As the attached picture points out, complexity offers a perspective shift.
Current management perspectives seek to shift organisations forward by seeking root causes to the problems they think are holding them back and fixing them. This is an optimal approach in a manufacturing environment. However, more economic activity is performed in services (my area of focus), where production and delivery occurs in the same (or nearly same) moment. This obscures root problems as they are often located at the level of people. So what can be done?
Once approach is for HR to be the psychology department; managing each person’s level of engagement, motivation, skill-alignment, and performance. But not only does this place a massive burden on HR (and I’ve met many exhausted ones over the last year!) it’s an impossible task. People have multiple identities they rapidly switch between. HR can never be certain which identity they’re dealing with and whether their interventions are sustainable.
Furthermore, how practical is a management strategy based on the idea that you can change people into what you want or need them to be? How many of you have had a personal relationship with someone who you wanted to change in some way? How did that work out?
The complexity perspective lets leaders move away from a purely ‘search and fix’ mentality and adopt an ‘explore and exploit’ approach as well. For in the deeply tangled web of the modern organisation problems and opportunities are part of the same complex day-to-day reality. So instead of trying to engineer your means of production (people), like manufacturers do to their machines, adopt the more human approach of a complexity mindset to work with people on discovering opportunities that impact throughout the organisation in sometimes surprising ways.
In other words, start working with how things really are, rather than how you’d like them to be.
But be warned: once you cross the complexity-Rubicon you don’t go back.
In a complex and crisis-ridden world ‘lessons of the past' are unreliable guides for future action. While ‘management by objectives’ doesn’t equip organisations with the agility or awareness to respond to emergent threats and opportunities. Yet, management thinking 1.0 and 2.0 still dominate organisations today.
1.0 Scientific Management - views the organisation as a machine and its people as component parts. Their work can be commanded and controlled through rigorous automation and focus on efficiency. The result are economies of scale that dominated management thinking for much of the 20th century.
2.0 Business Process Re-engineering - challenged the status quo, demonstrating that organisations could define future outcomes and goals, or values and behaviours for staff to adopt. While scalable information and communication technology could drive improved performance through metrics. This is the dominant management thinking of today.
Management 2.0 has a fundamental flaw - it sees the world as a predictable place
In 1994 Leading Change was published in which Prof. John Kotter highlighted a damning statistic: 70% of all change management programs fail. Yet, despite an assembly line of case studies and continuous BPR improvements in two decades since this figure hasn't improved. For organisations are collections of people and people are rarely interested in having change done to them. So faced with a need to 'adapt or die' business leaders today face a stark choice:
Find a way to do Management 2.0 better or find a more appropriate approach
Management 3.0 Sensemaking is a naturalised approach to leading in times of change. Rather than projecting an idealised future it seeks to understand and manage the evolutionary potential of the present. It puts people first - rather than processes - and taps into mass collaboration to bring the collective intelligence of the entire organisation (and beyond) into play. In short, management 3.0 replicates how the human brain - the most effective adaptive tool in the world - works rather than imitating the machines it creates.
Management 3.0 is already here and it will favour those quickest to adapt.
Faced with uncertainty leaders, especially ones far away in head offices, respond with increased control: alignment is sought, standards are mandated, discretionary spending slashed, and variation from pre-planned budget must be explained. The result - too often - is an organisation in the periphery that is more brittle and clumsy; unable to respond as fast as rivals to emerging opportunities, harming its capacity to survive and thrive in challenging times.
Despite having 21st century tools, management mindsets are stuck in the 20th century. Economies of scale and scope, effectiveness through efficiency, and survival of the fittest dominate. But even a cursory glance at any ecosystem (a natural or manmade one - like an economy) shows that it’s not the fittest that prosper but the ones best able to adapt to local conditions. This explains why giant tortoises have prospered for millions of years (an ability to adapt to a changing environment - not because they are a master race) or why Nokia and RIM didn’t, despite being market leaders.
Centralised decision-making - the 'head office head lock' - makes succeeding on the front line harder
For a century management thinking has been shaped by the metaphor of ‘the organisation as machine’ with the fastest and most efficient best placed to succeed. Aspirational targets are imposed, performance tolerances (KPIs) established, processes re-engineered for optimisation, and the people (the cogs) aligned. But when driving a speed boat in a storm the sea usually wins. Reaching safe harbour requires a ship for all seasons, but this would be a major feat of engineering - and prohibitively expensive in this climate. Yet there is a natural, cheaper alternative.
An organisation, like any organic group (e.g. a bee hive, a human brain, a stock market, the global economy) is a complex adaptive system (CAS). This means it has an inbuilt capacity to adapt intelligently to change at high speed (think about brain functionality, or sudden shifts in stock prices in response to good/bad news). It’s change management without the coercion and resistance.
A CAS is best understood in three parts (see the picture above):
The major insight here is that increased organisational variation (loosely-coupled alignment) improves the range of locally appropriate options leaders can select from to respond to unpredictable circumstances
Like human consciousness, each organisation has it’s own higher system (it’s culture, or health) that enables it to rapidly and appropriately respond to local circumstances. And just as attempts to re-engineer a brain would destroy its consciousness, head office attempts to engineer local organisational capacity from afar risks retarding local capability to better adapt to local circumstances than rivals - something needed now more than ever.
It’s time to stop engineering organisations and start cultivating them instead.
#SmarterOrganisations #OrganisationalHealth #ThinkTankNetworks #ExaptiveStrategy
Current business conditions in Russia are highly uncertain. Will things get better, or significantly worse first? Answers are hard to find, but they do exist - if you know where to look. For, in the same way blood flows through veins and oil through pipelines, critical knowledge flows through organisations. Tapping into these flows can make known what is currently unknown.
Given enough eyeballs, all bugs are shallow.
If you knew what every person connected to your organisation knew (management, staff, customers, suppliers) in one moment, you would have a rich and accurate picture of the current reality. And like a chess grandmaster you could see the truth of your current position; enabling you to strengthen where you are weakest and capitalise where you are strongest. Such knowledge is created and transmitted daily through tightly coupled human networks. The mechanism is the act of conversation, or the sharing of thousands of open-ended narratives (micro-stories without a beginning, middle or an end). For we humans evolved socially, learning from each other networks - clans, tribes, communities and now organisations - making us hard-wired to create and share 'critical to survival knowledge' on a daily basis.
Narratives are vehicles for sharing what we know and having our assumptions or insights confirmed, challenged or augmented. This is the process by which new knowledge is created and then transmitted. We do this not to populate the knowledge management systems our organisations have invested in (!) but as part of an on-going, natural process to make sense of the uncertain world around us so we can act better in it. Narratives take many forms: from the fairy tales we share with our children to educate them about the world, to the fragmented micro-stories we share with each other around the water-cooler, coffee machine or in break-out rooms at conferences that reveal and confirm what we must do round here to survive and thrive. If you want to learn about an organisation, listen to the stories being told.
The value of narratives is they reveal the context of what is happening. Multiple narratives, properly presented, can describe the world as it currently is; with all its various opportunities and threats. So, can organisational leaders who tap into these knowledge flows find powerful, (sunken-cost) assets to navigate the uncertain environments their organisations operate in?
Making sense of the uncertain
Today's business environment is uncertain because the world is changing rapidly in unpredictable ways. We know that building on shifting sands creates a fragile structure, but it should also be self-evident that ‘engineering’ idealised outcomes in an uncertain world increases organisational fragility when the future doesn't play out the way you hoped.
Nature evolves through 'listening' intently to the signals of change, however weak, and adapting. And it is far better for leaders to manage emerging beneficial patterns in their organisations rather than attempting to engineer idealistic outcomes. This requires decision makers ‘see the world’ through the eyes of their customers, staff, or citizens to build a picture of certainty - what's happening right now - rather than what might happen - and acting on those insights. Listening intently to the narratives may be the only way leaders - especially in Russia today - can navigate uncertainty, protect against emerging threats and discover the opportunities inherent in our uncertain world.
For more information about how to tap the knowledge flows in your organisation contact email@example.com
Leaders have a unique challenge in the 21st century. The ecosystems (the countries, markets and industries) their organisations operate in are increasingly volatile, uncertain, complex and ambiguous. And missing critical signals amongst the increased noise risks exacerbating existing fault lines in their organisation. What should leaders do?
Subject matter experts solve complicated issues at functional levels. But complex questions (e.g. top line growth, corporate culture, change or risk management) cut across specialised silos. Complexity therefore is always escalated up; making managing complexity the key strategic challenge for executives in the 21st century.
Yet complexity remains widely misunderstood; described as something ‘very complicated’ or confused with chaos theory. Complexity science itself ascribes distinct characteristics (non-linearity, emergence, unpredictability) that render traditional 'solutions' (e.g. best practice, ideal leadership styles) entirely context dependent.
To face a complex issue means to deal with a ‘brownfield’ context - never a ‘greenfield’. Complexity is located in the system (e.g. the organisation, market, population) and always has a history, yet is constantly evolving. And as we engage with it, it changes - often in unpredictable ways. This is why answers in a complex system often appear only in hindsight - though this doesn't lead to foresight (e.g. it seems obvious now that sub-prime mortgages were a bad idea, but likewise, today's Quantitative Easing is variously described as the only thing saving the global economy or creating an even bigger future crash. Only time will tell).
In a complex world context is king.
Idealised futures are an illusion - as are strategies based on certainties designed to get you there. The collapse of Michael Porter’s Monitor Group in 2012 showed that while rigorous strategic analysis can help explain how excess profits were created in the past, it's a poor predictor of how to generate them in the future. Even the best formal strategising can trap leaders into believing the future will be an extension of the past. But if the future fails to conform to expectations we are left naked and fragile, exposed to the elements.
Like King Canut ordering back the tide, we discover powerful natural forces defy command and control.
Yet, the natural world itself - of which man is a part - has adapted wonderfully to exploit complexity. Evolution works through a process of increasing variation (of options), basing selection on what works now, and replication (or starvation) of options based on hard evidence of suitability. Can leaders learn something from nature about adopting a rigorous external focus, increasing awareness of options through rapid trial and error, and creating mechanisms to amplify or dampen options in order to thrive?
Effective horizon scanning uncovers emerging signals that signal where and what to act on before its too costly or too late. Technology is a great enabler in this, if one caveat is kept in mind: technology without human interpretation is meaningless. Google may find anything you ask, but can’t tell you what to ask for. Uncoupled from humans technology merely increases the noise surrounding the signals. Data is dumb - to become meaningful information human knowledge must be applied.
Humans should be at the front and back end of technologically-aided decision-making - defining the issues to explore and discovering its real meaning. Technology therefore must be designed to fit the human - the way we are now, rather than the way we'd like us to be. It must augment our natural sense-making abilities, which have supported human evolution through millennia (a best practice case?).
Critical knowledge flows through organisations in human networks. Navigating these flows effectively can reveal the origins and dynamics of change. And as humans share such knowledge naturally, extrinsic rewards aren’t required to tap this. Humans naturally create and share knowledge in the form of narratives - ‘micro-stories’ - that are both universal (every culture has them) and democratic (no barriers exist to sharing). These are the 'water cooler’ stories that spread insights and enable other people to make sense of the world around them so they can act better in it. Harnessing these narratives is critical to making sense of and navigating complexity.
Critical knowledge can be leveraged at little extra cost.
Leaders must create the conditions for contextually-appropriate knowledge to emerge. Managing for serendipity (‘pleasant surprises’) means seeking fresh insights, rapidly field-testing coherent ideas and replicating success. But as genuine breakthroughs don’t come from established thinking patterns. Leaders must learn how to break through the hard-wired autonomic brain we rely on - which seeks first-fit, rather than best-fit, solutions - and instead become receptive to novel ideas. Strategic leadership is less about engineering future visions than it is about increasing awareness of the critical factors in our ecosystem, 'identifying the biggest challenges in them and devising coherent approaches to overcoming them'. Real strategy is about seeking the truth of the current position.
Navigating and exploiting complexity means leaders must take multiple perspectives to discover genuine insights. Going beyond objective numbers to understand the why. Rapidly testing coherent ideas as ‘safe-to-fail’ experiments. and feeding success, whilst starving failure of resources. No-one can ‘cut through’ or ‘simplify’ complexity - nor should we want to. Complexity contains rich opportunities in a changing world. Leaders employing naturalistic approaches can exploit complexity profitably.
SenseMaker® - an innovative technology first deployed by the Singapore government to detect weak signal terrorist threats - taps into mass organisational knowledge flows and helps join up disparate information from silos to form actionable knowledge. It presents whole network perspectives leaders can rapidly see and understand, helping unlock the organisation’s present evolutionary potential.
For more information about how to make sense of, navigate and exploit complexity for organisational success contact firstname.lastname@example.org
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