Monopolies of Knowledge

Information Asymmetry (Part 3)

This article is part three of a series on information asymmetry. Here is part two, on moral hazard, and part one, on adverse selection.

Often there is some key person in a company that knows the secret inner workings of some system. Any time someone has a question or there is a problem with the system, they go to that person. No one else seems to have the requisite knowledge to fix this. Apart from the problem of the “bus factor” inherent in this situation, it represents a huge inefficiency, because everyone has to wait for this one person to handle these issues. 

Why would they be interested in maintaining the status quo? They may enjoy the feeling of power and status it gives them to be considered important. They may be making a rational calculation that this improves their “job security” or makes them harder to replace. Or, they may simply not know how to address the situation or feel like it’s not a good use of their time to do so. Most often it’s the latter case, but if they are willfully withholding information then that needs to be addressed explicitly.

This is an example of knowledge monopoly, which is a situation in which one person or a small group restricts access to information, often to acquire power or status. This information asymmetry results in inefficiency and poor decision-making because the people that could benefit from that information cannot access it. Not all restrictions of information are problematic, as long as they are spread among a wide-enough group who are willing to transmit them then no problem arises. Apart from the key person, I have encountered two other common situations of knowledge monopolies:

1. Access to company data or metrics is locked down. It is reasonable to do this, but if access is controlled too strictly it can cause issues. It shouldn’t be too difficult to get access given a reasonable purpose. Handling this by having some “blessed” person that will issue queries on behalf of someone else is very bad, it discourages use of data and creates opportunities for error and bias.

2. Access to decision making is gated. It may be that some company leader makes a decision, but rather than explaining or discussing it directly, it gets passed along through some gatekeepers (e.g., middle management). This can be problematic because those people seek to latch on to this pseudo-power–while they cannot make decisions themselves, by controlling how they distribute knowledge of them they gain some semblance of the power themselves. 

The right way to address knowledge monopolies depends on the exact motivations involved. For example, the “key person” may not be interested in sharing their knowledge merely because they don’t know they should or they don’t feel it’s a good use of their time. In that case we could incentivize and encourage them to take those actions, by making it clear that activities like writing documentation and training are valued. 

However, in cases in which people do it intentionally for motives like power, a different approach is needed. Company leaders should then actively work to stamp out these sorts of silos, so that knowledge can flow to where it is most effective. For example, having an automated process to gain access to key data, or having direct communication between leaders and employees can help to stamp out the two types of monopolies described above.

In general it’s always good to reflect upon any situation in which knowledge is controlled by a small group. Is this done for good reasons, such as maintaining privacy? Or is it merely a way for that group to increase their power and control?