Wisdom at Work: Moving from Smart to Wise Leadership

Wisdom at Work: Moving from Smart to Wise Leadership                                  

Excerpted from the book From Smart to Wise: Acting and Leading with Wisdom             

By Prasad Kaipa and Navi Radjou

“The more flexible and dynamic your state of mind, the greater access you would enjoy to wisdom—and the more successful you will be in a complex business setting.”

“Smartness is grounded in application of intelligence for self interest while practical wisdom is grounded in taking ethical action for the larger good.”

Why do we need wisdom at work?

Complexity—magnified by globalization and information technology—is fundamentally changing the business context in which organizations operate. Such changes in business context intimidate most leaders who tend to respond to—or rather counter—these changes by reusing past success formulas. They get overwhelmed by complexity and hunker down and are unable to expose their vulnerability and ask for help: they prefer to fight or flee complexity rather than surrender to it—and learn from it. Current leadership approaches are no longer sufficient in today’s interconnected social networking era. We need an integral—or wise—leadership approach that embraces complexity—rather than shying away from it—and that gives leaders the flexibility and fluidity to think and find solutions. Let us explore specifically what new competencies leaders need to effectively cope with—and thrive in—complex settings. 

Soft skills and smart leaders

According to a 2004 survey done by Nigel Andrews and Laura Tyson[1], CEOs want to hire managers who not only boast strong functional skills but also soft skills—i.e., integrity, perseverance, intuition, passion, self-awareness, creativity, and desire to learn—which are often not given sufficient attention in management schools. In the complex global environment that we live in, these soft leadership skills are becoming paramount for success.

Unfortunately, in terms of knowledge, skills and attitude, there is growing gap between what will be demanded of future leaders to effectively navigate complexity and what business schools are teaching today. Take majority of current MBA programs: they continue to produce smart leaders. These smart leaders have highly developed analytical capabilities but have gaps in soft skills profile. They are like athletes who over-exercise specific muscles in their body, rather than developing their entire musculature. As a result of this skewed leadership education—which gets reinforced through early experiences in organizations—these smart leaders tend to: a) over-rely on analytical skills and logic—or smartness—to make rational decisions at the expense of intuition and empathy, which are becoming valuable leadership qualities in today’s unpredictable and interconnected global economy; b) focus, more often than not, primarily on optimizing shareholder value—and driving business growth—without sufficient consideration of other stakeholders and sustainability issues (business, environment and culture); c) excel at managing people and resources in organizations—but not at “leading from behind” and building grassroots coalitions (and ad-hoc networks) that embody the fluidity of social media networks.

But, this smart leadership model can’t fully equip leaders with the broad range of capabilities they need to cope with the challenges lying ahead in the global business environment. The need of the hour is for a well-rounded, holistic leadership model that can effectively help organizations navigate complexity. What the world desperately needs now is wise leadership.

Wise Leadership: Leading with Practical Wisdom

What is wise leadership? It consists in “playing in the middle of the court,” to quote Warren Buffett, and not too close to the boundary lines.[2] It is about cultivating a resting place within you, where you can introspect before arriving at your next decision. It is about anticipating and responding to external events pro-actively instead of reacting to them in a knee-jerk fashion. It is about setting high standards both for yourself and others and operating out of “values that create value” for your shareholders as well as the society at large. In an increasingly complex world, we need more wise leaders who can help navigate organizations through turbulent times. Leaders who can flex their state of mind gain access to something far more valuable—and rewarding—in today’s complex environment than smartness: wisdom.

What is wisdom? Wisdom a critical capacity that gives you the discernment to choose appropriate actions and make sound decisions in response to a swiftly changing external context. The more flexible and dynamic your state of mind, the greater access you would enjoy to wisdom—and the more successful you will be in a complex business setting.

There are many preconceived notions about wisdom—which we will address in this article. Here are ten popular “myths” about wisdom:

  1. Wisdom can only be discussed by wise people: Should a world class food critic or a ‘foodie’ be a world class cook? You can experience others wisdom and recognize wise leaders without being one. In fact, we encourage you to listen, discuss and read about wisdom and wise leaders and engage in learning best practices from them.
  2. Wisdom only comes with age/experience: Wisdom is perceived as good wine that matures well with age. While many wise people matured in age and experience before they were called wise, there are others who rapidly develop their wisdom at a young age and in a short time. Young entrepreneurs and executives—such as Mark Zuckerberg, founder of Facebook—have demonstrated wisdom by making some remarkable contributions to their organizations and societies.
  3. People are born with wisdom and wisdom cannot be developed: We have seen more examples of people who developed wisdom than being born with it.
  4. Wisdom is a luxury (because it takes time to develop) that we can’t afford in our busy work lives: We argue that the time taken for developing wisdom is mostly for getting rid of old habits and unlearning what is not wise!
  5. Wisdom is not practical: If there is one thing we learned about wisdom, it is pragmatic and grounded in action more than thought. While wisdom gives you long-term perspective it can also help you with your everyday decisions.
  6. Wise people are detached from society: Wisdom might be connected more closely with noble purpose and common good. That does not mean that wise people are detached. In fact, many wise leaders—such as Mahatma Gandhi and Martin Luther King—were actively engaged in the society that they helped transform for the better but they were detached from the fruits of their actions (i.e., they didn’t seek personal glory). As such, they practiced what one might call detached engagement.
  7. Wisdom cannot exist without spirituality: We have come across many wise people who are atheists, agnostics and have not had any spiritual grounding who rely on their “practical wisdom”—which Coleridge calls the “uncommon common sense”—to make farsighted decisions and take enlightened actions. We also noted that this “practical wisdom” gets enriched when informed and grounded in spirituality.
  8. Only a few “chosen” people have access to wisdom: While it appears that way because there are very few names that come to our mind when one is asked to identify wise leaders. Still, we found that all of can have access to wisdom within us—although many of us are unwilling to invest energy and time to discover and connect with our inner-wisdom.
  9. Smart people cannot be wise and wise people cannot be smart: Smartness and wisdom are not mutually exclusive. In fact, smart people can have a quicker access to wisdom if they put in the same intensity and energy that they invest in staying smart. Wisdom helps elevate smartness to the next level by enriching/fortifying it with valuable skills and attributes—such as context sensitivity, humility, openness, discernment, and commitment to action.
  10. Can everybody become wise? It is unlikely though hypothetically, it is possible. It is just like losing weight – everybody can by watching what they eat and doing appropriate exercise regularly—but most people don’t succeed or even if they do, they don’t sustain the weight loss. Let us explore what wisdom is in more detail.

Source of Wisdom

Wisdom has been a subject of study for philosophers for thousands of years. (Philosophy is, interestingly, defined as the “love of wisdom”.) In the West, Plato and Socrates are well known philosophers who explored the topic of wisdom while Confucius, Adi Sankara (founder of the Advaita (Non-dual) Vedanta school of philosophy), Vyasa (the author of Mahabharata—a Hindu epic that is the second longest in the world) are eminent minds who addressed the topic of wisdom in the East. For instance, the Greek Aristotelian tradition deems wisdom as the mother of all virtues—and Confucius had famously said: “By three methods, we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest.”

Likewise, wisdom has also been intimately connected with all major religions: Judaism, Hinduism, Buddhism, Christianity, Islam, and Taoism all refer to wisdom in more ways than one. When the religious perspectives (world view or dogma depending on whom you ask) translate into spiritual values and ethics (such as the Ten Commandments or Manu Dharma Shastra of Hindu religion) and personal daily practices (rituals, recommended behaviors), you have a structure for practicing religion. This religious wisdom is bounded by the religion’s worldview. For example, according to Hindu worldview, we have multiple lives and according to many other religions, we only have one life. Similarly, in one religion, heaven is the highest goal whereas for another religion, self-knowledge could be the highest goal. For a third religion, it could be removing suffering for all living beings. With such different worldviews, principles and practices sometimes we bump against the worldviews that prevent us from adopting wisdom principles and practices from different religions. For example, meditation or yoga could be a taboo for some religious followers even though they might offer practical help for their body or mind.

Spiritual wisdom has broader reach because practitioners might mix and match principles and practices from different traditions and work with wise teachers to help their journeys.

In this article, however, which is steeped in the business context, we will be covering what we call practical wisdom.

Practical Wisdom

Aristotle called practical wisdom Phronesis—and differentiated it from the philosophical wisdom, which he called Sophia.[3] Aristotle, in his book Nicomachean Ethics, describes phronesis as “figuring out the right way to do the right thing in a particular circumstance, with a particular person at a particular time.” While Aristotle identified many virtues like loyalty, self-control, courage, fairness, generosity, perseverance, integrity, kindness, truthfulness, the master virtue (arête) was practical wisdom.[4]

Practical wisdom, according to Nonaka and Takeuchi, Japanese concept of toku—a virtue that leads a person to pursue the common good and moral excellence as a way of life.[5] In Hindu tradition, this practical wisdom could be equated to, in Sanskrit, yukta-ayukta vichakshana—which means having the intelligence to discern what is right and appropriate and what is wrong and inappropriate in taking action for the larger good. While knowledge is connected with static intellect (leading to smartness), wisdom is connected to dynamic intelligence (leading to context sensitivity). In other words, practical wisdom is about taking actions, making judgments (using discernment), and fulfilling a noble purpose (perspective). In Bhagavad Gita, a Hindu religious text is considered to be a book of practical wisdom for Hindus and wise leadership is meant to be balancing the extremes and acting from an equanimity state of mind.[6]

Through our research and consulting work, we have identified some key attributes of practical wisdom:

  • It is grounded in action and lived experience
  • It gives you context sensitivity—so you can make decisions with discernment and take “appropriate” action
  • It gives you the intuitive intelligence to modulate your responses dynamically to changing circumstances rather than reacting to circumstances in a knee-jerk fashion or “as per the book”
  • It is unique to you: you don’t learn about practical wisdom by reading about it in books or observing other leaders who embody and practice it. In fact, developing practical wisdom requires you to unlearn the conditioned responses and practice it using your own counter intuitive logic that you develop iteratively.
  • It can’t be gained overnight: you need to practice it diligently and with self-discipline.
  • It is about having a noble purpose and taking action for the larger good. Enlightened self-interest and self-less interest are sometimes guiding forces that help a leader develop practical wisdom.

At this stage, it’s worth briefly exploring the differences—and complementarity—between religious wisdom and practical wisdom. The causality of religious wisdom is top down: the religious perspective is objective and absolute and gives way to values and practices (rituals) that are consistent with the absolute perspective. The religious perspective is objective and immutable. On the other hand, the causality of practical wisdom is bottom up – when personal experiences and individual actions are observed consciously one recognizes patterns and derive guiding principles empirically. When these principles and experiences are interpreted and discernment is applied, one could evolve a new worldview (Figure 2). This worldview is context-sensitive and subjective and after testing it over time and experiencing success with it, it evolves into a wisdom logic.

It’s important to clarify that religious wisdom and practical wisdom are not contradictory in essence. Indeed, there are values and principles that are common and shared across all religions and are universally applicable. The wisdom gained by practicing those universal values without being limited by the absolute perspective of any individual religion could be called spiritual wisdom.

Practical wisdom aligns, when matured, with spiritual wisdom. Practical wisdom begins subjectively with personal benefit as the driving force whereas spiritual wisdom begins objectively with common good as the driving force. Values serve as the bridge between the spiritual wisdom and practical wisdom (Figure 2).


As a smart leader, once you let practical wisdom guide your actions, you will begin to appreciate the different states of mind that help you deal with complexity. You will learn to flex your “wisdom muscle”—rather than being stuck in the smart leadership mode all the time.

Wise Leadership: The Antidote to Complexity

Smartness is grounded in application of intelligence for self interest while practical wisdom is grounded in taking ethical action for the larger good. When you become sensitive to the changing context, you begin to see that smartness has multiple shades and two extreme positions of smartness represent two significantly different contexts – functional knowledge and expertise (functional smartness) and business knowledge and expertise (business smartness). Practical wisdom is being able to take advantage of the entire spectrum of smartness from functional end to business end. Instead of being stuck in one kind of smart leadership, you gain access to all of smartness and depending on the context, you bring forth appropriate intelligence with discernment to act and grow in practical wisdom.

By consciously cultivating and continually gaining access to practical wisdom, leaders will be able to better address complexity: they will be able to better exercise the leadership capability that is available to all of us. In our book, we highlight six key leadership capabilities that are critical to cope with complexity—and we describe and exemplify how leaders use these capabilities differently depending on the state of mind they are operating from — with wisdom or with smartness:

In particular, we will show how practical wisdom gives leaders the:

  • ability to gain unified perspective so they make the most out of diversity
  • humility and integrity to leverage interconnectivity more effectively
  • stability to deal with velocity
  • clarity to deal with ambiguity
  • resourceful creativity to deal with resource scarcity.

In that sense, wise leadership is leveraging smartness for the greater good through reflection, introspection and ethical clarity (in contrast with smart leadership, which is the application of smartness and action in service of personal gain.) The wisdom anchor helps us to shift focus from using our smartness for our own benefit with a zero sum mindset to using it for creating new value for a higher purpose. We can reach this middle ground between the smartness extremes through reflection and introspection, which are gateways to find ethical clarity.

In the context of complex world, the journey from smart to wise is the movement from a rational and logical way of focusing on what is tangible and personally beneficial, to finding an authentic way of paying attention to intangibles such as shared values and ethics for the greater good. Those intangibles allow us to avoid attachment to either edge, and build a capacity to leverage the entire spectrum of smartness. To ignore the intangibles is to miss the invisible middle, which leaves us stuck with one kind of smartness or the other, but without discovering the middle ground of wise leadership. The journey to wise leadership is not just about discovering the middle ground and staying there, but using that middle ground as an anchor or fulcrum to dynamically move between the two edges of the spectrum.


In this article, we made a case that existing models of leadership are insufficient for dealing with issues of complexity, globalization and technology in the world place. Religious wisdom approaches from faith-based traditions do not appeal to business leaders as much as practical wisdom approaches. We believe that wise leadership of 21st century will bridge the needs of today with values and practices of ancient wisdom and wisdom at work is the need of the hour.

[1] Andrews, N. and Tyson, L. D. “The Upwardly Global MBA.” strategy+business, Issue 36, Autumn 2004.

[2] How Warren Buffet’s protégé David Sokol lost his way Business Week, April 28, 2011 http://www.businessweek.com/magazine/content/11_19/b4227050988120.htm

[3] Aristole. Nicomachean Ethics. Book 6.

[4] Ibit, page 6. And Aristotle, Nicomachean Ethics translated by martin Oswald (1962)

[5] I. Nonaka and H. Takeuchi, “Big Idea: The Wise Leader” HBR May 2011

[6] Bhagavad Gita – chapter II:55-72. Meaning is loosely translated from Sanskrit text by the authors

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