Can you identify the drivers of complexity in your organization? Are you able to diagnose the level of uncertainty in your environment? Can you assess a given situation’s complexity and use a framework for choosing an appropriate course of action?

The ever-increasing complexity facing organizations demands that leaders improve performance outcomes for their organizations. This is especially true for those working in unforgiving social, political and regulatory environments, which are rich with complexity and where the scale of consequences can be catastrophic. In addition, cognitive biases interfere with accurate perception of a circumstance and prevent the person from attending to additional incoming data. Further, it is very hard for the person whose perceptions and judgements are compromised to see it until long after the fact.

Leading through complexity requires leaders to possess impeccable awareness of their behavior and of how others interpret it. As leaders, we need to create actions that allow our people to quickly diagnose their level of complexity and respond accordingly. The following six principles are emerging as priorities for leading in a complex world.

Mindset for Complexity

Leadership mindset is critical for organizations dealing with complexity. This mindset embraces the discovery of new phenomena for which there is not an immediate diagnosis or solution. Instead there is inquiry, observation, and openness to discovery. This includes a willingness not to rush to reach a conclusion, which often frustrates others who have only a classic management mindset.

Increased Tension

The mindset in many organizations is to avoid complexity by insisting on adopting a known solution, even when the solution does not apply. The rush to impose a solution reduces the tension of the unknown, but does not serve the organizations best interests. That is, the choice of a quick solution rather than understanding the drivers of complexity is a temporary “feel good” solution since it reduces the personal tension of “not knowing”. Reducing tension costs the organization the opportunity to see the drivers of complexity which is found in the tensions and has the critical information for breakthroughs in innovation and reduction of risks.

Learning Agility

Leaders guide organizations and teams in development of new capabilities for embracing and learning from complexity. These new capabilities begin with identifying the drivers of complexity, rather than immediately assuming a known solution. Much of what happens in business does not actually fit inside “order and knowing”. Instead, it occurs in the realms of uncertainty and the un-ordered, which requires leaders who are willing to embrace the existence of complexity. If a business person assumes order, they will be surprised by the fact that “things that never happened before happen all the time”, a concept discussed by Karl Weick concerning High Reliability Organizing, or HRO.

Probing for Weak Signals

Leaders diagnose the level of complexity and uncertainty which their organization is facing. There are response patterns which can be observed, provide valuable insights, and ultimately diagnosed. The diagnosing involves probing for weak signals which require leadership experiments to quickly amplify and exploit these signals. A probe provides valuable data and patterns on what is being learned. The disagreement among those investigating the patterns is important. The leader and team collaborate in keeping an open mind and not falling into the temptation to prematurely rush to an inaccurate conclusion. The patterns serve as evidence necessary to diagnosing the uncertainty and effectively see opportunities in the complexity. Dave Snowden (from which much of this thinking is derived) aptly describes the response pattern as probe the environment, sense what works and doesn’t, and respond intelligently. This process of conducting probes gives an intentional look at the signals which led to success. These probes also allow for dampening the signals which are not working.

Capability for Creating Emergent Practices

Emergent practices enable leaders in an organization to observe the drivers of complexity, to conduct probes and projects to better understand the realms of complexity, and then to invent a course of action. Emergent Practice allows for experimentation and organizational learning. It is also an excellent place for Breakthrough Projects. With an Emergent Practice, solution emerges that could not be fully known in advance.

Leading Through Cognitive Bias

Facility in equipping others in the organization to spot cognitive bias is an essential skill of leadership. Cognitive biases are the consequences of mental shortcuts which every person uses routinely throughout the day. These cognitive shortcuts allow us all to function and are helpful in dealing with mundane routines. Occasionally these mental and behavioral shortcuts misread the situation and begin a course of action based on the faulty perception. The clear majority of these misreads are harmless and can even be humorous. However, on occasion these misreads can be very serious for managers assessing strategic options and anyone operating in some potentially complex situations.

KingChapman equips leaders to guide their organizations in identifying the drivers of complexity. In dealing with complexity, leaders begin with probing to observe the response patterns. Data discovered from these probes is the first step in agile learning and developing an intelligent response. The agile learning is required to avoid slipping into preexisting explanations which do not apply. Then information and learning can emerge.

 

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British Columbia is one of the most beautiful regions in North America. Most think of Vancouver, Victoria and Whistler Mountain as the high points of British Columbia. Truly each of these locations is spectacular. Kelowna is one area to add to this list of amazing places in BC. This town with a native Indian name sits in the heart of the Okanagan Valley. The Okanagan Valley excels as a region for agricultural and wine. It also sits at the base of a spectacular Okanagan Lake. This deep, clear lake is breathtakingly beautiful. It also is home to the mythical sea monster, Ogopogo.

Ogopogo is described as a 40-50-foot sea monster. It has reportedly been seen by First Nations people since the nineteenth century. Another sighting reportedly happens in the 1920’s and the 1970’s. The Okanagan Lake is home to forests, logging camps and saw mills. Given the industry, many have assumed that these sightings are actually large logs floating in the lake. Who knows? Maybe there is a sea monster actually living in the lake. Regardless of the “facts”, telling the story of Ogopogo continues to this day. The retelling of the story seems to make it “more real”. One way people from this area interact with strangers is to ask if they have seen Ogopogo? It’s a good conversation starter, and ultimately a source of good humor.

Ogopogo & Business Strategy Execution

The phenomenon of Ogopogo often applies to how employees think about strategies in their organizations. That is, many people speak about their organization’s strategies as if it is a myth. Try asking people in an organization if they know their organization’s strategies. They will say that they have heard stories that it might exist, but have not actually experienced anything to prove it is real.

While it is not a problem that most citizens cannot describe Ogopogo, it is a real problem when people in an organization cannot describe their business strategy. This raises the obvious question: “Why is it that these strategies cannot be communicated, remembered and understood? Let’s look at some common reasons:

• There is not an explicit strategy. “We all know what to do” is a common statement from executives in these organizations. The absence of strategic thinking occurs as a major problem when change and growth is required.
• Plans for the primary product is seen as the business strategy. The limited view of strategy closely ties the future of the business to the future of the primary product. As the product becomes old and obsolete, the business will find itself in real trouble.
• Confuse aspirational organizational culture and practices as being a business strategy.
• Strategy is described in a large complicated document with lots of financial and market share data.

A client once described this process of producing a large document which is placed in a lovely binder for presentation to the Board. Following Board approval, the binder is placed on a credenza. At that point, it becomes “credenza-ware”, where it will remain until the next year.

Making Strategy That Will Be Executed

What then makes a strategy executable? In a Harvard Business Review video, Don Sull describes the elements required for a strategy to be implemented and executed. It must be:

• Memorable
• Understandable
• Actionable
• Simple (focused and limited # of actions based on must-win battles)

The criteria for creating such a strategy is that it must answer three questions:

1. How do we create and sustain value?
2. What are the critical issues or obstacles we must overcome to create value?
3. What are the must-win battles to overcome those obstacles and create value?

This approach produces remarkable clarity and momentum when used by leadership and a group of people who are committed to growth in revenue and value. The questions evoke robust conversations and ultimately passion drive action. One key indication of good strategic thinking is that it promotes clarity of what’s needed for successful strategic execution, and the momentum to be in action.

Two additional questions guide development of execution:

1. Two years from now, what evidence will we see that we are winning or have won this “must-win battle”?
2. Thinking from that future success, what are the actions we must take?

As the group responds to the first question, it is able to talk about the future. This is not just any future, but one in which the must-win battles are being won and success is achieved in executing the strategies. The second question identifies key elements to include in the execution planning.

 Criteria of Good Strategy

The criteria for good strategy includes the following:

• It is easy to communicate and act on
• People can see it in action
• It is tied to results

If executives and managers can clearly communicate the strategy, it is a positive sign. Likewise, if employees can describe the strategy, that is an even better sign. However, if communicating the strategy is a struggle, the execution of that strategy will likely be a struggle as well.

One reason why so many employees think there is not a strategy is they see little evidence of it being acted on. If employees can see actions and consequences of the strategies being executed, the building of momentum in the organization to support the strategy will grow exponentially. Finally, if there are clear results and positive consequences coming from execution of the strategy, the acceptance of the changes associated with the strategy will accelerate.

How Bad Strategy is Like Ogopogo

Ironically, the differences between identifying a good strategy and spotting Ogopogo are illustrative.

• Ease of communication – a good strategy is easy to describe and understand. Bad strategy, like Ogopogo, is very hard to describe and even its name is hard to understand.
• People can see it in action – a good strategy being implemented can be observed and understood. Bad strategy, like Ogopogo, is not easily seen or understood.
• It is tied to results – a good strategy produces observable results. Bad strategy, like Ogopogo, produce no consequences. Although, perhaps Ogopogo can be given credit for producing some fun, entertaining telling of stories about a sea monster living in Okanagan Lake. Similarly, your employees may think of their company’s business strategy as a great myth or legend.

If strategies are not easily communicated, producing observable action and tied to results, key stakeholders are likely to equate them with a myth about a large sea creature. Make sure your business strategy has nothing in common with Ogopogo.

 

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