Right knowledge is a watchdog to bright organisational ethics but many corporates scantly recognised that, writes Krishna Venkitachalam. And they had to bear the brunt

Melbourne: Managing right knowledge is relevant and critical to tomorrow's organisational existence. At the start of the new millennium, the corporate world witnessed major fiascos and ethical blunders. This resulted in major dissolution of several organisations - like that of Enron, Arthur Andersen, Ansett Airlines and WorldCom, to mention a few.

These organisations grew geometrically in early years of its operations. Knowledge was the key factor of productivity in the dominant years of its business. They operated their businesses and served their clients with right knowledge. Thus Enron, Arthur Andersen and so on developed a reputable brand, clientele and market share, and sustained them for many years to come.

Few years ago, the corporate environment experienced solvency of many organisations in various sectors. Among them, the Enron collapse was unexpected and unpredictable. Another example, that of the demise of Arthur Andersen, came as a bolt from the blue. The major cause was due to the concept of faulty knowledge practices.

Faulty knowledge is a term used when the employees of an organisation use their rich experience and knowledge to achieve aims of self-interest and personal priorities at their organisations' disposal. It is quite obvious that employees share information and knowledge within an organisation. But the question is that of right knowledge being shared or faulty knowledge that is transferred across the organisation. The answer lies with the attitudes of the people working for an organisation. If the staff has a hard corner towards one's own self interest or personal priorities, right knowledge is just a phrase and it is the faulty knowledge which will come into play.

This happened in these organisations, which existed like white elephants, but fell like ninepins. Communication and application of faulty knowledge resulted in these shocking failures. The reason for applying faulty knowledge is simple. Since it is the age of competition for information and knowledge, to make the maximum profit out of it, the application of human thinking got distracted and channelled into faulty routines of procedures and policies in doing business. The faulty use of knowledge made unethical practices of accounting records and reports of hyped financial statements.

To do this, still, knowledge is essential. But the tricky and faulty decision came from the top management and used the right knowledge of mind-boggling financials to convince and gain the trust among their subordinates, clients and shareholders, projecting efficient organisational performance, while the whole corruption process went on unabated. But they actually applied faulty knowledge to manipulate the accounting numbers to achieve goals of self-interest.

Whatever the nature of the corporate environment, had the top management covered the faulty knowledge practices and implicitly used it in day-to-day operations, the watchdog of right knowledge in the form of auditing authorities, corporate trade boards and security exchange authorities would have revealed the inherent faulty knowledge practices, which result in fall-outs.

Situations in which government officials get involved in corporate blunders (like in the cases of Unit Trust of India and the securities scam) either the competition itself or the power and value of right knowledge practices will explode out of such faulty contexts.

In conclusion, right knowledge should be practised, communicated and managed well within the firm and externally with its suppliers, customers and strategic partners, while keeping individual aims of self interests at bay.

(Venkitachalam is a PhD student at the University of Melbourne. The views expressed above are personal. He can be contacted at krish_venkit@yahoo.com)