The Dangers of Received Wisdom
Received Wisdom - exercise care!
Received wisdom:- knowledge or information that people generally believe is true, although in fact it is often false knowledge or information that people generally believe is true, although in fact it is often false.
Over recent months I have, like many other people, been watching the crisis in Europe rumble along, lurching from one problem to the next. One number, which keeps coming up, is the 7% figure – the interest rate at which sovereign debt costs are said to become unaffordable. But what does this really mean? Is it 7% long-term average? Is it the point where all debt averages 7%, or is it a tipping point? After some research I can report that the definition is at best vague and at worst a completely arbitrary figure!
The real problem is that the press and commentators have picked up on this number and reported on it widely. For instance – Spain’s bond costs today exceeded the important 7% threshold – which bonds? How much in value? It has now got a momentum all of it’s own and I bet that very few, if any, of the people who quote it can really explain the background. It has become received wisdom.
People have a nasty habit of remembering numbers in isolation or remembering the number without understanding the context or background – this can be misleading. Once these numbers are embedded in your client’s or your customer’s minds you will have an uphill task to get them understand the wider issues.
When I worked at Westlands on the Apache contract we were asked for a very high level estimate for the costs of a support package. A colleague worked on the number and presented a very high level and very heavily caveated number to the MoD. Guess what? When the eventual contract costs came in at a substantially higher number , the MoD had forgotten the caveats, but remembered the number - it had become received wisdom as it was discussed by them and passed from one department to the next. We then had to spend weeks and weeks justifying the new, and far more logically costed price.
So, be very careful when you hear numbers – question their source and make absolutely sure that they have a firm foundation. Make sure that when you use numbers or quote prices and costs, that they are properly contextualized. If you are ever asked for a vague ‘guesstimate’ be very cautious. Quote too high and you might lose business, quote too low and you will find it difficult to apply the revised price.
Finally ask yourself how much of the information given to you as factual is actually received wisdom – it might be more than you thought!
Hawkmoor Associates Limited
This was posted in Bdaily's Members' News section by Phil Dibbs .
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