The ‘how’ of business is important too

Businesses, even small businesses, sometimes work against themselves. This becomes a problem when the situation is not recognised or when it is recognised and ignored or when it is recognised and glossed over. The telltale signs can include a chronic inability of the business to perform to its true potential or a growing frustration amongst key colleagues which becomes a real issue if they should eventually decide to leave. However in the short term what may appear to be a marginal performance shortfall is unlikely to be the most pressing issue for a business. If a business is growing there are likely to be other priorities and other options; resource shortfalls for instance can be met by investment and recruitment. At the other extreme when things are tight and everyone is stretched, ‘the best may be the enemy of the good’ and in this case ‘good’ may be survival. In either instance, a very good case would need to be made for persuading business leaders to spend much time on what might appear to be fine tuning as all businesses are ultimately ‘needs’ driven.

Though ‘needs’ define the why of business they do not represent the only business driver and recognising other drivers can provide some interesting insights. For instance, ‘needs’ do not define the ‘how’ or the ‘who’. The ‘how’ is very much in the hands of the business leader because he (or she) it is who determines the business culture and who also ultimately determines the organisation and the technology that the business will adopt in order to operate. In the natural flow of events the culture, the organisation and the technology often evolve as the business itself develops. Not only do they evolve together but they also adapt to each other. So what happens when in the fullness of time a business is asked to embrace a significant change in culture or organisation or technology? Or what happens when the technology or the organisation or, perhaps more likely, the culture comes to be regarded as immutable and its evolutionary progress is stalled or even reversed. Some sort of imbalance is introduced to the business which leads to stresses and strains which distort the behaviour of the business and constrain its performance.

Here is a problem, however. Business leaders by and large are not comfortable with relying on any process that can be described as evolutionary. For one reason it sounds like long term deal and for another the process sounds like it is out of their control. Thankfully it is possible to find at least anecdotal evidence that might provide some encouragement for them. In the first instance, a number of the changes that have affected our culture, organisation and technology at a societal level in the past 30 years have followed an evolutionary pattern where the adoption rate is slow initially but then accelerates dramatically, following a characteristic ‘S’ curve as saturation is approached in due course. The growth in sales of mobile phones is an example of this pattern. An item that was seen primarily as a piece of business equipment and supplementary to fixed line telephony has been instrumental in changing the social opportunities and behaviour of a generation in the developed world and has been the means of bypassing the need for costly investment in fixed line infrastructure in the developing world.

So get the change right and it can be the leaders who end up being the limiting factor. One important feature of such changes that must be borne in mind is that they are often ‘pulled’ by the adopters (the ‘out of the leader’s control’ factor) but there is also possible encouragement for business leaders here, too. Multidisciplinary research by various groups under the broad heading of complexity science suggests that it is possible to build models of complex behaviour involving groups of agents that interact according to relatively simple rules. This will not provide a tool for leaders to use to control the evolutionary process but it can provide them with a better understanding of the process with which they can better position themselves to influence it. The words say it all; an evolutionary process calls for an influencing style of leadership rather than a controlling style. It is not right for every situation but if you want to align the organisation, culture and technology of your business, then ‘influencing leadership’ is the way to go. And before you go, remember an effective communication flow of knowledge and information throughout the business process is the very lifeblood of an influencing style of leadership.

There are business tools that can help; one I have used with some success in the past is AIM (Accelerated Implementation Methodology) which is available from Implementation Management Associates.

The 3Rs of change

Even change changes. Why even Barack Obama’s official transition site has transitioned from change.gov to www.whitehouse.gov as a consequence of his winning the election. Groups from Luddites to NIMBYs have shown us how to resist change but it seems far more difficult to influence change in a positive direction; it is usually a voyage into the unknown. Here follow some ideas of patterns of behaviour for successfully negotiating change, called for the sake of argument the 3Rs of change. From the outset I will say I don’t think that any of these is an exact science, at least not in the dynamic world of rapid change.

There is no surprise with the first R which is for Reading. While this may involve words on paper or screen, it is certainly about reading the situation. What is the start point, can you visualise the desired end point, what are the obstacles, what will help or hinder you, who else is going to be in the change with you, how well equipped are you and how ready are you as an individual? Imagine yourself in a canoe and about to navigate difficult and unknown rapids; if you are wise you will get out of your boat and study the rapid before starting down it; identify the way the water is flowing, where the dangers and possible escape routes are and if in a group arrange to provide mutual support for each other en route. Reading change is an acquired skill, requiring knowledge and experience; I would argue that this skill is not given to everyone.

The second R is for Riding. Once you are committed, you are …. well, committed. You might as well enjoy the ride, if you can. There will be a flow and to continue with the whitewater analogy at any instant you will be busy dealing with the consequences of how you negotiated the features upstream, navigating the boat through the feature you are in and positioning yourself as well as possible to enter the downstream stretch. You are in what Boyd, an American fighter pilot ace called the OODA loop, that is Observe, Orient, Decide, Act. These are skills that you need to develop to Ride change successfully.

The third and final R is for Reckoning. Hopefully in your reading of the rapid you will have noticed an eddy or two where you can escape from the main flow in order to gather your breath and reassess the situation. Are you still on course to complete the rapid, is the group together, does anyone need help, have you learned anything that changes the route for the remainder of the rapid or what you will do when you get through it? You have gone through this change for a purpose; did you achieve it? One technique you can use for the Reckoning is the After Action Review; there is nothing magic in it at all but having a technique helps you to be rigorous.

So there you are. It looks simple but it isn’t. There is nothing new; it has all been said many times before in many different ways. But if this encourages anyone, it has been worth writing. Just because you have failed once does not mean you are not capable; you are only not capable if you are not capable of learning.

Notes:

1. If you have time and particularly if you have an interest in the Theory of Constraints, have a look at the OODA link; it takes you to a treasure trove of interesting material.
2. This link takes you to the USAID guide for planning, preparing and conducting After Action Reviews; follow the prinicple and adapt (simplify) the practice to meet your own needs.

Old insight, fresh perspective?

When Ralph Stacey looks at the complexity matrix (seen here being used by the medical profession) he drew up some years ago he could be forgiven for feeling a glow of satisfaction. For him it is perhaps ‘old hat’ but for many of the rest of us his matrix provides a helpful fresh perspective on the confusing economic, financial and political climate in which we find ourselves. His matrix suggests that in situations where we are far from agreement and far from certainty having recourse to rational decision making (and this I would qualify to mean linear rational thinking), political decision making or judgement based decision making will not necessarily be very effective. Brenda Zimmerman of York University, Toronto on whose analysis the above reference is based acknowledges that traditional management teaching has concentrated on decision making where (linear) reasoning, politics and judgement can be effective, which focus has left a gap in management teaching. This raises a couple of questions: how useful could the Stacey matrix be in the prevailing circumstances – which can well be described as far from certain and far from agreement? How aware are the current business leaders of this material, given that many of them will have completed their formal education before it was published?

In Stacey’s matrix this region (far from certainty and far from agreement) is divided into two zones, the zone of complexity and the zone of chaos. With reference to the zone of chaos, Zimmerman says, with no little understatement, this is a region ‘… that organizations should avoid as much as possible.’ So, looking on the bright side, let’s assume that we are in the zone of complexity. If traditional management tools are not necessarily effective in this region, what tools are there that we can use?

Some strategic thinkers are looking to see what complexity science can offer in the military sphere and this book by James Moffat serves well as a starting point: Complexity Science and Network Centric Warfare. In amongst the non linear maths there is a wealth of analytical thinking that lays down a foundation for the application of complexity science on which to build models of operations in what is described as the information age.

I don’t want to say more about complexity science here apart from commenting that its use in this context is to help break the mould of traditional command and control structures and to create the philosophical and intellectual framework for de-centralised command and control. Hold the idea of using complexity science in this way while we explore another line of thought.

A recent copy of the Economist includes a special report on the middle class, particularly in emerging markets (Burgeoning Burgeoisie, Economist, 14th February 2009 – to see the link may require a subscription). There is an interesting discussion on who or what are the middle classes but two particular correlations stand out; one between the middle class and economic growth and the other between the middle class and democracy. As the report recognises the former case is easier to make and even it is unlikely to continue without interruption through a recession. Daaron Acemoglu of the Massachussetts Institute of Technology is quoted as attributing the importance of the middle class to growth in the emerging markets to the fact that “… they are more committed than the elite to a mixed, competitive economy.” This is related in the Economist report to Maslow’s hierarchy of needs; I suspect that account also needs to be taken of an economy of exclusivity alongside the economy of wealth.  The former is a zero sum economy while the latter is not; as an emerging middle class starts out with little to lose in either economy it does not have to balance a loss of exclusivity against any gains in wealth. This brings us back to complexity science because it provides one of the perspectives for understanding the dynamics of non zero sum economics as is very ably expounded by Eric Beinhocker in his book, The Origin of Wealth.

What puzzles me in the current climate is that with all the scholarship that has gone into complexity science over the past 20 years I am not hearing more reference to its use in responding to the current uncertainties. Perhaps I am listening at the wrong windows; I hope so because I find much to attract me in the philosophical underpinnings of complexity science and much that I would like to investigate as a means of addresssing the difficulties that present themselves to me.

James Moffat acknowledges the role of the Santa Fe Institute in the early development of this field of multidisciplinary research and the institute provides a treasure trove of relevant expertise and reference material. Ralph Stacey is professor at University of Hertfordshire and was recently interviewed here.