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Strategy + Business has just published an article Leading Outside the Lines. Its summary reads:

In every company, there are really two organizations at work: the informal and the formal. High-performance companies mobilize their informal organizations while maintaining and adding formal structures, balancing the two.

Reading the full article reveals that

In every company, there are really two organizations at work: the formal and the informal. The formal organization is the default governing structure of most large companies founded in the past century. Businesspeople recognize the formal organization as that rational construct that runs on rules, operates through hierarchies and programs, and evaluates performance by the numbers.

….

The informal organization, by contrast, is an agglomeration of all the human aspects of the company: the values, emotions, behaviors, myths, cultural norms, and uncharted networks. The power of the informal is visible in every organization every day – it is an undeniable, emotionally resonant force.

The authors Katzenbach and Khan point out (no surprises) that :

Organizations that sustain high performance over time have learned how to mobilize their informal organizations while maintaining and adding formal structures, each in sync with the other.

And then make the obvious statements that it's difficult to a) know how to do this and b) do this. However, they then make a suggestion to focus on goals and metrics – a very few of each, and a lot of communication and involvement on both agreeing these and keeping them uppermost in people's minds. This makes sense and neatly marries the formal organizational aspects – in the goals and metrics, with the informal – in the communication and involvement.

It's an approach that has a popular track record – remember the article in the HBR – The One Number Your Need To Grow, for example. And David Nadler and Michael Tushman were writing about the informal and formal organizations many years ago. (See Nadler, D. and Tushman, M. (1999). The Organization of the Future. Organizational Dynamics, Vol. 28. No.1. Summer).

Then there is the old but practical and readable guide by Geary Rummler and Alan Brache, Improving Performance: How to Manage the White Space in the Organization Chart which is more about process change that flows across the "white space" between the departmental silos one finds on any organization chart, but covers the formal and informal 'marriage'. This book was updated last year and is available as White Space Revisited: Creating Value Through Process the authors this time around are Geary Rummler, Alan Ramais, and Richard Rummler.

Considerations of both informal and formal aspects of an organization also has a theoretical track record. Chester Barnard (management theorist) in his 1938 book The Functions of the Executive suggested that 'managing the informal organization was a key function of successful executives'. His theories 'foreshadowed participant-observation studies that were later used to establish the symbolic-interpretive perspective [of organization theory]. (See: Hatch, M-J and Cunliffe, A. (2006). Organization Theory. Oxofrd University Press).

The lesson for organization designers, and managers, that comes out of considering both the formal and informal aspects of an organization is (yet again) not to focus on the formal structure of an organization i.e. the formal organization chart, when you're thinking of reorganizing or restructuring for performance improvement. The structure, as shown in the charts, cannot improve performance if it is not addressed simultaneously with all the other formal and informal aspects of an organization.

This week I'm working on a 'toolkit' for managers interested in developing organizational capability and effectiveness. Essentially it is a set of activities, diagnostics, checklists, and thought provokers that they can use to work out what organizational (not personal) strengths they need to have and develop to make their business successful.

One of the tools suggested by my colleagues working on this is something called 'The Nine Forces Shaping Our World'. I hadn't come across it before and found the whole concept intriguing. It set off a whole raft of questions in my mind, including:

• Why are there only nine forces (or is nine too many)?
• What is the rationale for the nine?
• What perspective about the world does the title and the list suggest?
• What can someone 'do' with the list. (I just got the list, no introduction or instructions)

Before going further, the list of nine is:

1. The Internet – the acceleration in the application of information technology and communications.
2. The emergence of large trading blocks – EU, NAFTA, ASEAN, Africa
3. Globalisation of business – WTO
4. Break up of former power blocks (e.g. communism, several dictatorships. Power to supra national bodies (UN, EU, OAU) and to local regions. Resurgent countries – Russia, China
5. Knowledge industries as the driver of the new world economy.
6. The Environment
7. Energy
8. Conflicts – regional wars
9. Competing ideologies / value sets e.g. East vs. West, Islam vs. Christianity, Change via ballot vs. bullet

There are some obvious challenges that can be made to this list . In an attempt to find out more about it, and making an assumption I would find something I started Googling the title. This was, itself, an instructive exercise as in one part of the document I was reviewing the tool is listed as 'A global perspective – the 9 drivers of the world', and in another – 'The 9 forces shaping the world'.

I put in the search bar 'the 9 drivers of the world' and got suggestions including the list of the nine world rally championship drivers, and the Callaway FT-9 Tour Driver. Knowing nothing about either, I spent a few moments dallying on these sites so now I know next to nothing, rather than just nothing, on rally driving and golf equipment. The return I liked most, however, on this search was 'Amphibian road kills: a global perspective'. I had not appreciated that "Transportation infrastructure is a major factor determining land use forms. As global changes in this factor are the most important for biodiversity, roads fundamentally influence wildlife."

This set me off on another tack as I'd just read an Economist article on the car industry in China (one of the articles in the pull-out of April 17 'The World Turned Upside Down') so now I wondered whether there should be a substitution on the list of nine forces. Is road construction/use v amphibian road kill a competing ideology?

I then searched on the term 'Nine Forces Shaping our World'. This got a match closer to what I was expecting, but not exact. However, I know now that " Air Force officials have announced the 2010 force-shaping initiatives and that 'Air Force retention is at a 15-year high, despite an incredibly robust operations tempo. … We must correct these overages and skill imbalances by sizing and shaping our force within our authorized, funded ceiling.' This information started to imply number 8 on the list 'Conflicts and Regional Wars' but it was still not quite close enough for my purposes.

What sprang to mind at that point was Tom Friedman's book, The World is Flat. I remembered he had in it the Ten Flatteners and I took another look at these to see if there's a match. There are some similarities which might suggest that Friedman's idea of shapers of a 'flatter' world (a concept many challenge) are akin to the shapers of 'the world' (flatter or not).

I question whether 'shapers' or 'drivers' of the world can be reduced to a list of specifics. A higher order of abstraction might work better e.g. regulatory, physical environment, government, technology etc. That would allow a wider discussion within and between organizations seeking to develop capability as they could put their own stamp on the detail of each category.

Here's an observation I received last week:

I was walking around someone's office (a consulting company) and noticed an acronym on client service and the related expected behaviors posted on notice boards and TV screens. I asked the employee whom I was with about it. It turned out that he'd never noticed either the acronym or the statements. What struck me was that if I ask someone in my organization what our service acronym is, and means, most people will be able to recite it and will have formed an opinion about the behaviors that evidence we live the service values – I'm pretty certain, everyone will know what the values are and a lot of people really take them to heart.

When I asked another employee in the organization I was visiting about the notice board messaging on client service his response was rather flippant "no-one pays attention to that …". I find this interesting as both employees are on the promotion track and they are highly regarded and respected but neither one of them cares nor places any importance on the exhortations their organization has put out.

I wonder if they are automatically living out the values and service standards of the organization or if what's rewarded by the organization is something different from what they say they want?

Going into a lot of organizations myself I often see company brand values and associated collateral. Sometimes people know them, sometimes they don't, sometimes they live them and sometimes they don't. Whether stating organizational values (and then getting organizational members to live them) is of business benefit seems to be the nub of the question. Alan Mullally, CEO, Ford is of no doubt on that score. An interview with him in Fortune magazine makes this clear:

Are corporate mission statements so 1990s? Not to Mulally. To let everyone know what he had in mind, Mulally created those plastic cards with four goals on one side ("Expected Behaviors") and a revised definition of the company ("One Ford") on the other. To Mulally, it is like sacred text: "This is me. I wrote it. It's what I believe in. You can't make this shit up."

The behaviours fall into four categories, utilizing the word FORD as an acronym for the first word in each category. Foster functional and technical excellence. Own working together. Role Model Ford Values. Deliver Results. Collectively, both sides of the card embody Alan's message of working together as "ONE Ford". Every employee carries this succinct and powerful message with them, attached to their Ford ID badge and poster-sized versions of the card can be found on the walls of every conference room in every country in which Ford operates, translated into each of the local languages. As one employee said "The message is heard and clearly understood – everywhere!"

One person hearing this suggested that "presumably Ford fundamentalists also have it tattooed on both arms and both sets of cheeks" illustrating a commonly held attitude to this type of evangelizing. (Witness the success of the anti-motivational posters, e.g. Teamwork: A few harmless flakes working together can unleash an avalanche of destruction). Explicit proselytizing with public messaging, printed paraphernalia (cups, lanyards, and mousepads) seems to work only if it is part of a more broadly implied way of working i.e. what leaders expect, what they themselves are role modeling, what the organization is rewarding, and how recognition is achieved. It doesn't work if there is no associated or consistent evidence/demonstration of 'this is the way we do things'.

Is the explicit messaging a waste of effort and money? Yes, if it serves to foster cynicism and apathy (Apathy: If We Don't Take Care of the Customers, Maybe They'll Stop Bugging Us.) No, if it serves simply to reinforce a message that is already clear, evident, and being repeatedly rewarded for being lived – as in Ford's case. Overall, however, it may be that a cheaper and more effective route to business success is to make it clear (not through printed messages, but through practices and processes what is expected) and invest the money saved in more useful farkles.

*Farkle: An accessory item that enhances not only the functionality of a motorcycle, but also contributes to the pride in ownership that comes from a motorcycle(!)

Someone taking on a new leadership role emailed me with this question:

I have interesting challenge in this new role. I have to take the leadership role of a troubled account. In my view, in order to get the account back on track there should only be one leader. In our company culture that will be a problem as the leader that failed will want to keep control. Thus, I have interesting challenge in this new role. Have you any thoughts on how to handle it?

This is not a lot of information to go on so in the first instance I would like the questioner to tell me a bit more about:

1. The history of the 'troubled account' in order to get some feel of what constitutes 'troubled' and what the symptoms and expressions of it are. (A good tool to use here is the standard, who, when, what, where, how, why).

2. Next I'd like more information on the issues that are really important to the questioner, as well as his understanding of the priorities and circumstances that are motivating the beliefs and actions of the other leader to want to keep control.

In an ideal situation I'd like to meet with the other leader and get his perspectives on these two aspects, and might also like to meet with some other stakeholders e.g. the managers of these two people and some of their peers.

There are all sorts of possible reasons why someone might want to keep control of a situation: among others, the reward processes encourage it, the organizational politics demand it, and/or the individual motivations make it necessary, and from doing the assessment outlined above I'd hope to get a picture of these.

From this, I would discuss my assessment with the questioner – using as a framework the GROW model – what is the goal, what is the reality, what are the options, and what will you do. If the relationship with the other leader allowed it then both parties could participate in the discussion, and arrive at an agreed way forward. (For example, outlining and agreeing accountabilities which effectively allow for two complementary roles).

On the other hand, if the relationship precluded this in discussing the goals, realities, and options even with just the questioner some ways forward would emerge. In my experience people tend to see a situation like this in only one dimension – for example as a power play, or as a conflict of interests, or as a confrontation, or as a control of resources.

I came across a phrase yesterday that was unfamiliar to me 'man is an animal trapped in webs of significance he himself has spun'. If the questioner is trapped in a way of seeing the situation then offering alternate ways of seeing may open up courses of action beyond those he has already considered.

Reading between the lines, the situation outlined has the hallmarks of an existing or potential conflict which, as an article on Beyond Intractability suggests "may therefore be colored by a backlog of animosities, historical grievances, mistrust, alliances, and structural power imbalances." In this instance Beyond Intractability has a range of checklists aimed at intermediaries and adversaries who are struggling with difficult conflicts. The checklists "highlight conflict dynamics that are helpful to understand, as well as options for dealing with common problems", and are a useful starting point to re-frame the situation.

However, sometimes these types of organizational 'two leader' situations are not resolvable by mediation or consensus. In this case the only option may be for the questioner to exert enough power to get the existing leader moved to a different role where he/she has no influence on the 'troubled account'.

Someone sent me a piece on selecting leaders. It's an interesting piece, as I took it, on different perspectives and expectations.

The nub of the paper is this:

… "boards and CEOs are perfectly willing to consider CEOs who have failed in past CEO roles as viable candidates for a CEO position. A CEO with a record for disastrous corporate results is an acceptable person to not only be interviewed, but to be hired as the best leader. The reasoning they cite is CEOs learn much by their failures and can bring these lessons to the new role and – ultimately – perform better.

Contrarily, the same board members or CEOs use exactly the opposite logic when it comes to CFO candidates. When a CFO candidate has a mark on his or her record for a failing experience, they say "absolutely no" and cut him or her from the list for consideration."

What the sender wanted to know (among other questions) was why an apparent double standard? Having just been discussing looking at organizations through different lenses and perspectives (see Gareth Morgan's Images of Organization) I wondered if the same kind of thinking was coming into play. Perhaps CEOs and CFOs look different if viewed through the same lens alternatively people may apply one lens to CEOs and another to CFOs.

Either way it's possible that CEOs are viewed as strategists and CFOs are viewed as operators or administrators. From this perspective making a strategy mistake could be more excusable than making an execution, implementation or operational mistake (because the latter are easier to track and measure, whereas strategy failure is a much more nebulous arena).

I came across an article in the Journal of Accountancy "What does it take to become a CFO?" that makes the point that:

Successful finance execs seem to agree that technology skills and breadth of vision are hallmarks of the CFO position. A viable candidate "has to be broad in many areas; being a CPA is only one of them," … "Two other factors have a terribly important impact … the computerization of information and the participation of the CFO in all forms of operations," he says. In other words, explains Meinert, you must understand "the technology behind the way goods and services are marketed" and "every kind of asset, including intangibles, property leases, negotiations, mergers and acquisitions and pensions and benefits."

The article continues:

Many CFOs have the information technology department reporting to them," he says. "You need a solid understanding of enterprise resource planning and e-business initiatives. You need to keep pace with emerging technologies and Web-based applications, especially those that coordinate front- and back-office operations."

CEOs, on the other hand, are not typically expected to have this hands-on knowledge of the operations (although it helps if they do). But they are required to take public accountability for their mistakes. An article in Chief Executive discusses this point, presenting a list of CEOs who, during 2009 recognized, and apologized for their performance:

Consider the numerous CEO apologies that have made the front page just in the past few months:
• Apple's Steve Jobs for presenting confusing information about the status of his health. Earlier, he apologized to its most ardent customers for slashing the price of iPhones two months after they stood in line for the high-priced item.
• Amazon's Jeff Bezos for not having a sufficient supply of Kindle readers for the holiday season.
• Whole Foods CEO John Mackey for writing anonymous posts on financial message boards.
• Steve Hughes, former CEO of tea-maker Celestial Seasonings, for poisoning prairie dogs on company property.
• General Motor's Rick Waggoner for failing to invest in small cars and other misjudgments.
• Facebook's CEO Mark Zuckerberg for heavy-handed tactics that many Facebook customers felt would threaten their privacy.

This form of visible and public apology is a damage limitation and reputational risk mitigation action, and seems to stand in the CEO's favor.

Sadly, CFOs who become publicly visible often do so as a result of legal action of some description. CFO magazine argues, for example, that

"The moment you have a fuzzy environment, … the more this [fraud] can happen." In finance, recessions are very fuzzy. "CFOs are on shaky ground," warns Ariely, "because they are [now] operating in very difficult conditions."

The different treatment of mistakes by CFOs and CEOs when they are being recruited is due to the recruiters perceptions of the very different roles the CEO and CFO play in an organization, the different outcomes of mistakes they typically make, and the different responses people have to the circumstances in which mistakes are made publicly visible.

In trying to convert myself from my ThinkPad to a Mac I am driving my own behavioral change e.g. I'm slowly learning to insert my signature block manually on emails (Mac) – rather than it appearing automatically (ThinkPad), and stopping myself thinking what a ridiculous waste of time doing this is but instead getting to a level of automaticity to press the signature block key(s) before inadvertently sending with no signature block.

So when I saw a white paper from Pilat land in my inbox called 'Driving Behavioral Change' with a note from the sender saying "the thing that I find very interesting from this is the fact that individuals receive change in the brain in a way that pain is received, completely fascinating" I stopped tormenting myself with the Mac and turned to read the white paper.

It's a basic paper making an initial point that:

Over the last 20 years, the integration of psychology and neuroscience has provided a new view of human nature and behavior change. The use of imaging technologies such as functional magnetic resonance imaging (fMRIs) and positron emission tomography (PET) have identified formerly unseen neural connections in the living human brain.

One of the unsurprising conclusions that can be drawn from this research is that change is linked to pain – even when the change appears to be in an individual's best interests. It appears that our brains are programmed to resist change. We become comfortable with our habits – they require much less energy and use just one part of the brain.

The author, Rhonda Miller, does not cite any references for these assertions, which I think, is a pity because they are pretty significant. And the idea that 'our brains are programmed to resist change' suggests an inherent rigidity and external agency that presents the complexity of the brain in a overly simple way.

However, Lewin's and Schein's theories on managing change are well embedded in organizational behavior thinking – although they have moved on in the last ten years or so (again something that is not touched on in this paper). A useful text that gives more information on this is John Miner's book "Organization Behavior 4: From Theory to Practice"

Miner has written extensively on organization behavior and a paper that I felt was particularly useful was a paper he wrote: The rated importance, scientific validity, and practical usefulness of organizational behavior theories: A quantitative review: (See John B Miner. Academy of Management Learning & Education. Briarcliff Manor: Sep 2003.Vol.2, Iss. 3; pg. 250).

This paper analyzes rated importance, extent of recognition, validity, and usefulness of 73 established organizational behavior theories, differentiating between the views of judges with expertise in organizational behavior and in strategic management. The results indicate an increasingly mature science with many more positive relationships among the variables considered than existed previously. The findings have major implications for learning and education activities, such as textbook writing and organizational behavior course design in that they indicate which theories should be stressed and which should be given minimal, if any, attention at different levels of the educational process.

Clearly Miner and Pilat have different audiences in mind for their papers. So although I found the Pilat paper overly simplistic it did work to remind me (again) that 'all models are wrong, some models are useful'. As far as my Mac learning goes I have turned from the change model described in the Piloat paper to the more reassuring four stages of competency model . This is a learning styles model predicated on the theory that learners move through the four stages of unconscious incompetence , conscious incompetence, conscious competence, and unconscious competence. to achieve mastery of a skill. Personally, I reject the notion that I am resistant to change and that it is painful to try changing, preferring to think that I am going through a staged learning process where I will achieve mastery over the Mac. I don't know what that tells me about my brain function.

Yesterday I went cold turkey on my lovely IBM/Lenovo Thinkpad in favor of a MacBook Pro. Why? Because in the office I worked in the computer I was issued with was the Apple. For some time I have sat with both computers side by side, working on both but going back to the safety blanket of the ThinkPad when things got frustrating, time consuming, or just too difficult on the Mac. It had taken me ages to get my ThinkPad set up just the way I liked it. (Following the theft of my previous ThinkPad), and I felt adrift in the Mac world that has very different conventions from the Microsoft world.

Starting almost from computer scratch again even though my Apple is loaded with their version of Microsoft Office is hard work and time consuming. There are many, many things I am struggling with. My long-suffering computer expert brother (and Apple fan) is getting a stream of emails. Today's already include:

Passwords
The question being 'where do I locate the passwords that Mac is remembering for me?' Now Firefox is 'remembering' passwords for me which is ok but not if I can't find them. I see Roboform , which I had on my ThinkPad, works with Firefox so if I want to go that route I will have to work out how to install it and transfer the passwords I already have. (I guess they have a help desk or FAQs)

On passwords – I just read some handy tips in FastCompany on remembering countless passwords. It's something I will adopt for the future.

Keyboard shortcuts
How do you get to the top of the page in one keystroke?
How do you erase/delete characters from left to right instead of right to left? (I've found out that one – hold down the FN key).
When will I stop pressing the control key when I need the command key?
Etc, etc

Personalization
How do I get the default font in Word to be the one I want?
Why does the email I'm opening do so in the top left hand corner covering up the 'reply' button so I have to move the email to reply. (Why isn't reply in the header of the email?)
Etc etc

Sync stuff
BlackBerry sync – how do I get my BB to sync with the Mac when it's been syncing with the ThinkPad. (Without losing any info from my BB)
How do I get my i-pod to sync with the Mac – should be easy but I seem to have too many computers authorized (so how do I de-authorize some to allow me to authorize this one.

Installing software
I need to install Skype (but with my profile etc still intact)
Ditto Google Desktop – do I need Google Desktop or does the search function on the Mac work as well as GD?

There are many, many other small frustrations. Yet I bill myself as a 'change agent' so I'm observing how I am dealing with this transfer of skills, knowledge, and experience. My technique has been:

a) Play with the Mac knowing I had the safety of the ThinkPad
b) Ask several people who had made the transfer what their experiences had been. I got several tips from this approach e.g. on touchpad v mouse. Most people I talked to had transferred with some frustrations but felt it was worth it in the end. Two people had sold the Macs and gone back to their Dell or whatever.
c) Get reasonably clear about what I immediately needed to make the Mac workable e.g. my address book and calendar from my ThinkPad so I had (sub!) basic competence
d) Ask for help (long-suffering brother) in getting the Mac set up to these basic requirements
e) Go cold turkey on the ThinkPad. (It's currently 300 miles from me).
f) Spend a lot more time using trial and error playing with the Mac to get it more attuned to my requirements. (Several hours yesterday and today so far).

So far I'm still on the Mac, I haven't despaired and gone off for a run instead. My change technique seems to be following the organization design methodology: assess, design, transition. The next step will be the review! (In a week when I get back to my ThinkPad and have to decide whether to revert to it, continue with the Mac, or do something different). What I like about the Mac is the screen display and the general design of the hardware. What I don't like about it is that it isn't configured correctly and it's taking me a lot of time to get it right. (One of the standard reasons people don't persist with changing is because it takes persistence and resilience).

One of the things that people preoccupied with the 'day job', 'putting out fires', and the myriad things that besiege them in the present have difficulty with is preparing for the future. (I wonder how many organizations forecast the difficulties that would arise from the volcano erupting in Iceland?). Nevertheless future thinking and 'horizon scanning' are skills that managers should have high on their personal development agenda. Why do they need these skills? Because, as a paper from the International Futures Forum (a non-profit organisation established to support a transformative response to complex and confounding challenges and to restore the capacity for effective action in today's powerful times) put it

These are powerful times, in which the world we have created has outstripped our capacity to understand it. The scale of interconnectivity and interdependence has resulted in a step change where complex human systems now operate within other complex systems, often with modes of thinking and practice developed in simpler days. This is a new world, raising fundamental questions about our competence in key areas of governance, economy, sustainability and consciousness. We are struggling as professionals and in our private lives to meet the demands it is placing on traditional models of organisation, understanding and action.

Managers unaware of, or unable to deal with, this situation tend to

Strive to regain the comfort of control and coherence by reasserting old truths with more conviction and urgency, stressing fundamentals, ignoring inconvenient information, interpreting complexity in simple terms.

Behaving like this does not make for a successful organization. The International Futures Society has published several papers that managers would do well to read. For example, three of the suggestions the the authors of the document Ten Things to Do in a Conceptual Emergency make are particularly relevant to managers:

• Try other worldviews on for size (making the point that a western view of what constitutes a successful organization is not necessarily the only, or best, view)
• Give up on the myth of control – not an easy task for those measured on attainment of targets, key performance indicators, and so on – but another response is, rather than to try and simplify the complex to accept and acknowledge complexity as an inevitable fact of modern life and instead of trying to avoid or control it, participate in it. Relish diversity, surprises, look for the ineffable and appreciate the richness and the unique quality of all things

• Form and support new organizational integrities: We are pushing at the limits of traditional organisation. The rise of partnering, alliancing, outsourcing, cross-cutting and 'joined-up' working creates organisations in which the density of internal transactions is less than the density of transactions with the external environment. The boundaries of organisation are dissolving – a shift critically enabled by technology.

A series of other papers examine psychological capacity in a global age, with an interesting one on the nature of the leadership challenge in powerful times and the role that the arts and cultural sector might play as a setting for developing 21st century competencies.

The International Futures Forum is one of many organizations specifically looking at developing future oriented thinking. Others include the World Future Society , the Institute for the Future and the Singularity University (an interdisciplinary university whose mission is to assemble, educate and inspire a cadre of leaders who strive to understand and facilitate the development of exponentially advancing technologies in order to address humanity's grand challenges)– regularly looking at what these types of organizations are reporting on/discussing would help any manager develop the capacity to think beyond the immediate and support their organizations into developing modesof operationg that are more successfully responsive to emerging situation than they currently are.

One of the learners on an organization theory program I am teaching said that he was interested in the course because "specifically I am trying to understand why some of the most grievous mistakes that I have seen made are being made by those who know better, but are overconfident and continue on in the face of issues that they normally would have taken as signals to stop the job."

The other day I mentioned Gary Klein's book Sources of Power: How People Make Decisions. (See Toyota piece). Now he has come up on my radar again because he has also written a couple of other books more specifically on intuition and decision making, the most recent being Streetlights and Shadows: Searching for the Keys to Adaptive Decision Making, and he also appears in the current issue of McKinsey Quarterly (that I was reading just before I saw the piece from the learner) where he and Daniel Kahneman 'debate the power and perils of intuition for senior executives'

The connection between intuition and over-confidence is made by Klein in this discussion with Kahneman. When asked: "Under what conditions are the intuitions of professionals worthy of trust?"

Klein replied: It depends on what you mean by "trust." If you mean, "My gut feeling is telling me this; therefore I can act on it and I don't have to worry," we say you should never trust your gut. You need to take your gut feeling as an important data point, but then you have to consciously and deliberately evaluate it, to see if it makes sense in this context. You need strategies that help rule things out. That's the opposite of saying, "This is what my gut is telling me; let me gather information to confirm it."

Kahneman follows up saying: There are some conditions where you have to trust your intuition. When you are under time pressure for a decision, you need to follow intuition. My general view, though, would be that you should not take your intuitions at face value. Overconfidence is a powerful source of illusions, primarily determined by the quality and coherence of the story that you can construct, not by its validity. If people can construct a simple and coherent story, they will feel confident regardless of how well grounded it is in reality.

Turning to the RSA Journal (also in the pile of things I am reading) was the article by John Kay, from his book Obliquity. Kay tells the story of the hedgehog who knows one big thing and the fox who knows many little things. He reports that Philip Tetlock, a political economist used this to study political judgments, noting that:

But Tetlock's most striking discovery is that, although the foxes perform better in terms of the quality of their judgments, the hedgehogs perform better in terms of public acclaim. Hedgehogs are people who know the answers. Foxes know the limitations of their knowledge. The confident certainties of hedgehogs attract the attention of politicians and business leaders. Give me a one-handed economist, goes the saying, but careful judgment is often a matter of 'on the one hand, and on the other'. Yet hedgehogs, who claim to predict the future, will always attract a larger audience than foxes, who acknowledge they can't, even if the larger audience learns nothing useful from the predictions.

This brings me back (almost) full circle to my blog yesterday on Dunbar's number, and the concept of 'opinion leaders'. From mashing the theories (Klein's, Kahneman's, Kay's, and Dunbar's) emerges a hypothesis that there are opinion leaders, i.e. hedgehogs, who (over-confidently) rely on their intuition to make decisions and these decisions are not good ones. Indeed Kay makes the point that "It is hard to overstate the damage that has recently been done by people who thought they knew more about the world than they really did." And he goes on to give some examples.

Assuming that there is something to the hypothesis (the learner could test it) what would stop leaders from leaping into an over-confident decision and not taking time to review the outcomes of the decision and stop things if they were going wrong? The articles present three suggestions:

• Select leaders differently. Kahneman makes the point that "One of the real dangers of leader selection in many organizations: leaders are selected for overconfidence. We associate leadership with decisiveness. That perception of leadership pushes people to make decisions fairly quickly, lest they be seen as dithering and indecisive."
• Teach people to continuously challenge their assumptions.
• Do the 'post mortem exercise'. Before acting on a decision, people should say, "We're looking in a crystal ball, and this decision was wrong, it failed to deliver, it was a fiasco. Now, everybody, take two minutes and write down all the reasons why you think the decision failed."

The spring 2010 RSA Journal (UK) has an article by Robin Dunbar, professor of evolutionary anthropology at the University of Oxford. He has a theory that

Among primates in general, there is a simple relationship between a species' typical social group size and the size of its neocortex (very roughly, the thinking part of the brain). Humans fit nicely on to the end of this line, with a predicted group size based on our neocortex size of about 150 – the figure that is now known as 'Dunbar's number'.

He goes on to note:

That said, the 150 people in your social world do not form a homogenous group. Our research has revealed that social networks actually consist of a series of layers, or circles of acquaintanceship. The size of these layers tends to increase by a multiple of three – an inner layer of five intimates, then 15 good friends, 50 friends and 150 acquaintances, with each successive layer including those below it. As you go up through the layers, the average emotional intensity of the relationship declines, as does the frequency with which you see individuals. What seems to set the limit at 150 – the outer layer – is that you run out of time and psychological capital to give to more people.

This is a very attractive theory and could hold implications for the ways organizations are designed. In fact, as Dunbar points out, military units are often that number of people. If right, his thinking could mean that business units function optimally in groups of 150 people 'with an inner layer of five intimates' (perhaps a proxy for the units leadership team?). But in this article Dunbar does not mention hierarchies or layers and spans, although he does remark that:

In small-scale societies, the fact that the community is spatially and socially integrated means that its members can maintain social cohesion and social discipline. This doesn't mean to say that they never fall out or quarrel, but it does mean that they will look out for one another. Peer pressure is usually sufficient to police everyone's behaviour and prevent individuals from stepping too far out of line. What bonds the community together is a common sense of obligation, reciprocity and trust.

These are characteristics that any organization is constantly tyring to develop and so begs the question of whether business organizations are more successful if they are modeled to develop stable social communities, or whether things like succession planning, planned assignments in different locations, encouraging a certain amount of employee turnover, etc result in more successful organizations.

Later in the Journal there's an article The Many and the Few by Sanjeev Goyal, professor of economics at the University of Cambridge. He points out that

In a series of pioneering studies in the 1950s, Elihu Katz and Paul Lazersfeld identified a key feature of social communication: the fact that a very small fraction – about 20% – of the population, which consisted of so-called 'opinion leaders', served as the primary source of information for the rest. In the intervening decades, a number of studies on information and communication have confirmed that this is a robust feature of our social networks; we rely on a relatively small subset of our social group for information. Malcolm Gladwell calls this the 'law of the few'.

What follows is a rather clever example of how the 'opinion leaders' can influence the way people regard two technologies – one old and proven, and one new and unproven. Goyal has found that

Opinion leaders observe only a few others, while almost everyone observes them. This leads to the mass adoption of ideas and technologies whose desirability is contradicted by large amounts of locally collected information. Moreover, due to the broad adoption of such actions, the generation of information about alternatives is seriously inhibited, so the lack of experimentation can persist for a long time. …

… These findings may be interpreted in the light of Mark Granovetter's celebrated 'strength of weak ties' hypothesis. Granovetter visualises society as comprising groups of individuals who have many internal links but only a few cross-group links. Our research suggests that strong ties within groups sustain experimentation, while weak, cross-group ties carry valuable information across a broader network, thereby sustaining technological dynamism in a society.

Taken together the two articles suggest that designing workgroup communities of around 150 people with ties to influence leaders in other communities might make for a successful organization. But of course we don't know that this would happen (although Gore is an example of a successful organization which does, in fact, follow more or less those principles).