The Fake Knowledge Society
How industries create complexity in order to sell simplicity
I come from a country known for its bureaucracy. Brazil is a country where opening a company takes on average 11 procedures and around 90 days of work. It ranks 124th in ease of doing business (sandwiched between Senegal and Paraguay).
Companies willing to pay correctly their taxes employ 100-people tax departments just to be sure that it is filed correctly. It is a country that has a whole industry dedicated to paper-pushing (called “cartórios”).
And another to speed up document issuing (called “despachantes”). It wasn’t long ago that the families running it were the richest ones in town. Nothing here is new — as many underdeveloped countries, the public sector creates difficulties to sell facilities. The gigantic amount of non-sense documents needed justifies the inflated number of employees. And the high budgets these offices boast.
The examples are everywhere. I was lucky enough to have graduated from a public Federal University. These Universities are known for their academic excellence and are accessible to only a small percentage of the population. Usually the same population that was already blessed with conditions to graduate a good high school.
The country recently had a big discussion on University funding and the government’s willingness to cut it. Still, the reality is that these institutions were never known for their fiscal rigor.
The University’s annual budget is 1.5 billion Brazilian Reais, higher than all the cities in the state apart from the two biggest ones. Money is not missing, using it wisely definitely is. Simple tasks that could be easily automated like getting a copy of your diploma can take several months.
These also demand in-person filing in the University’s offices instead of a simple online service. It is common to see a severely overstaffed library with employees doing menial jobs as scanning books. All this while providing poor service and enjoying job stability.
Employment stability is a mechanism that was created in Brazil to protect public servants from mass replacements during government changes. A new government means new friends and, thus, a new working body.
This mechanism was created with the best of intentions, but the consequence is the terrible quality of the service. It also lacks performance reviews or incentives to improve quality in many of its sectors. Career mobility is very low and employee engagement is non-existent.
Usually, the solution brought to light is to privatize the company or service. The understood concept is that with a capitalist behind pulling the strings, the efficiencies will come. Privatizing public companies usually sees a significant increase in efficiency, engagement, and profit.
The companies are forced to organize internally in order to turn the old buck. We argue that these companies should be serving the population instead of their shareholders. Yet, it is undeniable that the latter is a more empowered and organized body, pushing harder for performance.
We also may argue that we should aim to make the government a better owner than it is. Still, the reality is that countries like Brazil are light-years away from that reality. As corruption schemes pile on newspaper’s covers, the quality of service or employee engagement is ranked bottom at the country’s priorities.
As the shareholders get organized and start to crack the whip to increase profit, the inefficiencies get trimmed, the uninspiring get laid off, and the leeches get taken out. Good old capitalism finds its way to turn a dollar into two.
The issue lies that, same as public companies and services, private companies are suffering from their own type of paradox.
As the company grows in size and importance, it starts to become a hostage of its bureaucracy, redundant processes and useless complexity. In short, the business model that we currently see around us is that the companies create complexity to sell fake knowledge.
The reasons are many, but the biggest one is that there are too many players high in the hierarchy who benefit from this situation. And therefore strive to maintain the status quo. There are entire layers of management who don’t any value apart from being the “translators” of complexity.
They withhold the “fake knowledge”, the enigma machine to a corporate knowledge who benefits absolutely no-one but themselves.
You don’t need to look too far to see examples: industries like commodities trading created contracts and jargon so inaccessible that it forgets that it is selling some of the simplest products in the world. Glorified merchants behind their 12-screen Bloomberg terminals to hide that their biggest skill is knowing the Deputy Secretary at the USDA and getting that golden tip every once in a while.
While still searching for stakeholder value, these companies can hide a massive amount of inefficiency and a workforce doing nothing of value.
It is not only the “players” that are to blame. Companies make it easy, by investing more and more in creating their BS jargon and language. They proudly display it as a symbol of their culture, but what they do is to help out the fake knowledge society to thrive.
This gets worse then considered it is being helped by the fact the company is currently run by former members. It is borderline pathetic needing a dictionary to understand a Profit & Losses statement. These practices aim to build a culture, but what it does is alienate and make it hard for starters to be up-to-speed.
Promotions are based on how well analysts can navigate the twisted politics. How well they can understand the templates, language, ways of analysis. This all to produce a myriad of useless reports and internal PowerPoint slides. These in turn have no other reason to exist than to maintain people occupied and justify some mid-leadership roles.
Companies with simple businesses became “financial-driven”. Those became factories of graphs and unhelpful reports that thrive on creating an aura of “science” and “depth analysis”. Deep down it is the good old bullshit.
Terms like “POOMA” became business terms, with seemingly complex analysis being built out of assumptions “pulled out of my ass”. In the end, an uncanny waste of time of everyone involved.
This is vice from a system that praises “sounding technical” and places value on this. Public universities should be performing research to inform and develop the population, but its papers are purposefully written in complicated language.
This ultimately impairs its reach and accessibility. A researcher’s worth seems like its weighted in its capacity of using terminology that no one seems to understand. Law is another prime example, with the uncanny ability to make extremely simple things sound like rocket science. Lawyers take pride in using archaic terminology in texts and speeches.
It is quite infuriating to see a Supreme Justice making a speech that is of public interest in a language crafted to 60-year-old law professors. Professional jargon that, though offering the illusion of knowledge, is in reality the language of ignorance.
Finance and the Investment Banking industry also created a bizarre complexity in tasks like raising money through a Public Initial Offer. Things that have been around since the beginning of the century are not understood by the majority of the population nowadays. To justify their high salaries and vague roles, it is quite convenient to keep it that way.
An army of brilliant undergraduate students is hired every year to be glorified paper pushers and PowerPoint designers. Company valuations were created with an absurd level of complex language and calculations to hide the fact that they are produced based on “goal seek” and bullshit assumptions.
We became a society that praises and pays well what is the company equivalent of a storyteller producing its stories in Latin, papers that no one can understand except his fellow Latin speakers.
In recent times, with the advent of start-ups and their way to engage issues on a more “direct, no-bullshit” methodology, a great majority of the workforce became obsessed with making a change to what seems like “heaven” in terms of ways of working.
Start-ups did change the landscape and their “agile” way of executing and thinking most definitely can be mimicked (and a lot) by older more-traditional companies already ridden with the bureaucracy pest. The disregard for hierarchy, the feeling of being “changing the world”, there is no shortage of “sexy” on the growing tech sector.
Companies that were just recently being run in garages still have owners who saw their pet projects grow into the corporate mammoths they are today and are still able to identify and recognize the “fake knowledgization” of some of its aspects.
Even though the majority of start-ups were able to fend off the fake knowledge leeches and their bullshit approach, but they are not completely immune.
The biggest test you can do is just to take a look at some of these companies’ organizational chart (or hiring roles) and see the amount of vague sounding roles there are. Go one step further and ask an employee to explain it and watch as he stumbles. With titles that range from “Head of NextGen Strategy EMEA” to “VP.
Associate Finance Analyst” (which is an entry-level job), the vague titles hire entry-level roles which have no great addition to the company than to feed a system where bigger teams mean “more importance”, giving the middle-manager an incentive to hire what is essentially seat-fillers.
In the “new world order”, companies that will survive are the ones that identify and get rid of the “fake knowledge” pest. The ones that dedicate their time to making a simple, straight-to-the-point approach that is accessible to all layers in its organization.
It needs to come from the very top as, as mentioned before, middle-management has no incentives to destroy its own “business model” of importance and employment.
The fake knowledge feeds of a market loophole, where to justify many of the jobs and industries that leech out from the complexities the system creates, the high-ups in the system are the ones striving to maintain the status quo.
A working society where the career move “McKinsey consultant” to “CEO in a company hiring McKinsey” is completely normal, it is not hard to understand why the incentives are completely off.
Companies looking for efficiencies, cost-cutting, and adding value to shareholders, look no further: just take a good hard look at the redundant processes and information being generated every day. The comparable “privatization” step on public companies to private companies is simplification”.
Simplify the language, the processes, and trim the fat. If you make the specific company and industry knowledge straight to the point, your leadership team will focus on what matters: driving the informed people to the correct path, instead of retaining their little silos of fake knowledge.
Obsess about making every simple aspect as simple as possible and thrive on seeing how ideas will come from the places you least expect. It is a fact that the private sector is still the best ruler for shareholder value generation, but its efficiency is making it look more and more like my Public University.
There needs to be a movement to simplify things and fend off a cancer that increases turnover, as demotivates employees and destroys corporate culture. Or get ready to employ demotivated dinosaur in its ranks. Change comes from the top, but revolutions start from the bottom.