I Know What You Mean. And I Can't Do Anything About It.
By Michael Schrage

(FORTUNE Magazine) – Knowledge is power.

No, it's not. This deceitful truism is the Big Lie of the Information Age. For most people in most organizations, knowledge confers impotence, not power.

Why? Because more often than not, managers and employees are expressly forbidden from acting on what they know.

A warehouse employee can see on the intranet that a shipment is late but has no authority to accelerate its delivery. A project manager knows--and can mathematically demonstrate--that a seemingly minor spec change will bust both her budget and her schedule. The spec must be changed anyway. An airline reservations agent tells the Executive Platinum Premier frequent flier that first class appears wide open for an upgrade. However, the airline's "yield management" software won't permit any upgrades until just four hours before the flight, frequent flier (and reservationist) be damned.

In all these cases, the employee has access to valuable information. Each one possesses the "knowledge" to do the job better. But the knowledge and information are irrelevant and useless. Knowledge isn't power; the ability to act on knowledge is power.

Technology has skewed organizational priorities. Initiatives designed to make enterprises more "transparent" to customers and employees are doomed to create more frustration than satisfaction. The reason is cruelly obvious and obviously cruel: Managers confuse giving people timely information with providing people appropriate authority. The cliche is "empowerment"; the reality is "emasculation."

Anyone who has ever tried to buy or sell a stock online only to discover that the trade can't be executed because the system is frozen knows that feeling of furious despair. Systems that let people see information they cannot act on are little more than technological teases.

The clearest sign of poorly devised transparency? When employees consistently tell customers, I'll have to refer you to my supervisor. Not incidentally, the problems intensify when customers and clients can peer directly into processes with an eye toward making changes. If someone sees his package going astray on Amazon.com or Federal Express, he'll want to take corrective action immediately. To the extent that supply chains and "customer relationship" management systems encourage greater transparency, people will want to make changes that matter to them.

This is a natural human urge. If the folks in marketing have real-time access to R&D and manufacturing data, they're going to propose ideas that make the most of that information. If customers know their vendors' inventories are backing up, they're going to seek discounts. If frequent fliers learn that first class is wide open, they're going to demand upgrades. If they don't get what they want--and they'll "know" if they don't--they'll be angry.

This "you can look but you can't touch" transparency is nothing more than business voyeurism. Turning customers and employees into Peeping Toms and Peeping Tammies hardly represents a productive deployment of information technology. Organizations need to confront a heretical proposition: Maybe there is such a thing as too much transparency.

So is ignorance bliss? Are people simply better off not knowing? Not necessarily. But an objective review would confirm that most firms grossly overinvest in technologies that let people see what's going on and dramatically underinvest in delegation and true empowerment.

Indeed, a case could be made that a rise in transparency leads to a rise in recentralization. As top managers find it easier to see more and more of what's going on in their organizations, they further eradicate employee discretion rather than enlarge it. The more the boss knows, the more he wants to meddle. That's a natural human urge too.

There's an old medical joke that goes, "Internists know every- thing and do nothing; surgeons know nothing and do everything; pathologists know everything and do everything--but too late." Transparent organizations increasingly run the risk that top management will become executive pathologists, and customer service agents will become internists. If people can't do something either practical or productive with the information they can see, then organizations need to think twice before posting it.

That's not to say that enterprises should err on the side of concealing rather than revealing knowledge. But it is in everyone's best interest to be honest about the organizational reality that knowledge is seldom power. On the contrary, knowledge confirms the absence of meaningful power. Working with that proposition is the true challenge for those zealots who advocate "knowledge management."

MICHAEL SCHRAGE is co-director of MIT Media Lab's e-markets initiative and author of Serious Play. Reach him at michael_schrage@fortunemail.com.