A big issue

John Bird presents a stirring case for tackling poverty.  ‘To me the really big thing in the world today that needs to be done is that we have to stop seeing things as ‘things in themselves’. We have to stop being separators of life into categories. That if you want to solve poverty, which I am rantingly struggling to do, you can’t separate poverty out into separate things. You have to hit poverty square in the eye. You have to give a cocktail of solutions to it, like you might zap a cancer. Yet the world is always dividing poverty up into different parts: literacy, housing, work, wellbeing, health … the world of thinking, of society, of government, always breaks things up into things’.

This ‘thingifyíng’ of issues – trying to tackle them separately rather than interdependently, collaboratively and/or as complex problems is a big issue – because people in organisations I work with ‘get’ interdependence in theory and understand that linear and cause/effect thinking won’t address re-ordering the tangle of variables that constitute the ‘design’ of the organisation.  Yet they are unable to work with this in practice and continuously retreat to the organisation chart as the way to solve many organisational issues.  (See a Q5 Partners short video Forget Personality: a thinkpiece of restructuring teams, that warns against an ‘org chart first’ approach, and goes down well when I’ve shown it).

I’ve had several different conversations during the past week on interdependence and the tendency to ‘thingify’.   Various possibilities were put forward for the inability of organisational leaders to engage with complex, interdependent and problematic organisational design situations and address them systemically or holistically, rather than individually and in compartments.  Among the reasons we discussed for the tendency to reach for the organisation chart, three came up in all the conversations:

1.  The ‘tyranny of metrics’ (see my blog on this)  that is performance targets that attempt to measure elements of a system’s performance, rather than the outcome of the performance.  This frequently leads to gaming behaviour as organisational members try to reach the target rather than the intended outcome.  An example of this is described in Max Moulin’s article Flawed targets and the ambulance service – is there a happy ending? which leads to questioning, ‘traditional assumptions about measurement, impact, and relationships’.  There’s also a recent report that looks at flawed performance targets in the public sector A Whole New World — Funding and Commissioning in Complexity.

2.  Believing that organisation design work is complicated rather than complex.  David Snowden, explains the difference: ‘In a complicated context, at least one right answer exists. In a complex context, however, right answers can’t be ferreted out. It’s like the difference between, say, a Ferrari and the Brazilian rainforest. Ferraris are complicated machines, but an expert mechanic can take one apart and reassemble it without changing a thing. The car is static, and the whole is the sum of its parts. The rainforest, on the other hand, is in constant flux—a species becomes extinct, weather patterns change, an agricultural project reroutes a water source—and the whole is far more than the sum of its parts. This is the realm of “unknown unknowns,” and it is the domain to which much of contemporary business has shifted.’  Organisations are complex.  Trying to redesign them as if they are complicated doesn’t work.

3.  The almost impossibility of changing the infrastructure, systems and processes that have been set up over decades to reflect a mechanistic/deterministic view of an organisational universe.  As Professor Karen Carr  states: ‘The challenge is to implement a systems world view from within organisations that have evolved from deterministic world views. … making it difficult to take a systems approach. Issues such as health, training, leadership and information management are addressed within different partitions …. Finding a way to get these different areas to interact in an organic manner is in itself a problem, given the [organisational] political, social and economic contexts.

Other reasons we discussed for the lack of systems thinking included: power dynamics (‘my bit is ok, why should I worry about yours?’), financial/resource constraints leading to prioritising some parts over others without thinking through the consequences, and short-term thinking – ‘let’s fix this fast and now’, and not knowing how to apply systems thinking.

Going back to the issue of tackling poverty, John Bird tells us, ‘We cannot simply carry on in this brainless, unconverging bit here and bit there’, and it’s the same for organisational issues.  How do we then create the conditions for systems and complexity thinking to become a natural part of the way we look at problems?

Answering this question as if it were a complicated problem yields a bits and bobs answer for example, send leaders and managers on systems thinking programmes (look at the Open University’s courses Systems Thinking in Practice,  or discuss and then pin up the poster Habits of a Systems Thinker,  show David Snowden’s video ‘How to organise a children’s party’ that shows ‘the promise of complexity theory for organizations and government alike’.

Answering the question as if it were a complex problem yields other responses.  Donella Meadows offers some thinking on how to do this in ‘Dancing with Systems’ (warning:  this is not written in standard management speak)  and in another Leverage Points: Places to Intervene in a System

Perhaps the most useful response to the question ‘how do we encourage organisational leaders to engage with complex and problematic organisational design situations and address them systemically or holistically, rather than individually and in compartments?’  is to do so in both a complicated and a complex way.  Maybe then we would see system thinkers emerging and a big issue would be resolved.  What’s your view?  Let me know.

Image: Systems thinking 101

Complexity and organisational processes

Do you have a criteria or approach for assessing/measuring the complexity of business functions? This question came to me from a consultant redesigning a business unit.  The proposed new design increases the number of functions reporting into the current Director.   He wondered if the size of the unit would be too much for him.   The consultant suggested that the answer depends on the complexity‎ of the functions reporting in to the Director and now needs to find a way to identify and test functional complexity.

McKinsey tells us that ‘Companies must get three things right to manage complexity for value: organizational design, coordinating processes and systems, and capability building.’

In a later article they point out that ‘When pressed, many leaders cite the institutional manifestations of complexity they personally experience: the number of countries the company operates in, for instance, or the number of brands or people they manage. By contrast, relatively few executives consider the forms of individual complexity that the vast majority of their employees face—for example poor processes, confusing role definitions, or unclear accountabilities.’

Accepting that distinction, the number of different functions that a single Director can manage depends on both factors.  The institutional complexity relates to the operating environment.  A Deloitte paper quotes the example of regulators, ‘whose job has always been to protect the public from danger, exploitation, or insufficient competition in reasonably stable markets, now face another danger: that their own application of old rules to new realities might suppress innovations of tremendous potential value to the public.’

The article lists four ‘new realities’:

  • Change comes faster – the authors point out that ‘while innovation has always challenged regulatory authorities, its influence on society has historically spread more gradually, giving regulators more time to learn and adapt. Today, startups are more quickly reaching significant scale and impact, in some cases serving millions of customers and employing thousands of people’
  • Innovators find back doors – think how Uber challenged the regulation of taxi firms, and Air BnB of the hotel industry.
  • Ecosystems are full of unlike players – ‘once-clear industries dissolve into complex ecosystems full of unfamiliar entities and innovative offerings’.
  • Innovations cross lines of jurisdiction – for example people interested in investing their pension in cryptocurrencies cross more than one regulatory framework.

The individual complexity that employees face is commonplace in most organisations.  Julian Birkinshaw in his TEDx talk ‘The Cost of Complexity’ gives vivid examples of individual complexity at work:  workarounds, things falling into ‘a bit of a black hole’ where no one can retrieve them, duplication of activity, and poor customer service.  He talks about the costs of this form of complexity, advocating instead ‘organising based on adhocracy not bureaucracy’.

There is an example of this adhocracy over bureaucracy thinking applied to traffic flow.  Hans Monderman’s ‘designs emphasized human interaction over mechanical traffic devices. By taking away conventional regulatory traffic controls, he proved that human interaction and caution would naturally yield a safer, more pleasant environment for motorists, pedestrians and cyclists.’

The information above is useful in indicating that the Director needs to know:

  • The level of institutional complexity, and whether it is the same for each business unit
  • The types of individual complexity employees and customers experience in the organisation (and the costs of this)
  • The possible methods of addressing the two types of complexity to make the Director’s task manageable in the absence of being able to reallocate some of the management to another Director – for example, could the number of rules and policies be reduced?

Knowing the level of institutional complexity means keeping alert to the constantly changing external environment, perhaps introducing a horizon scanning function, keeping a close eye on competitors, looking for patterns in large data sets, and so on.

Knowing the level of individual complexity is usefully done by examining organisational processes.  As David Garvin says, in an excellent article, ‘In the broadest sense, they [processes] can be defined as collections of tasks and activities that together — and only together — transform inputs into outputs. Within organizations, these inputs and outputs can be as varied as materials, information, and people.’  He tells us that ‘a process perspective gives the needed integration, because it emphasizes the ‘links among activities, showing that seemingly unrelated tasks — a telephone call, a brief hallway conversation, or an unscheduled meeting — are often part of a single, unfolding sequence’.  Additionally, a process perspective can link the realities of work practice ‘explicitly to the firm’s overall functioning’.

He describes organisational processes in three categories:  work processes (subdivided into operational and administrative), behavioural (he discusses decision-making, communication and organizational learning), and change.  Processes operate at the institutional and individual level, emphasizing, ‘the links among activities, showing that seemingly unrelated tasks — a telephone call, a brief hallway conversation, or an unscheduled meeting — are often part of a single, unfolding sequence.’

Organisation designers take note of the point that there are ‘intimate connections among the different types of processes’ and it is futile to analyse them in isolation.  As he says, ‘It is extraordinarily difficult – and, at times, impossible – to understand or alter a single process without first taking account of others on which it depends.   Thus, in Garvin’s view, accountability must shift ‘to those with wide enough spans of control to oversee entire processes’.

Following the discussion of organisational processes, Garvin talks of managerial processes:  direction setting, negotiation and selling, monitoring and control.   He then presents a ‘Framework for Action’ that I haven’t yet used but intend to try.  It looks to be a good starting point for making some judgements on whether the organisational and managerial processes are complex – in terms of work flow, behavioural interactions and degree of change – in the context of what is known about the institutional complexity.

How would you assess the degree of complexity in a business function and what is manageable for one Director?  Let me know.

Image:  Data complexity