"Concrete steps to lead in a complex environment"

by Didier Marlier on Sunday October 10th, 2010

In the (not so) old days, problems were solved through a four to five steps approach:

  • Problem definition and scope
  • Root cause analysis
  • Selection of solution
  • Implementation
  • Monitoring and feedback

It is clear, one-dimensional, sequential, linear and reassuring: For each problem there should be one solution.

By now, we all have realized that globalization, “technologization”, acceleration and growing complexity made this way of tackling certain of our challenges inadequate. Some of us have started to think in terms of “Strategic dilemma management”, where:

  • There is rarely a “solved once for all” hope; the dilemma needs to be frequently revisited
  • A dilemma doesn’t get solved in a one-dimensional “either… or” state of mind but in a “both… and” one
  • A dilemma calls for a much wider and systemic understanding of the challenge than the traditional problem-solving approach

And, what makes our lives very complex is that both contexts (linear and non linear, simple and complex) will continue to co-exist.

Recently, I received an interesting article from Michael Newman[1]. Although I believe that the authors confuse a few things (amongst which simplistic and simple), I found great value in reading their recipes for leading in a complex environment:

  • Don’t design your processes and organization for optimization: “Designing for optimization and efficiency exacerbate the risk of things going wrong at a systems level”… They are right! Complexity requires trial and error, it demands experimentation and patience. Perfectionism and cost obsession will not help us here…
  • Make your assumptions explicit and check them frequently: When confronted to complexity and having to take decisions around it (like when using dilemma management), “Make simplifying assumptions explicit as assumptions and give organizational members the right to challenge them” the authors suggest. I would support this as well: too often, the assumptions under which we function are kept implicit and unconscious and inviting our people to challenge these is a great way to engage them as well as to create an intelligent organization.
  • Use resilience rather than prevention: The authors quote Political scientist Aaron Wildavsky: “Systems can be designed to prevent potential dangers or, alternatively to cope with whatever outcomes might occur”… “Is strategy guessing the future or preparing for it?”, would ask Nick van Heck. Wildavsky is quoted as concluding that: “The strategies which decision makes develop in anticipation of a threatening event are heavily biased against risk and failure. Indeed they may go so far as to ban all activities that could create potential harm. The dilemma is that in such a situation, positive discoveries and outcomes can also be hindered”. The authors conclude that “Anticipation and prevention can be effective when the source of risk and failure are predictable. When they are not, however, investment in resilience is essential”.
  • The importance of shared values to action in face of the unexpected: brings us back to the Sense of Purpose of General Van Riper or to what elite military commandos teach us about leadership. A too detailed planning will not resist the test of action. Keeping soldiers dependent of a too well crafted, too detailed and procedure driven plan will weigh heavily on their capacity to be flexible and adapt. A clear purpose, a few guiding principles, clear and agreed upon rules of engagement will boost their creativity and initiative when things go wrong.
  • Invest in real options: is another worthwhile tip from the authors. In front of uncertainty and complexity, experimentation is quite helpful. Therefore, investing in options will develop capabilities (back to designing an intelligent organization) but also hedge risks. McGrath and MacMillan are quoted in offering the following guidelines:
  • Make sure all investments have high upside potential
  • Make sure the investment required to determine the potential is relatively small
  • Make sure that you can stop making further investments
  • Invest in a portfolio of ideas
  • Stage and sequence funding so that you review the investment regularly across time

I liked this paper, offering concrete ways to deal with and lead in Complexity. I hope it is worth your time. Mourning the loss of my stepfather which happened last night, it was a liberation for this suffering man and his family aqlthough the mourning process now has to take place. Luckily I will be home with my wife most of the time this week. Have a great week all,

Didier


[1] “Managing under complexity : where is Einstein when you really need him ?” by Gökçe Sargut, Assistant Professor City College of New-York Economics Department & Rita Gunther McGrath, Associate Professor at Columbia Business School New-York City. VERY HAPPY TO SEND YOU THE WHOLE TEXT IF YOU WISH

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