The high cost of accurate knowledge

In the complex world in which most business leaders operate, information about the environment, though abundant, is seldom obvious in its implications. Thus, executives do no have any choice but to interpret and intuit the data they receive. Against this background, there is a debate of which is right, accuracy or interpretation. This paper presents research that casts much-needed empirical light on the debate. Findings and case studies suggest how accurate senior executives are about their competitive environments can indeed be less important for strategy and corresponding organizational changes than the way in which they interpret the information about their environments. This, in turn suggests that investments in shaping those interpretations may create a more durable competitive advantage than investments in obtaining and organizing more information.