A group of researchers in British Columbia, Canada, wanted family physicians to adopt a medical intervention that reduced frailty in senior citizens.^[1] A scientific study concluded that the intervention resulted in a significant delay in the onset of, and in some cases reversed, frailty. The researchers had evidence–they knew their methods worked.

There existed no fee code, however, that doctors could use to bill for the medical intervention. After a quick financial analysis, most physicians concluded they would lose money if they adopted this program. They knew performing the intervention risked making their practice financially unviable.

Through scientific research, doctors knew how to delay frailty. Through economic analysis, they knew they were unable to adopt these research findings.

Knowledge is required, but insufficient for wisdom. What, however, is knowledge? How do we come to know something? What happens when different ways of understanding lead to conflict, as the above example demonstrates? Whose knowledge is relevant for a given situation? Can we ever know enough to eliminate uncertainty?

This chapter answers these questions by presenting an exploration of rationality. It first defines what rationality is, and then gives a framework through which to understand it. It will then explore the concept of practical reason and discuss the power of blending different forms of rationality to solve hard problems. It then closes with a discussion on why knowledge is required but insufficient for wise action.

Let’s start by establishing what rationality is.

What is Rationality?

Knowledge is knowing how and knowing about.^[2][3] We gain knowledge by applying various forms of rationality. We use rationality to measure and analyze our environment,^[4] and then to justify our actions.^[5] More than this, rationality is the basis of social interactions, for we expect people to behave reasonably.^[6][7] We expect the same from organizations and the managers who run them.^[8][9][10]

As the previous chapter on values discussed, Western education is founded on principles of instrumental-rationality.^[11] We subsequently believe rationality is the logical process through which we learn objective truths. In the above example, however, researchers used rationality to justify why physicians should adopt their medical innovation. Physicians, however, used rationality to justify why they chose not to. Where, then, is the objective truth?

Rationality takes many forms. Some of these forms do indeed aspire to apply logical processes to uncover objective truths, though others rely on different approaches. Because the world is complicated, we need many tools to navigate its complexities. The multiple forms rationality takes are the tools we have at our disposal to make sense of a messy world. The next section introduces these varied forms.

Forms of Rationality

Rationality has been the subject of philosophical discussion for a long time. Consequently, many thinkers have written extensively on the subject. This section presents a framework of rationality developed by Barbara Townley.^[12] Her work mostly draws from the work of Western philosophers. Other cultures have their own traditions of rationality. Additionally, her work focused on rationality as expressed in organizations, which may not apply to all facets of human activity.

This textbook’s reliance on Dr. Townley’s work does not imply that her perspectives on rationality are right and others wrong. This textbook focuses on her framework for its focus on rationality as it operates in organizations as well as its utility in categorizing different forms of rationality succinctly. You may find other frameworks of rationality better meet your needs. The purpose of this section is not to present the “right” way to understand rationality. Instead, it seeks to start a discussion on the varied forms rationality may take.

Dr. Townley described three faces of rationality that the following sections will describe: disembedded, embedded, and embodied. Disembedded rationalities presume that truth is separate (or disembedded) from human activity. That is, the truth is “out there,” and through the application of objective analyses, we can learn what those truths are. Conversely, the view that people embed truth in a specific social context is the basis of embedded rationalities. To learn what is rational, individuals must seek to understand the social environment in which they operate. Embodied rationalities argue that it is through our bodies that we experience the world. Thus, understanding the world requires that we interpret our visceral, lived experiences. After exploring these three faces of rationality, Dr. Townley then explored collective rationality, which describes how rationality operates in group settings. She then finished her framework with thoughts on how societies can develop practical reason, which combines multiple forms of rationality to create deep, rich understandings of the world.^[13]

The following sections dive deeper into the faces of rationality Dr. Townley presented.

Disembedded Rationality

Disembedded rationality refers to objective knowledge. ‘Objective’ knowledge refers to truths that remain true regardless of human activity. For example, the force of gravity pulls two pieces of matter together according to a set of laws. Those laws exist separate from human activity. They operate whether we know about them or not, and they remain unchanged regardless of our actions.

Disembedded rationality takes three forms: economic, technocratic, and bureaucratic.

Economic Rationality

Economic rationality is a means through which individuals make utility-maximizing decisions (that is, getting the most value for the fewest resources). Current management thinking views organizations as utility-maximizing entities. In other words, people create organizations for a purpose (the utility they provide), and the objective of the organization is to fulfill that purpose for the least amount of resources. Economic rationality, thus, is a dominant approach in modern business thinking.

Technocratic Rationality

Technocratic rationality assumes the world (including humans) operates according to objective, natural laws. Through the application of the scientific method, practitioners gain an understanding of these objective natural laws, which in turn allows them to optimize systems of human activity. Those who rely on this form of rationality see organizations as means-end structures (that is, organizations exist to use certain methods to achieve a defined objective). Through scientific study, we can optimize the means through which organizations achieve their ends.

Bureaucratic Rationality

Bureaucratic rationality controls how individuals in organizations perform activities by defining and controlling knowledge through the following methods.

1. Documentation: Bureaucracies use documents to classify and define objects, activities, and people (e.g. job descriptions, employment contracts)
2. Boundaries: Bureaucracies define boundaries that classify who is responsible for which activity (e.g., finance department approves spending, teachers administer classroom lectures)
3. Rules: Bureaucracies use rules to guide behavior and reduce the unpredictability of human discretion (e.g., sales associates must reply to customer e-mails within twenty-four hours)
4. Processes: Bureaucracies use processes to standardize how individuals perform activities (e.g., the process of taking an order at a coffee shop)
5. Procedures & roles: Bureaucracies use procedures and roles to eliminate unpredictability by defining discrete roles within the organization responsible for different procedures (e.g., the Vice President of Marketing is responsible for overseeing all the company’s marketing activities).

It is through bureaucratic rationality that individuals understand how an organization operates and how to get things done in that organization.

Thinking of bureaucracies as a type of rationality is counter-intuitive for many. Let’s look at an example to see how this works in practice.

Embedded Rationality

Embedded rationality recognizes that what is rational depends on the social context in which you operate. For example, a friend saying, “You’re fired,” when you bring the wrong potato chips to a party means something different than when your boss says it at work. Embedded rationality takes three forms: institutional, contextual (cultural), and situational.

Institutional Rationality

There exist within society many spheres of activity, such as government, church, law, banking, healthcare, and so on. What individuals consider rational varies from one sphere of activity to another. Institutional rationality governs what is rational within a sphere of human activity.

Individuals may face multiple institutional rationalities as they go about their day. For example, someone may go from their work at a bank to a medical appointment at a doctor’s office during their lunch break. They then follow this by attending a meeting with the Parent-Teacher Association at their child’s school that evening.

The actions seen as ‘rational’ differ in each of these spheres. You may entrust your banker with tens-of-thousands of dollars, but not your doctor. You may share with your doctor deeply personal aspects of your body, but you would never share those details with your child’s teacher. Each sphere determines what its desired ends are and the appropriate means to achieve those ends. To operate effectively, an individual must adapt to each of these rationalities as they move from one sphere to the next.

Contextual (Cultural) Rationality

Contextual (cultural) rationality presumes that what is rational can only be determined from within the social context (that is, culture) in which it occurs. Members of a culture share values and beliefs. It is a community–what people hold in common. Cultures exist across national and ethnic lines. They also exist within organizations, occupations, and neighborhoods. Any collective of human activity will form a unique culture over time. Through their shared values and beliefs, cultures become a means of coordinating activity. Members of a culture expect other members to act in certain ways and maintain specific attitudes. Thus, one can only determine what is rational from within a cultural framework.

Situational Rationality

Situational rationality occurs when we assign reasons to other people’s actions in an attempt to make those actions understandable. Generally, we believe that people will act rationally. Thus, whenever we witness a person doing something, we develop reasons that explain their action. For example, we might see someone give another person money. We immediately start to think of reasons why. Perhaps the first person is paying off a loan from the second. Maybe the first person recently bought something from the second and is now paying for it. Perhaps the second person is homeless, and the first is giving them money out of charity. We assign a reason to other people’s actions that render those actions rational.

We do not come up with our reasons for others’ actions randomly but rather through two sources. The first source of our explanations come from everyday knowledge. We gain everyday knowledge through our experiences, which we then use to judge what is probable in a given circumstance. For example, consider if the person giving money was well dressed, while the person receiving payment was sitting on the street wearing ragged clothing. Based on most people’s experience with the homeless problem, you might conclude that what you are observing is someone giving money to a homeless person.

The second source of our explanations come from common sense. Common sense is the unexamined assumptions we gain through our experiences. For example, if we see a person sitting on the street wearing ragged clothes and begging for change, common sense leads us to believe they are homeless.

Embodied Rationality

The previous two forms of rationality, disembedded and embedded, perceive rationality as separate from the self. Disembedded rationalities seek objective truths, whereas embedded rationalities depend on the social context. Embodied rationality, conversely, is derived from the self. This form of rationality argues we experience reality through our bodies. We perceive reality with our senses and process this sensory input with our brain. Our knowledge of the world, therefore, is the product of this bodily experience. There are three forms of embodied rationality: body, emotions, and ‘irrational’ subconscious.

Body Rationality

Body rationality argues that we gain knowledge through our senses. Experience gained through our senses forms the basis of intuition, which is a fast-act of logical reasoning. It is our intuition that allows us to act in complex situations when we lack the time or data needed to process our options formally. You may also hear people calling it ‘instinct’ or ‘gut feeling.’ Whatever you call it, body rationality is a form of reasoning we are often unable to put into words. It guides us when we must navigate dynamic and difficult situations.

Emotional Rationality

Can emotions be rational? The instrumental-rationality dominating our society presumes that whereas the mind is rational, our passions are not. Yet, inappropriate emotional responses to a situation–say, screaming in terror in a coffee shop–demand explanation. We judge whether a person’s emotional response is reasonable for the situation. If it is not, we accuse the person of acting ‘irrationally.’

Our emotions are a form of social communication. Through emotional rationality, we communicate what we feel to everyone in our social environment. Observers use our emotional cues to assess our state of wellbeing. They also use it to assess the status of the group. A scream of terror indicates the group is in danger; everyone shifts to high alert. Laughter suggests the group is safe, and so we can relax.

Our emotions are also a form of internal communication. They drive us to action and inform us of our preferences. Our emotions show us what ends we desire and the means we are willing to use to achieve them–they, in short, inform us of our values.

The ‘Irrational’ Subconscious

The 'irrational' subconscious is our psychological rather than objective reality. It is our response to situations that we have difficulty justifying. Our reaction to circumstances is not only based on objective reality, but a lifetime of experiences that unconsciously influences our response. In organizational contexts, the ‘irrational’ subconscious manifests as corporate myths, unquestioned assumptions, belief systems, and rituals.

Collective Rationality

Disembedded, embedded, and embodied rationalities describe individual forms of rationality. Let’s explore how groups act to understand the world and make decisions. Collective rationality takes two forms: collective action and collective reasoning.

Collective Action

Collective action occurs when individuals make self-interested choices that add to other people’s decisions to result in group action. For example, let’s say we had three companies that produced soap in a city. Company A decided to invest in eco-friendly technology. As a consequence, it reduced its annual output of carbon dioxide by one tonne. Company B decided to make the same investment, reducing its carbon dioxide output by one tonne also. Company C, however, was uninterested in reducing its carbon footprint and refrained from making the same investment. Collectively, all three companies reduced carbon dioxide emissions by two tonnes. Rather than coordinate activity, each company made their choice independently. The collective action was the total of all those individual choices.

Collective action is based on two assumptions. First, individuals make choices in their self-interest. Second, if a person belongs to a group, and their fortunes rise and fall with that of the group, then they will make individual choices that are in the group’s best interest.

Though there are many situations where those assumptions hold, there are many circumstances where they fall apart. Examples of these circumstances include the Prisoner’s Dilemma, Tragedy of the Commons, and Arrow’s Impossibility Theorem. The following example explores the Tragedy of the Commons.

Collective Reasoning

Collective reasoning is a form of rationality where individuals put forth ideas for public debate. It is a deliberative democracy. Proponents of an idea put forth arguments. Individuals within the group debate these arguments. As this process progresses, the group discards weak ideas and strengthens good ones until they agree on a course of action.

The collective process of deliberative democracy often leads to better decisions. This process, however, can be challenging to implement in businesses because businesses are not democracies–they are private property. Individual rationalities tend to dominate in private property (that is, owners make decisions; employees carry them out).

Practical Reason

Dr. Townley argued that an exclusive focus on one type of rationality often leads to irrational results.^[15] For example, many businesses use performance metrics to measure employee competence and promote desired behaviors. By their nature, performance metrics rely on either technocratic rationality or economic rationality. If implemented poorly, this reliance on minimal forms of rationality leads to problems. These problems include degradation of communication and trust between individuals, overcompensation of some people, under-compensation of others, lying, bullying, and managing the appearance of performance rather than improving actual performance.^[16]

Moreover, each form of rationality has strengths to understand certain facets of the world but is blind to others. For example, let’s return to the researchers developing an intervention that delays frailty in the elderly from the start of this chapter. Science (technocratic rationality) showed how to delay frailty. It was, however, blind to the fact that implementing the procedures was financially unviable (economic rationality). If the researchers want to resolve this challenge, they will require additional forms of rationality.

Bureaucratic rationality governs the process through which the government assigns billing codes. Thus, if the researchers wish to create a new billing code, they must learn this bureaucratic rationality. Additionally, the government is a sphere of society that is different from a healthcare environment. Thus, the researchers must familiarize themselves with the government’s institutional rationality.

Furthermore, government departments will need to approve the creation of this billing code. These departments decide what to support based on their values and beliefs. To obtain these departments’ approval, researchers must understand those values and beliefs. In other words, they must learn the contextual (cultural) rationality governing those departments. Doing this well will require emotional and social intelligence on behalf of the researchers, which they develop through their body and emotional rationality.

Gaining mastery of all these needed rationalities requires practical reason. Practical reason is the process of blending multiple rationalities to generate effective solutions to challenging problems. Through blending rationalities, we gain a fuller picture of the world facing us while deepening the arsenal of tools we can use to overcome challenges.

How Do We Blend Rationalities?

The first step to blending rationalities is to recognize that rationality takes multiple forms. Further to that, realize that each type of rationality has the power to see certain aspects while being limited in other areas.

Blending rationalities also requires us to recognize our limits. For small problems, we may have the capacity to blend multiple rationalities on our own. As the complexity of the problem increases, however, it can quickly outstrip our capacity. Furthermore, our job training tends to develop one form of rationality over others. Science training promotes technocratic rationality, business training fosters economic rationality, and so on. This focus leads to the creation of expertise but leaves us weak in other areas.

In these situations, collective reasoning is a helpful tool.^[17] Find willing partners with different backgrounds, bring them together, present the problem, and allow them to deliberate on solutions.

We further need to recognize the knowledge we do have is often flawed or incomplete.^[18] Combining the knowledge of many through collective reasoning may help us close the gaps in our understanding, but some holes will always remain. Thus, an essential aspect of blending rationality is to apply solutions cautiously and with a spirit of experimentation. As the situation progresses, collect more information, use different rationalities to understand what is happening, and modify your approach appropriately.

Knowledge is Required But Insufficient for Wise Action

There are several reasons this is true. As shown above, rationality takes many forms. Though each type allows us to see a different aspect of our world, they have blind spots. Try as we might, we are not omniscient. There are always limits to our knowledge. We can use practical reason to build a rich picture of how to achieve a goal, but even then, there will still be things of which we lack knowledge. We must progress with a spirit of experimentation and a willingness to learn and course-correct along the way.

Importantly, though we use knowledge and rationality to figure out how to do something, they do not tell us what is worth doing. For that, we need values. As discussed in the previous chapter, values tell us what ends are worth pursuing and what means are appropriate to achieve those ends. Rationality, conversely, helps us understand our operating environment and develop techniques to perform tasks and resolve problems. If values tell us what to achieve, rationality tells us how to obtain it.

This is an important distinction that people often forget. In healthcare, for example, one side might argue, “The science shows this is is how we delay frailty” (technocratic rationality). The other side argues, “This financial analysis shows we cannot afford it” (economic rationality).

If you have worked in an organization, you know these types of debates could linger for months, even years. We may think this is a conflict between technocratic and economic rationality. My study says this; your study says that, so what should we do? The truth is, though, this is not a debate between rationalities, but between values. The real debate is this. Should we delay frailty (value=public interest) or maintain financial viability (value=sustainablility)? How can we achieve both values without sacrificing the other?

The solution to that debate will not come from presenting the results of your studies to the other side. To progress, both parties must first agree as to what values the organization should pursue and then use the relevant rationalities to chart a path to achieve those ends.

It is true, though, that sometimes rationalities do conflict. For example, a doctor may know a scientific study says they should treat a disease one way (technocratic rationality). When faced with the unique characteristics of a new patient, though, their intuition may tell them a different treatment is needed (body rationality). How do we resolve conflicts between rationalities? The answer is complicated. Future chapters in this textbook will address that question.

For now, we have explored values, which show us what is worth doing, and rationality, which informs us how to achieve it. We next need to understand how to turn these ideas into action. To create action, you must exercise power. The next chapter, therefore, explores the social structure of power.