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Managing in Complexity – convergence of ideas

Do you believe in synergy and synchronicity?  I do.

Over the past few weeks I have been seeing a real convergence of ideas from companies, experts and people I meet, suggesting that there are some fundamental deep-seated differences between organisations that manage complexity and change successfully and those that don’t – and that we should be able to identify and measure these, for the benefit of our clients.

Those of you who follow my blogs will know that I have been saying for some time that complexity is not linear and managing complex projects successfully demands a move away from ‘command and control’ style project management to one that supports and nurtures emergent behaviour and new forms of organisation. (I took my original cue from the work of Eve Mitleton-Kelly who runs the Complexity Group at LSE).

It is encouraging that the recent IBM study (‘Capitalizing on Complexity’) takes a similar view of business complexity, suggesting that the ever-increasing scale of complexity in business places new demands on CEOs to be more creative. One CEO in the IBM study concludes that “The complexity our organization will have to master over the next five years is off the charts — a 100 on your scale from 1 to 5.”

And today’s Sunday Times actually has an article (Complexity may be inevitable but it must be managed) about the need for companies to simplify in the face of complexity. It also identifies the non-linearality of complexity and accepts that levels of complexity are rising.

So complexity is the ‘space’ within which I want to be able to offer help and support to clients, whether it’s project (narrow focus) or business (wider focus) complexity.

Convergence of ideas

In addition to the IBM study and the Sunday Times article, here are some of the other ideas that are converging:

1st and 2nd Order Project Management

Michael Cavanagh (http://mcavanagh.com/) has identified that managing complex programmes demands a different approach to that required to deliver simpler programmes – what he calls “2nd order PM”, focusing on some of the soft aspects of change, where 1st order PM focuses just on the project outputs.

Michael refers to “Bureaucracy – when you know what to expect” and “Adhocracy – when you don’t”. I have for some time used a similar distinction, first encountered when reading Thomas Docker’s white paper on project complexity (he is Chairman of CITI):

  • Complicated = not simple, but ultimately knowable (such as installing a new comms network)
  • Complex = not simple and never fully knowable (such as restructuring and merging two departments)

(Interestingly, a discussion about complexity on BBC Word Service Radio this morning with Nassim Nicholas Taleb (The Forum: 12/03/2011), used exactly those terms…more synchronicity!)

Michael’s 2nd order PM includes the use of “adhocratic” leadership, system thinking, outcome management and experiential learning – “learning in the experience, not from the experience” – a great distinction which fits well with David Snowden’s “Probe > Sense > Respond” approach to complexity, in his Cynefin framework. i.e. act in the uncertainty.

Overload tipping point

In the capability assessment that forms part of the Project Readiness Healthcheck, we assess the capability of the organisation to cope with change by looking at its culture and process management capability. But clearly another factor must be the sheer number of change initiatives being loaded onto the shoulders of the poor managers. I suspect that there is a tipping point, beyond which nothing new gets through.

A recent report from the Economist Intelligence Unit, “Leaders of change – Companies prepare for a stronger future” says that change programmes are “consuming ever more corporate resources” but adds that on average only 56% of change initiatives are successful. The report suggests that the limit of how many initiatives a company can absorb is, on average, just 3.6 changes annually. That average doesn’t tell us very much, unfortunately. It would be useful to know on what variables it was based – and to be able to assess an organisation’s overload factor as an indication of how well it would cope with further change.

What is the tipping point? 100% overloaded? 200%?

The strategy is obviously to get managers to STOP doing stuff…which fits with the idea that one answer to complexity is to simplify the customer and employee experience, i.e. simplify your processes… but that needs a strong, well-supported argument, based on research. Some work on overload was done by Rebecca Henderson at Harvard way back in 1981, but the details of this are not available and I haven’t seen anything since.  Time we focused on it again!

Investing in an organisation’s capability is key to longer-term success

That’s so obvious, it shouldn’t need saying, but how often do you come across organisations where they only really pay lip service to their Investing in People values? So it’s great when one comes across something that confirms the importance of consistently paying attention to developing and maintaining a strong set of core values and supporting people to trust, share and become empowered to ‘invent their own route to the future’. Following up the Overload work by Rebecca Henderson at Harvard produced this gold nugget:

When the CEO’s priority is to hit the revenue targets, performance seems to go up. So that becomes the strategy whenever the company comes under pressure. However, work done by Nelson P. Repenning and Rebecca M. Henderson at Harvard suggests that this apparent causality may lead to a “vicious cycle of accelerating decline”. Their (very technical) paper: ‘Making the Numbers? “Short Termism” & The Puzzle of Only Occasional Disaster’, suggests that the more the focus on revenue targets diverts attention and resources away from developing capability (i.e. their people and processes), the more the company risks disaster longer term. Again, there seems to be a critical “tipping threshold”.

So it seems that developing a strong, sustained cultural and process management capability enables an organisation to be flexible and achieve performance targets when the pressure is on, without detriment to its long-term survival.

That fits right in with our Change Equation principle that the management of change is not a subset of project management and cannot be achieved within the lifecycle of a change project – it has to start earlier, continue throughout and go on after the completion of the project. In other words it requires a separate, continuous thread of capability development to reflect, transmit, embed and maintain the organisation’s core values.  That is the recipe for sustained growth and survival.

So what do organisations who are good at managing change have in common?

They

  • Have strong, congruent values, embodied and disseminated from the top
  • Follow a ‘grow-your-own’ and ‘pick-the-best’ approach to talent and skills
  • Take care with their people – ‘they are our real assets’ (and mean it)
  • Involve their people in ‘creating their own route to the future’
  • Set performance targets from the ‘outside in’, taking a systemist and holistic view of the organisation, where individuals are recognised to wear multiple hats
  • Recognise the dangers of overload, manage out unnecessary processes and invest in change management
  • Understand how to cope with complexity, are able to simplify and build in flexibility and adeptness for change.

That’s my list, off the top of my head…what’s yours?

And what tools have you got to measure all this?

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March 13, 2011 - Posted by | business, business change management, complexity |

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