In my last post, I suggested that there are two primary types of knowledge needed to be successful in business (maybe any endeavor). The first is technical knowledge or the knowledge required to execute a skill. The second is theoretical knowledge or an understanding of how things work and/or how to think.
There is a third that is hinted at in Fayol’s point summarized in my last post. It is knowledge that informs what may happen in the future. It is somewhat comical that I didn’t include this in the last post because I believe it is the most critical knowledge for success within business.
This has been an area of investment for centuries. From Witzel’s A History of Management Thought:
Larger businesses like the Medici Bank had elaborate systems of couriers to enable information to be passed quickly from branch offices around Europe back to headquarters at Florence. In the sixteenth century the House of Fugger, based in Augsburg and like the Medici Bank engaged in a range of activities from mining to manufacturing and banking, also spent much time and effort on collecting information. One of the family, Philip Eduard Fugger, seems to have done this almost as a full-time job. He was responsible for the so-called Fugger Newsletters, a remarkable collection of digests of political and economic news gleaned from all around Europe and compiled in Augsburg for use by senior management.
These institutions operated in the Middle Ages, centuries before then, Sun Tzu, valued spies above all else for the information they provided, and today is no different. Microsoft, Amazon, and Google invest billions in the chase for cloud domination because the expected market is valued at $20 trillion. It is the knowledge about the future or the demand we can anticipate that fuels lucrative business investment.
I believe this knowledge is most important and it is also the most difficult to attain.
I believe correctly anticipating the future (which I know axioms and data suggest is impossible) is a combination of strong technical knowledge, knowledge of the past, an understanding of human behavior, and a deep connection into markets.
I suggested in my last post that my time spent acquiring knowledge should be two-thirds technical and one-third theoretical. I have to update that – one-half technical, one-third acquiring knowledge to anticipate demand, and one-sixth theoretical.