Knowledge versus Beliefs

Fellow colleague and VeraSage friend Brenda Richter recently attended our Everyday Ethics course in Woodland Hills, CA.

She showed me a memo written by the managing partner of a CPA firm in Seattle. This firm has been attempting to make the journey from Good to Great, as outlined in Jim Collins’ book of the same title.

I didn’t read anything in that book that said you should do useless tasks that don’t matter to knowledge workers; but I digress. From Brenda’s post, here’s the more egregious excerpts from the managing partner’s memo:

I expect that this report will lead to questions about time entry standards, especially with respect to non-billable time. After tax season, I expect to hold sessions for mentors and all team members aimed at consistency among time-keepers. In the meantime, continue to refer to the ‘ Non-Chargeable Codes’ memo from the billing clerk, and forward time-keeping questions directly to me, as it will help me compile a list I make sure to address.

As a final comment, I hope this doesn’t seem like a ‘big brother’ thing. This information has always been available, and I believe that making it more visible and regular will help the ‘disciplined people’, ‘disciplined thought’, and ‘disciplined action’ of the Good to Great journey be just that much easier to implement.

Wouldn’t you just love to see the “XYZ Non-Chargeable codes?”

Another colleague and friend of VeraSage, Mark Bailey—whose firm has trashed timesheets—has a wonderful series of blog posts on why he hates timesheets. His most recent post really said it well.

We at VeraSage are often said to be proselytizing a religion—one of Value Pricing and Trashing Timesheets. I’m guilty of using such religious terms myself. I need to stop.

VeraSage is not about religion; it is about empirical economic evidence of what works. I’ve been reading [Mortimer] Adler’s Philosophical Dictionary lately, and here’s his definition of the word “Belief“:

It stands for things affirmed that lie beyond all philosophical knowledge or opinion, as well as beyond science and history.

Such affirmations tend to be stronger and firmer convictions than the knowledge we have or the opinions we hold by empirical evidence and rational argument.

Read that second sentence again, this time very closely. He’s saying something very profound.

At the end of World War II, English writer and prominent socialist H.G. Wells wrote:

Human history becomes more and more a race between education and catastrophe.

Wells was a socialist who believed knowledge alone would create a more peaceful world.

But surely before they became the aggressors in World War II, the German people were among the best educated in the world—with their universities to become the model for America’s—and the Japanese among the most literate.

For as valuable as knowledge and education are, it is imperative to bear in mind that man is guided far more by his beliefs than his knowledge. How else does one begin to explain why people fly airplanes into buildings?

Recently, I’ve been crossing swords around the world with various consultants about the necessity of timesheets. They claim they are essential for measuring productivity, cost accounting, etc.

Yet, we have EMPIRICAL EVIDENCE that this is not so. Real live firms, made of up of flesh and blood human beings, performing advertising, IT consulting, accounting, law, consulting and other knowledge work, all without timesheets. More and more firms are joining them every single day.

Even when confronted with this evidence, many people still insist on believing timesheets are essential.

Ladies and Gentlemen, that is a religion.

If anyone in VeraSage is ever confronted with empirical evidence that his or her theories are wrong, I expect everyone of us to cower in the corner in utter fear. I also expect them to seek out the evidence, test it, see if it works.

If it does, they better change their beliefs. I wouldn’t ask the same about their religious faith.

Those tied to the status quo of timesheets and hourly billing are the real religious zealots. VeraSage is full of heretics, denouncing the existing orthodoxy.

It’s one thing for your religious beliefs to be inflexible and impervious to challenge. It’s quite another for your beliefs about the economics of human behavior, which should be based on observation and empiricism, to remain secluded from reality.

I’m not arguing that we don’t hold wrong beliefs in the area of economics. I’ve been wrong on many issues and have changed my mind when confronted with contradictory evidence.

It’s excusable to have wrong theories. What’s inexcusable is when the stay wrong.

The perpetuators of the status quo have a lot to answer for. It’s as if they were medical doctors still in denial of germ theory. Though they are not killing people with their beliefs, they are sup-optimally leading their knowledge workers, as well as destroying once nobel and proud professions with their religious-like dogma.

The physicist Max Planck wrote:

A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.

This statement has often been interpreted as “science progresses funeral by funeral.”

I’ve always considered this a rather pessimistic view of mankind’s progress, as if we had to line up our elders and shoot them to advance.

Yet, sometimes it seems so. How else do we account for all of the negative and obsolete beliefs most professionals possess—from hourly biling, a ruthless focus on efficiency, Frederick Taylorite thinking, and measuring for the sake of measuring, confusing cause and effect?

I do not have a conclusive answer to this question; but I do belief it is largely because we are guided far more by our beliefs than our knowledge; and since our beliefs are part of our theories of how the world works, we relinquish them only after some traumatic experience, or the difference between our beliefs and reality is simply to great to ignore—in other words, people change not when they see the light but rather when they feel the heat.

This is precisely why entrepreneurs are so essential to growth and wealth creation. Existing organizations that have done something well millions and millions of times are usually not the best vehicles to perform something new for the first time.

Jack Welch put it this way:

Change has no constituency.

Niccolo Machiavelli said it even better in The Prince:

Innovation makes enemies of all those who prospered under the old regime, and only lukewarm support is forthcoming from those who would prosper under the new.

John Perazzo, in his book The Myths That Divide Us, sums it up nicely:

It requires courage to cast the accumulated myths of a lifetime to the wind. Our natural desire for simplicity, certitude, and the approval of others occasionally causes us to defend even our most flawed worldviews as if our very lives depended on them. Dead belief systems are difficult to bury, for in doing so we enter a world we do not recognize; we watch the carefully crafted towers of our understanding crash down in ruins; and we lose an integral piece of the only reality we have known, reinforced and imprinted on our minds by a thousand voices, internal and external.

It’s tiring and nauseating to have to continue to debate people who are not just impervious to contrary evidence, but are also unaware that any exists at all.

The economist John Maynard Keynes said it well:

The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.

To which philosopher Bertrand Russell added:

The resistance to a new idea increases as the square of its importance.

So, to all those consultants I’ve crossed swords with over the necessity of timesheets (and some over cost-plus pricing), I’ll leave you with another thought from John Maynard Keynes:

When somebody persuades me that I am wrong, I change my mind. What do you do?

Are you leading your firm based on what you believe or on empirical evidence? It’s worth pondering.


  1. Two posts about killing the timesheet

    For those of you who say it can’t be done, here are two recent posts from VeraSage related firms

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