I tested my patience and waited for an eternity for my Apple TV to download the film Unknown .  I really enjoyed it, and so it was worth the wait.  Whilst waiting for it to download, and thinking enviously of the World’s fastest Internet connection which Virgin have installed at the TechHub, I found myself reflecting on the name of the film and remembering Donald Rumsfeld’s famous speech on the Iraq Weapons of Mass destruction, his reference to ‘Unknown unknowns.’

What Rumsfeld was talking about will be familiar to any student of knowledge management: the difference between explicit and tacit knowledge.  The difficulties of handling tacit knowledge within an organization has been one of the stories behind the headlines since the summer. Many media sources expressed disbelief that the board of directors of The News of the World and News International (News Corp) could have been ignorant, in the way they claimed to be when questioned before the DCMS parliamentary select committee, to the hacking which it appears was taking place on an industrial scale (there are alleged to be over 4,000 names on the list of people who were targets for the hackers: that takes some real organization.)  The reality of course is that, much as we might prefer it not to be the case, the ignorance of the board is all too believable.

There was some thoughtful, albeit brief, analysis on the Today programme on BBC Radio4, where Anthony Fitzsimmons was discussing his ‘Roads to Ruin’ report. This was the result of a study conducted at CASS business school which looked into patterns common to major corporate failures.  They identified seven common traits in the report, of which here I highlight four:

1. Boards were blind to important risks to their business model or reputation
2. There were problems with internal communications and information flow within the organization
3. Organizational Complexity
4. There were Glass Ceiling effects preventing important risks being communicated upwards

As the analysis on the Today programme pointed out, this is not so much about Rumsfeld’s unknown unknowns, it is more about the unknown knowns. There are certain matters which will not get mentioned to the leadership of an organization, and for organizations with complex hierarchies, this means important knowledge is being filtered out at every level.  So, although a risk might be known about within the organization, it is not known by its leadership, and because of this, board members do not know which questions they should be asking.

As Professor Steve Haberman, Deputy Dean of Cass Business School, points out when commenting on the report: there are certain important risks which are simply not captured by current risk management techniques.

It seems to me that the PRINCE2 project management methodology, favoured by UK Government, has built into it two features which are destined to exacerbate the problem of the unkown knowns:

1. Management by exception: project managers are encouraged by the board only to communicate with them when something goes wrong, when the project is ‘in exception.’  This, in my experience, fosters a project management culture which spins real problems and risks so that the PM is encourage to paint a rosy picture of reality. Equally, the board sees the communication of real problems as ‘exceptional’ and that conduces to make the project board meetings a formality rather than an effective decision making body.
2. Risk management: the current practice of identifying risks, scoring those risks based on their likelihood and impact, and then reviewing them periodically, seems very often to degrade into ritual. It becomes all about capturing the list, then managing the list itself rather than actively doing something about risks, which, when combined with the principle of management by exception, means that risks are routinely removed from the risk list as and routinely classified as ‘business as usual.’  In fact, the project managers do not want to escalate those risks to the board as they would be communicating bad news: something ‘exceptional’ rather than expected, or welcome.  At a BCS Conference on Meeting the Cyber Challenges earlier this year, David Lacey, the author of the ISO27001 information security standard referred to this tendency when employing ISO27001 to look at information security in an organization, and was one of the reasons he gave for wishing he could ‘tear the standard up.’

Organizational psychologists have identified this problem as a design flaw inherent in hierarchical systems, they have even given it a name: ‘hierarchical incompetence.’  The organization is made ‘incompetent’ due to the very existence of the hierarchy and the distorted information flows that structure creates.

Before the Internet age, Information theorists looking into this problem talking about the need to create what they called ‘Information Routing Groups’  (IRGs.) They anticipated the need for mechanisms to by-pass hierarchical chain-of-command information flows so that those in the organization who needed to get information were more likely to get it unfiltered, instead of not getting it at all through the hierarchy.

The current problems for big-media, most starkly brought into focus by the problems at New International, and the closing of the News of the World, the Newspaper which had the widest circulation in the UK, provides an interesting parallel.  The problems created by a small number of mass-media outlets, increasingly in the hands of fewer and fewer people, in themselves mirror the problems of hierarchical incompetence, but written on a much larger canvas.  We as the readers or consumers of that information are much less likely to get to read, see, or hear the information we need to.

This would all be a very negative picture if it were not for the Internet, which is delivering a multiplicity of sources of news, and paints a much more varied and chaotic picture.  This brings me to why I think boards not really knowing what is going on in their organization in the Internet age could really be thought of as inexcusable, and what they can do about it.

The so-called Web2.0 view of the Internet as a participative network, where its users are contributors and not merely consumers or passive recipients is, for an increasing number of us, a feature of our daily lives.  It has, for example, been a long time since I have seen a mobile phone ad refer to the ability to make telephone calls.  All of the features which are used to sell mobiles now are web2.0/social features, some phones even have a Facebook ‘Like’ button, built in to the handset.

These Internet technologies have revolutionized the way people communicate and collaborate around their family and social life, around their education, and are increasingly having the same impact on people’s working life.

Almost any organization beyond a certain size will have employed some means to measure the ‘engagement’ of the people working within it. In a pre-web2.0 world, this was likely to be some variant of an annual staff survey, asking a set of carefully designed questions, which surely convinces no-one (even the leadership) that the leadership of an organization really cares about what they think.

But increasingly, smart organizations are using the power of web2.0 to be able to gauge what people are thinking and feeling, and understand what the topics are that they care about right now are, and not annually distorted through a set of narrow questions the results of which can take months to process, by which time, they are even more meaningless than when the questions were asked.

In the same way that people are increasingly finding out the news first, and unfiltered, on social channels such as Twitter or Google+ (as people were earlier this year with the Norwegian massacre) so, by making technologies, such as the Elgg free and open source Social Networking platform, and encouraging and promoting its use in the workplace in support of a culture of complete openness, the people who need to know are much less-likely not to know.

So, (without giving too much away) just as the film ends with the Unknown becoming known, with the judicious deployment of Web2.0 technologies, there will be fewer unknown knowns within the organization, and that will be much to the benefit of organizations of every size.