’s role is to provide an ever-changing overview of what is coming.
This column is the repost of an article that was originally published in the Paris Innovation Review on 14/03/2018.