Norman Chorn

Part 3: Accelerate Performance With Strategic Alignment - Develop The Appropriate Culture

norman@drnormanchorn.com (Norman Chorn) — Mon, 27 Mar 2023 00:14:14 GMT

In my previous article "Accelerate Performance with Strategic Alignment - Define the logic of your strategy", we demonstrated the alignment between the market and business strategy by matching the logic of the market with the logic of the strategy.

The Explore logic emphasises a market where customers seek new solutions for emerging requirements. The strategy responds by exploring new opportunities and driving for growth.

The Exploit logic occurs in a more stable market where customers seek lower costs and reliability of supply. The appropriate strategy focuses on operational efficiency and building close customer relationships.

Culture is key to shaping the capabilities of the business to successfully implement strategy . It drives the way that people behave, decisions are made and actions are taken. It determines, therefore, the strategy that is actually realised in the market, as opposed to that which is merely intended.

We make a key distinction between the desired culture and the appropriate culture. The desired culture is what people may choose because it sounds attractive and in vogue. However, the appropriate culture is the culture that is required to successfully implement the chosen strategy. Often, these can be different.

For example, people might seek to develop a culture that is ‘innovative’, ‘flexible’ and ‘empowering’, but this may not be the appropriate culture needed to successfully implement the business strategy.

DEVELOP THE APPROPRIATE CULTURE FOR YOUR STRATEGY

Developing the appropriate culture requires a deliberate emphasis on certain cultural attributes and making trade-offs on others. As we will see, the attributes that are traded off are usually the opposites of those that are emphasised.

DEVELOPING THE APPROPRIATE CULTURE REQUIRES FOCUS AND TRADEOFF

The focus and consequential trade-offs may be clearly seen in the following graphics:

Prospector, Defender and Analyser

As we can see, the Prospector and Defender make clear trade-offs in their culture to achieve the necessary focus.

The Analyser adopts a portfolio approach and so trades off the ability to manage in a consistent way across the organisation.

The Reactor, on the other hand, achieves no clear focus as it frequently changes its strategy and needs a different culture (ie different patterns of behaviour) on each occasion. Consequently, no clear pattern emerges, and the business achieves little success.

ALIGNMENT IS THE KEY TO BETTER PERFORMANCE

In each case we see that the culture must be appropriate for the strategy in order to achieve successful implementation.

The focus that is required may mean that the business must make some trade-offs in certain cultural attributes in order be effective. The failure to do so generally results in a ‘balanced’ culture that attempts to achieve action, innovation, consistency, and consultation. Sadly, this produces internal cultural conflict and often results in key aspects of the strategy not being implemented.

This is the cultural equivalent of the marketing maxim that you ‘cannot be all things to all people’. At the end of the day, the strategy and culture need to be focused to emphasise those characteristics and attributes that meet the needs of the market.

About Norman

Dr Norman Chorn is a highly experienced business strategist helping leaders build highly successful and resilient organisations. Well known to many as the ‘business doctor’!

By integrating the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations.

Part 2: Accelerate Performance with Strategic Alignment - Define the Logic of your Strategy

norman@drnormanchorn.com (Norman Chorn) — Mon, 27 Mar 2023 00:11:47 GMT

In Part 1 "How to Accelerate Performance with Strategic Alignment - Understand the Logic of the Market" we outlined different market conditions and defined them in terms of two overarching logics — Exploring and Exploiting .

To briefly recap, an Exploring logic is one where customers are seeking new solutions for emerging needs. It’s all about change and action.

An Exploiting logic occurs in a more stable market in which the issues are about lowering costs and working collaboratively with customers.

It’s a market that focuses on stability and cohesion.

FORCES THAT SHAPE YOUR STRATEGY

Clearly, it is one of these two logics — or a combination of both — that will shape your strategy as you operate in these markets.

See figure 1 below that describes how these logics will form your business strategy:

The diagram outlines 4 distinct strategy types that regularly appear in competitive markets ^[1] . In each case, the strategy type is formed by a combination of the two logics described above.

Each of these types are described in further detail in table 2 below:

UNDERSTANDING THE STRATEGY TYPES

The table above shows that two of the strategies (Prospector) and (Defender) have highly focused logics, while the Analyser is a combination of logics achieved via a different organisation design. The Reactor is shown to be least viable form because it has little clear logic:

The Prospector emphasises exploring new opportunities through innovation and a highly flexible, decentralised structure. It does not always excel in exploiting these opportunities but focuses on growth and creativity.
The Defender emphasises stability and operational efficiency which is achieved by tight controls and standardised processes. It focuses very little on innovation and change but delivers steady earnings in its core market.
The Analyser achieves a combination of both exploring and exploiting. However, this is NOT achieved by combining these characteristics into a single organisational form. Importantly, the exploring and exploiting focuses are achieved in separate business units, divisions or departments. In other words, an Analyser organisation needs to consider itself a portfolio of businesses — some focused on exploring, and others on exploiting. And the explore and exploit parts should be managed differently with different processes and KPIs.
The Reactor is the least successful of these strategy types, largely because neither its strategy nor organisational form is clear and consistent. As we shall see in the final email in this series, the Reactor’s culture and strategy is too unstable for the development of capabilities and competencies that produce a competitive edge.

A KEY LESSON

Strategic success is achieved through focus — and focus is imbalance . A deliberate imbalance in resources and effort. The 3 successful types display this focus:

Prospector (high explore; Defender (high exploit); and Analyser (portfolio approach) all make deliberate tradeoffs to achieve this focus.

We will see how this is supported in Part 3, that focuses on culture and its alignment with strategy.

About Norman

Dr Norman Chorn is a highly experienced business strategist helping leaders build highly successful and resilient organisations. Well known to many as the ‘business doctor’!

By integrating the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations.

Part 1: How To Accelerate Performance with Strategic Alignment - Understand the Logic of the Market

Mon, 27 Mar 2023 00:09:14 GMT

Do you know what will help your organisation perform better?

In the last 30 years of research a key finding is to ensure your strategy is right for the market, and then to have a culture and leadership style to reinforce this.

But what’s the code that unlocks this alignment of market, strategy, culture, and leadership?

What is the approach that outlines how these key elements fit together?

If you had a chance to attend or watch the replay of my live webinar ‘How Leaders Align Culture with the Logic of Their Strategy?' I discussed an approach to create this alignment.

Following on from this topic, I thought it would be of benefit, to share my key insights of “Strategic Alignment” methodology in greater detail and I will do this over the next few articles.

This will help you and your organisation create strategic fit between your organisation and the market.

Forces that shape the market and strategy

We begin by outlining the timeless forces that explain the patterns behind behaviour, decisions, initiatives and plans.

Extensive research shows that we can apply these same forces to explain the overarching logic of how a market operates and what customers want.

See Figure 1 below - The forces that shape behaviours, decisions, initiatives and plans

The 4 forces are well researched in multiple settings ^[1] and are useful to describe both the patterns that occur in markets and in business strategy.

We outline how these may be applied to describe different conditions in markets ^[2] .

Understanding Different Market Conditions

We may describe the different market conditions in terms of these 4 forces in the table below ^[3] :

What's the overarching logic of the Market?

The overarching logic of the market can be explained by whether the focus is exploring or exploiting.

EXPLORING is the state where the market is changing with a degree of uncertainty, and customers are seeking new solutions for their emerging needs. Urgency and action are implicit in this market state.

Exploring, therefore is about change and action.

EXPLOITING , on the other hand, is where the market is stable and the issues are about keeping costs low and working collaboratively with customers. There is caution and some risk aversion in this market state, where customers seek reassurance that they are getting good value for money and that the solutions will meet their needs.

Exploiting is, therefore, about controlled stability and cohesion.

When viewed in this light, it seems obvious that the strategies for exploring and exploiting are quite different.

Often, a market might appear to have both logics — ie: a need for both exploring and exploiting.

In our experience it is highly likely that, in this case, there might be two quite distinct segments in the market.

In this case, we may have to identify these different segments and develop appropriate strategies for each. More of this in Part 2.

The next step - Defining the appropriate strategy

In Part 2, I outline the strategies that suit these different market logics by describing the driving forces and the key elements of each strategy. I also address the important question of how a business might combine both explore and exploit logics into their strategy.

Hint: these two strategies cannot be easily combined except through a different organisation design.

References

(1) Helfrich et al, Implementation Science, 2007, 2:13

(2) R Martin, The Design of Business, Harvard Business School Press, 2009

(3) N Chorn, Strategic Alignment, Woodslane, 2010

About Norman

Dr Norman Chorn is a highly experienced business strategist helping leaders build highly successful and resilient organisations. Well known to many as the ‘business doctor’!

By integrating the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations.

Why Aligning Culture and Strategy Improves Performance

Wed, 28 Sep 2022 23:49:54 GMT

What drives organisational performance

There is a wide range of views on the definition of organisational performance. Profitability? Market share? Good products? Despite the lack of a common measure for performance, the question of what drives performance is more easily answered.

We have given up the search for the strategy, culture or style that produces the best performance in any condition. Instead, it seems more sensible to recognise that any strategy is only appropriate in a given set of market or competitive conditions. Similarly, we realise that a given culture or leadership style is only appropriate in a given strategic situation.

While this basic principle is easily understood, how can it be applied? We think driving organizational performance may lie in the concept of “ strategic fit ”.

What is Strategic Fit and How Does it 'Fit In'?

Strategic “fit” considers the degree of alignment between your strategy, culture and leadership style. In this sense, alignment refers to the “appropriateness” of the elements to one another.

Research reveals that superior performance (measured in a variety of ways) is associated with high degrees of alignment between strategy and culture — ie: a good “fit” between strategy and culture.

This is explained by the fact that culture has a significant influence on the organisation’s capabilities in two ways:

By acting as a filter to constrain strategic options to those that are compatible with the existing culture (1) ^[ ^1]
By requiring cultural change to enable the organisation to effectively implement its strategy (2) ^[

In both cases, we see that the “fit” between culture and strategy is closely associated with the organisations ability to execute strategy and, therefore, improve an organisation’s performance.

Leadership has a critical role to play in this “fit’ between culture and strategy. Not only does leadership influence and guide the overall strategy, culture is also shaped by the style and key behaviours of leaders in the organisation.

3 Steps Leaders Can Take to Strategically Align Culture With The Business Strategy

Clearly define the business strategy with respect to “how we will win” in the market
Identify the key elements of the culture to support the strategy
Adopt a leadership style that will actively shape the required culture.

These steps are further outlined below.

1. Clearly Define The Business Strategy With Respect to 'How we Will Win' in The Market

The purpose of strategy is to achieve some form of competitive advantage. Therefore, strategy should answer the question of “how will we win?”, or “what do we do to earn our customers’ business in this market?”.

Competitive advantage is achieved when the business has a pronounced focus on the source of competitive advantage. Focus is achieved through a purposeful over-allocation of resources to a particular set of initiatives, rather than evenly spread through all initiatives. Focus is different to balance – it is a deliberate imbalance of resource allocation.

There are 4 focused pathways to choose from to create competitive advantage in strategy. These are represented in the diagram below by individual colours.

Recognise that your strategy may have elements of all four pathways — but there should be clear dominance in one to reflect the required focus.

2. Identify The Key Elements of The Culture to Support The Strategy

Since the culture is closely associated with the organisation’s capability to implement strategy, the key characteristics of the culture should match those of the strategy. (3)

Research reveals that the way you do things inside the organisation will drive the way things are done outside the organisation — ie: your strategy in the market.

3. Adopt a Leadership Style That Will Actively Shape The Required Culture

Leaders play a key role in shaping and modelling the culture in an organisation. We know that the leadership style and approach should meet the demands of each situation, and we have identified the specific elements of leadership that are appropriate to reinforce and enable different cultural types.

Creating a Strategically Aligned Culture

Three points are worth noting as we consider culture alignment:

Strategic fit (alignment) is an ideal state to be strived for. However, given the dynamic state of markets and organisations, it is rarely achieved on a permanent basis. Nonetheless, it is a worthy goal due to its positive impact on performance
A primary role of leadership is to achieve alignment by actively managing the interdependencies between market, strategy, culture and leadership
There are occasions where leaders might deliberately create a misalignment — such as when there is a need to shift strategy. The resultant tension will usually give rise to a change in culture and leadership to create a new alignment for the business.

The moving “in” and “out” of alignment is a common phenomenon in a fast changing environment. We know, however, that organisations cannot survive in the long term if there is misalignment of culture and strategy. That is why it is important to include future strategy when you plan the alignment of your business. The purpose of strategy is to position and align the organisation for the future.

(1) Strategy: Beyond the Hockey Stick. Bradley, Hirt and Smit, McKinsey & Co, 2018

(2) Strategic Alignment. Chorn, Woodslane Press, 2010

(3) The Alignment Theory: Creating Strategic Fit. Chorn, Management Decision, 29,1, 1991

About Norman

Dr Norman Chorn is a highly experienced business strategist helping leaders build highly successful and resilient organisations. Well known to many as the ‘business doctor’!

By integrating the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations.

Get out of the Dark Room to Build a Clear Strategy

Fri, 29 Jul 2022 14:24:54 GMT

You can improve your strategy by shifting from an analogue approach to a digital approach. Here I share my insights in leadership and strategy in this disruptive world we live in.

In a recent article I discussed how all significant initiatives in your business begin with a well thought-out, clear strategy — whether it’s change management, implementation of an Agile process, or the development of an innovation program.

However, there seems to be a lack of confidence in the ability of strategy to deliver results when speed and agility is required.

The Analogue approach vs Digital approach

One of the problems we see, is the way organisations practice strategy — that is separating the formulation from the execution of strategy. This separation is what we term an analogue approach. Instead, we are advocating that a digital approach be adopted.

The analogue approach can be likened to traditional photography, with the use of a dark room to develop your picture. In this situation, we take time to take the perfect picture, and then wait for the photo to be developed. The final picture however cannot be changed once the process is completed.

The digital approach, on the other hand, is where we take the picture, review it immediately, and then keep on clicking until we get a picture that we are satisfied with.

It is the digital approach that we see as being critical for organisations to adopt.

Why a Digital approach?

A digital approach addresses three of the common failings of the traditional analogue strategy. A digital approach will:

include a much wider set of views in the organisation by integrating the views of people who normally formulate the strategy with those who normally execute the strategy. The understanding of the market is likely to be more complete
build a strong rationale (the “why”) for the strategy through the organisation right from the beginning of the process
achieve a higher level of engagement and commitment to the strategy.

What are the key differences between an analogue approach and the digital approach?

How do we achieve the digital approach/methodology to create a clear strategy?

My colleague Lisa Carlin and I have identified 4 processes to achieving a digital approach to a clear strategy:

An open strategy development process immerses a representative cross-section of people in the organisation, not just the board or senior executives
A many-to-many, synchronous communication process occurs between those responsible for developing the strategy, and the rest of the organisation. Furthermore, the process is not periodic, it is an ongoing working methodology with staff at different levels — often termed a ‘co-designed’ approach
A seamless integration between strategy formulation and execution phases takes place through an iterative Agile process. This means that ideas are trialled through small, low-risk pilots — allowing some ideas to occur concurrently with the formulation of other ideas
Technology platforms offer a number of tools that can speed up this process, many of which can be used in a hybrid working environment. These include tools for engagement, productivity, communication and training.

You may be interested to watch my latest video below...

The 3 Horizons of Strategy - What it Really Means

About Norman

Dr Norman Chorn is a highly experienced business strategist helping leaders build highly successful and resilient organisations. Well known to many as the ‘business doctor’! By integrating the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations.

How Successful Leaders See Into The Future

Fri, 29 Jul 2022 14:20:27 GMT

How many times have you expressed frustration at your inability to have a clear view of the future in your organisation? It’s so obvious that things need to be done differently — but we are unable to see what the future holds.

There are several factors that block our view of the future. Some factors are to do with the way we think about risk and uncertainty. And others are related to the way our human brain functions.

Here are four practices that can assist you to see through these blockers and give you a better view of the emerging future.

1. Treat uncertainty as your friend

Generally, we view uncertainty and its bedfellow risk, as something negative. It is seen as something that can upend our carefully laid plans. In this way, we view it as an equation — the probability of something occurring to prevent us from achieving our plan.

But uncertainty is also a space — a space in which opportunity exists for creation and innovation.

Understanding the key uncertainties in your environment is the key to recognising the ways in which the future may unfold. We know that most of the future depends on the way that these uncertainties play out and interact.

So, instead of treating them as the key risks to your strategy, it makes sense to embrace them in your thinking and planning for the future.

And doing so recognises that risks emanate from uncertainty.

2. Embrace risk in your strategy

By embracing uncertainty (risk) into our strategy, we implicitly recognise that there are several ways in which the future can unfold. These alternative futures are generally referred to as future scenarios.

The future scenarios are constructed by identifying your two key uncertainties and representing them as two axes, and then using them to construct a model with four alternative cells.

Each cell represents an alternative future scenario, and they represent 4 ways in which the future can unfold. You now have a view of the future that takes into account the key uncertainties in the environment.

For example, assume that you manufacture a product used in building construction, and that your major market is to export into the USA. You identify that the exchange rate (which affects your price in the US market) and the level of activity in the US construction sector (size of the market) are your major uncertainties.

Your scenario model might look something like this:

So we now have four scenarios with very different market dynamics — each with a particular set of challenges.

You now understand the range of futures you can face and begin planning for these.

Two key insights emerge from including uncertainty into your thinking about the future:

You face multiple futures as you look forward in your strategy
Instead of attempting to predict the future, a better approach is to define those capabilities necessary for success in each of the four scenarios. Thereafter, you can begin to build and develop those capabilities that are common across all four scenarios.

3. Use examples from other sectors to build new analogies

Our lack of memory about the future is another factor blocking our future vision. This may sound strange, but our memory plays an important part in making sense of what we see and how we make decisions. This so-called semantic memory helps to create the structures whereby we interpret what we see — and is largely formed by our educational, cultural and social environment.

If our memory lacks this knowledge and structure, we may not see and understand the picture (of the future) that is unfolding in front of us.

This is where studying examples from other sectors and industries becomes useful. However, the purpose is not to use these examples as benchmarks and seek to copy them.

By studying examples from other sectors, you will create new cognitive pathways and classification systems — thereby increasing your ways of “knowing” and considering new possibilities. These alternative “mental models” can help you to see and consider a different future.

4. Separate planning and strategy activities

The term “strategy planning” is a strange term, since it combines two quite different concepts and approaches. And it causes people to believe that planning and strategy are interchangeable. They are not.

A plan is not a strategy.

Strategy is a creative and learning process whereby we seek to explore connections and associations in a non-linear way. We are seeking new insights into a challenge or a problem. This requires deep inward reflection and an opportunity to “retreat” from an action-orientation.

Planning, on the other hand, is a linear and methodical approach whereby we apply logic and best practice to achieve an efficient pathway to an objective. Unlike strategy, it requires external focus and attention to detail.

In practice, it works best if you have a separate session for strategy — the exploration of the information, challenge or problem. The purpose of the strategy session is to learn all you can about the situation and then agree on how the problem can be framed.

Once the problem has been framed, a separate planning session can the focus on the actions steps that need to be taken to address the problem or challenge.

We know that action is often the enemy of thought. The planning process, with its emphasis on action and doing things, will often push aside the reflection and insight required for strategic thinking.

Seeing into the future

The ability to see into the future requires that we take the time to do things a little differently:

Slow down.
View uncertainty as a shaper of the future.
Build an understanding of practices in other sectors and industries.
Create time for reflective insight by separating strategy from planning.

About Norman

Dr Norman Chorn is a highly experienced business strategist, future thinker and author helping people lead and build strong and successful organisations in times of change. Well known to many as the ‘business doctor’! By integrating the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations.

How to Integrate the Biology of Risk into your Leadership Practice

Fri, 29 Jul 2022 13:53:58 GMT

Given that uncertainty and risk present a threat to us as leaders, how do we move past the tendency to simply ignore it and hope it will go away?

I’m not suggesting that we have a tendency to consciously ignore risk, but the practice of running a “risk register” is sometimes like parking the risks in a ledger and then just getting on with our business.

Part of working out how to integrate risk into your leadership is to understand how it affects us. This will then identify some ways in which we can integrate it into our leadership practices.

What is the biology of risk?

The ‘biology of risk’ refers to the way our brain and body reacts to risk and uncertainty.

Much of the risk we encounter is due to the inherent uncertainty in the environment. This uncertainty — and the risk of things going wrong — has a significant effect on us. In essence, it is registered as danger by our brain and our body.

Because a primary goal of our brain is to protect us from danger, this uncertainty induces stress at both a conscious and non-conscious level.

Not all forms of stress are bad. Indeed, some forms of stress are enjoyable and quite productive. In moderate amounts, we get a rush from stress and thrive on risk taking. For example, when we see an opportunity that results from some volatility in our environment, our body produces a powerful cocktail of dopamine and testosterone. This allows us to expand our risk taking and engage in innovative and entrepreneurial activity to capitalise on the opportunity.

This type of stress has been termed the “challenger” response. As you can see, this is a productive and important use of stress to allow us to advance and improve our situation.

However, if this volatility and resultant uncertainty continue for a long while, our sense of danger grows as we realise that we no longer understand what is going on. This sense of danger produces an increase in the production of cortisol (the body’s natural response to danger) which then acts to curtail our risk taking and entrepreneurial behaviour.

This reaction may be unfortunate since long periods of volatility and uncertainty are exactly the times when leaders need to be bold and decisive.

The response to volatility and uncertainty suggests that a leader’s risk appetite is not stable, but rather that it shifts according to the amount of uncertainty and threat in the environment.

Short bursts of volatility register as novelty and encourage more risk taking behaviour. Continued and erratic volatility induces a rise in cortisol and produces risk aversion.

How does the biology of risk affect leaders’ risk appetite?

An important implication of the biology of risk is that we are likely to see swings in leaders’ appetites for risk in their strategy. Higher risk entrepreneurial behaviour is evident during short bursts of volatility, while risk aversion manifests in continued volatility and uncertainty.

Furthermore, we know that the anticipation of erratic and volatile conditions also evokes a strong stress response. Sometimes it is more stressful not knowing when or if something bad will happen, than if it actually happens. This too can lead to strong risk aversion.

As mentioned above, this reduction in higher risk entrepreneurial activity may not be in the best interests of a business during extended periods of uncertainty.

Given this variability in risk appetite, what are the lessons for leaders as they seek to encourage appropriate entrepreneurial (risk taking) behaviour in their organisations?

Managing the biology of risk to promote entrepreneurial behaviour

Based on the evidence above, there are three things leaders can address:

1. Be conscious of the effect of uncertainty on your own risk appetite

Recognise that long periods of uncertainty may inhibit your risk appetite and will reduce your entrepreneurial instincts as a result of the rise in cortisol levels. This may not be in the best interests of your organisation, as long periods of uncertainty may well benefit from more innovative behaviour during this time.

2. Avoid continuous volatility and uncertainty within the organisation

While we may need ongoing adaptation to meet the challenges of the market, “keeping your people guessing” about when you will make the next change is not likely to result in productive and adaptive behaviour.

People will be anticipating the next change and will be in a state of hyper-vigilance. The continued uncertainty and stress will raise cortisol levels, increase risk aversion and reduce the much-needed entrepreneurial behaviour.

3. Introduce planned volatility and novelty through a program of Agile Sprints and / or Scenario Planning

Agile Sprints will give people an opportunity to work in a novel and exciting way on a specific project. The short-term uncertainty provides an opportunity for people to work in a way that allows them to give expression to higher-risk entrepreneurial behaviour for a defined period of time.

Scenario Planning creates a forum in which people can explore different futures in a novel way. The opportunity for creative and divergent thinking — and the interactive processes — elicit higher levels of dopamine (fun) and testosterone (energy) and are likely to produce more entrepreneurial behaviour.

By understanding the biology of risk, we understand that leaders display variations in their risk profile, depending on the context. It is possible to manage this context — the level and duration of volatility in the organisation — in order to enable a more appropriate risk appetite.

Successful leaders are able to manage this context (the level of volatility in their organisation) to encourage appropriate levels of entrepreneurial behaviour to suit the circumstances.

About Norman

Strategy + Innovation - An Unrequited Love

Tue, 08 Mar 2022 02:53:08 GMT

What’s love got to do with it?

This “military” model reflects much of the traditional thinking about strategy — and makes sense when we recognise that the word strategy comes from the Greek word “strategos”, the art of the general.

The military model places competitors at the centre of our focus .

But what if there was a different way of thinking about strategy? What if we thought about strategy as LOVE instead of continually thinking about strategy as WAR? What new insights would that afford us? What are the implications for organisations as they plan for their futures?

Putting customers at the centre

Instead of competitors being the centre of our focus, strategy as LOVE places the customer as the core focus. The customer now becomes the driving force. And we begin our strategy discussion by deeply understanding the customers’ requirements and focus on how we can add value to customers in the most effective way.

Instead of trying to beat or imitate our competitors, you begin by understanding the customer — and then building a value proposition that is unique, differentiated and adds significant value to the customer.

How does innovation fit into this strategy?

Innovation is a powerful process that opens up new opportunities for growth and success for the business — in many cases by rethinking the customer value proposition.

But what is the connection between innovation and strategy ?

In essence, innovation is a process for breaking constraints that may limit the business.

Strategy is a process that identifies where the constraints are — ie: what constraints need to be broken.

So, how do we develop an innovative strategy that places the customer at the centre of focus?

Developing an innovative strategy

There are essentially three broad stages to developing an innovative strategy:

Stage 1: Develop a future strategy

The purpose is to develop a customer-centred strategy that articulates your future aspirations, customer value proposition, and the capabilities you would require to be successful in a competitive market.

Depending on the levels of uncertainty in the environment, you may choose to use a process such as scenario planning or a more conventional business planning process.

This strategy would also indicate the key constraints that prevent the business from successfully implementing the future strategy.

Stage 2: Overcome constraints and focus the innovation process

Since you now understand where the constraints exist, the innovation process can be used to address these constraints and identify new opportunities.

Innovation can be defined at 4 key levels — and the process can be focused at where the greatest opportunities and constraints exist.

Leadership innovation challenges the very concept of the organisation and its future in the market
Strategic innovation explores the business model and how the business interacts with customers via its value proposition
Product / service innovation tests the product and service offerings of the business
Operation innovation has a focus on improving the efficiencies and effectiveness of the operational activities in the business.

Stage 3: Implement an effective innovation process

An effective innovation process reduces the risks involved in making radical changes and improvements in the business.

In essence, it allows the business to move from leaps of faith (with high risk) to leaps of logic ( 1 ), with numerous incremental gains and continuous learning and adjustment.

Source: wave.design

Bringing it all together to develop an innovative strategy for the future

The three stages above will ensure that any innovation process not only takes place within the context of the overall business strategy — it also allows us to explore new opportunities and growth opportunities for the business in the future.

All with the customer at the centre.

References:

( 1 ) *Dr Munib Karavdic, wave.design

About Dr Norman Chorn

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

By integrating the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations. He specialises in creating strategy for the rapidly changing and uncertain future and can help you and your organisation.

Build Strategic Resilience by Adapting Organisational Processes and Functions

Tue, 15 Feb 2022 04:02:24 GMT

Resilience is not an evolutionary process

During 2020/1 we undertook a research program to understand the characteristics and drivers of organisational resilience (1). This led to the development of a successful program to develop Strategic Resilience in organisations — the Organisation Resilience Action Learning program ( ORAL ).

Through our experiences in running this program for a wide variety of organisations, we discovered three important underpinning principles that were reflected in these organisations and their leaders. This article outlines these principles.

Importantly, we also discovered that the development of organisational resilience is not an evolutionary process. Instead, it is developed by co-opting and adapting organisational functions for purposes other than which they were created.

This process is called “ exaptation ”.

Why “Exaptation” is the driving force

Exaptation is the process whereby a capability develops by means other than natural selection. While natural selection describes the natural evolution process in which those that are better suited to their environment pass on their genes (capabilities) to the next generation, exaptation occurs when an existing function is adapted to perform another purpose (2).

The distinction may not seem important at first. But the crucial difference is that exaptation is a process that does not happen naturally through natural selection. Instead, it occurs opportunistically .

In other words, it occurs because someone has seen the opportunity to deliberately do something in order to exploit a situation — to gain some form of advantage.

Why apply Exaptation to Strategic Resilience?

It would seem that strategic resilience has not evolved naturally through continuous improvement. Strategic resilience has developed as a result of deliberately co-opting and adapting certain organisational functions and structures — and then using them to help the organisation thrive and develop.

There are two issues that are important here:

Current organisational processes and functions are used in different ways to which they were originally conceived

Exaptation is a deliberate change in the way this process or function is used.

Given these issues, we can explore strategic resilience by way of three underlying principles that deal with best practice, learning and control.

Principle 1: Best practice may no longer suffice

Due to the complexity and uncertainty in our environment, the relationship between ‘cause’ and ‘effect’ becomes less clear and changes continuously. What has worked in one situation is no longer a guarantee of success in another — hence the use of ‘best practice’ is no longer a success formula in complex and uncertain environments.

It is easy to conclude that ‘best practice’ has little use in these complex and uncertain times (3) . However, it is probably more accurate to say that successful leaders in complex situations have moved past a simple reliance on best practice, and instead use it as a reference point to develop a unique solution. This is analogous to the way a writer uses a library, or a researcher studies past theories before developing their own breakthrough approach (4) .

So, best practice may be a necessary, but insufficient, requirement for achieving strategic resilience.

Changing the best practice view of uncertainty

For a long while, best practice with regard to uncertainty has been to treat it as a risk, and to develop strategies for its mitigation. It was seen as a threat to the strategy, a disruption in the ability of the organisation to plan ahead.

However, when examining uncertainty and risk more closely, we see that they are quite different.

Risk is expressed with mathematics, usually viewed as the probability of something bad happening — a core foundation of insurance. Uncertainty, on the other hand, does not involve probabilities — it simply means not knowing about the future.

In this sense, uncertainty may be better understood as a space in which several options (or opportunities) exist. Given this, uncertainty can be quite generative (5) , providing the context for different efforts and different possibilities. This is the approach adopted by foresight and scenario thinking — the practice of understanding and exploring the future in order to develop future strategy.

Rather than treating uncertainties as risks, scenario thinking uses uncertainties as dimensions with which to construct alternative scenarios of the future. This enables leaders and organisations to prepare the necessary capabilities for the organisation to grow and thrive in the future. In this way, uncertainties are the foundations we use to construct the context for discovering new opportunities for future growth.

In our ORAL program, we directly apply this adapted view of uncertainty by demonstrating how to identify the key uncertainties in your environment, and then to use these to build alternative scenarios of the future. This guides your organisation in the development of capabilities and strategies necessary to thrive in an uncertain future environment.

Principle 2: Unlearning and relearning is the new wisdom

The shifting nature of conditions in our environment means that the ability to learn new skills — and abandon those that may be outdated and less useful — will become ever more important for successful leaders. Indeed, some call this ability to unlearn and relearn the ‘new wisdom’ (6).

Related to the previous concept that 'best practice’ sometimes represents past practice, the concept of learning has become a well-established foundation for individual and organisational success (7). With the increasing pace of change, there is a need to more rapidly let go of previously established doctrines and learn new approaches.

Adam Grant encourages us to keep an open mind, to continuously test our assumptions and to rethink our views and opinions. He terms this ability to shift our perspectives when the circumstances change, as the new wisdom.

Rethinking and relearning strategy

A good example of this unlearning and relearning principle is the changing view of strategy in organisations. Traditionally, strategy has been viewed as a positioning exercise. Under this approach, the purpose is to position the organisation and its products to gain a competitive advantage. This is usually operationalised by setting key objectives and measuring progress towards these.

In complex and uncertain conditions, strategy has been adapted to focus on learning . In this approach, the purpose of strategy is to explore and understand the market, and then to develop the capabilities necessary for success.

The critical difference is that under the positioning approach, objectives are set at the outset before we engage the market, while the learning approach allows the objectives to emerge as the market is engaged.

‘Strategy as learning’ recognises that we cannot address a complex (and therefore uncertain) market until we engage it, develop the necessary insights and only then respond with appropriate objectives and actions. To achieve resilience in complex and uncertain environments, strategy has become a process of ‘engage-learn-respond’.

This is a critical element of our ORAL program. Our module on strategy thinking demonstrates that the characteristics of a complex and uncertain environment demand a different approach to strategic thinking and planning for the future. Accordingly, we focus on the development of strategic insights and the appropriate use intuition. This involves an understanding of the role that our brains play and how leaders can develop new cognitive pathways to enhance strategic thinking.

Principle 3: We cannot control or know everything

If evolutionary psychology has taught us anything, it is that humans share a series of basic instincts that manifest often in social and organisational settings. This includes behaviours such as using emotions rather than reason; being naturally averse to loss or defeat; and seeking to classify things and people into generic classes rather than analysing them deeply.

Research in neuroscience has sharpened our understanding of these behaviours by emphasising our brain’s tendency to move away from danger as well as its preference for security and certainty. This is often manifested by people’s fear of an uncertain future.

In addition, if we examine the origins of ‘organisation’, we find that the very concept of an organisation was based on the need to reduce complexity and uncertainty in the environment (8) .

Given this, we can understand why there is a natural tendency to avoid or even eliminate uncertainty by controlling and knowing as much as possible in situations of complexity and uncertainty. The motivation for control in these situations is to protect oneself, our people and the organisation. The intention is to prevent the external disturbance and change from damaging the organisation — to insulate and protect it from disruption.

Adapting the use of control to achieve strategic resilience

Rather than seeking to direct and control the organisation to resist disruption, new thinking on resilience suggests instead that we control and use disruption to build new capability in the organisation. In a sense, we are using the disruptive energy as a means of developing the organisation. This has become known as the ‘anti-fragile’ approach ^[ (9).

‘Anti-fragile’ practices challenge many traditional organisation design and development conventions. For example, rather than seeking to streamline organisational processes and eliminate duplication, anti-fragile practices encourage deliberate redundancy to create multiple decision-making nodes and parallel processes in situations where the consequence of failure are high. An everyday example is the use of dual braking systems in modern cars.

This achieves several benefits such as diversity of thinking, higher levels of flexibility in the organisation, and the ability to learn from errors and local failures without damaging the entire organisation.

Organisational control has been adapted from a process that ensures rigid adherence to standard procedures, to one that allows the organisation to learn from disruption throughout the organisation and develop improved capability as a result.

The concept of anti-fragility is an important element in the ORAL program. We demonstrate the practical use of anti-fragility in the spheres of organisational process and structure as well as leadership practices. The Agile process is explained through the lens of anti-fragility and we outline a practical approach to launching such an exercise in your organisation.

Building anti-fragility becomes one of the key leadership challenges of today.

Strategic resilience through exaptation

We have observed that the adapted use of these principles are generally in evidence where strategic resilience is found.

These principles have not evolved naturally through a process of natural selection, but rather by having been deliberately co-opted and adapted to serve other purposes in the organisation.

Our ORAL program — through a process of action learning — demonstrates how these approaches might apply in development, design and leadership of organisations.

In the same way as the origins of exaptive processes are not yet settled in biology (10) , it is unclear how these practices were formed in the study of strategic resilience.

However, that are worthy of our attention and focus as we strive to develop greater resilience for ourselves and our organisations in these challenging times.

References

(1) The ability of an organisation to recognise and adapt to disruptive change so that it continues to thrive and grow.

(2) Biological examples of exaptation include the use of feathers, which were originally developed for thermal protection, for purposes of flight in birds. Or dogs licking the faces of their human owners, which developed from the practice of wolves licking the face of the alpha male to signify submission. This evolved through the domestication of dogs.

(3) David J. Snowden, Mary E. Boone, " A Leader’s Framework for Decision Making " , Harv ard Business Review, November 2007.

(4) I thank my client Nicolas Poncelet, a senior leader in Bosch AG, for this insightful analogy.

(5) Kurt Wilson, “ Uncertainty is an Opportunity”, Effect X , June 2020.

(6) Adam Grant, “ Think Again: The Power of Knowing what you don’t Know ”, Viking Books, 2021.

(7) Peter Senge, “ The Fifth Discipline ”, Deckle Edge, 2006

(8) Thompson, James D. (2003) [1967]. Organizations in Action: Social Science Bases of Administrative Theory . Transaction Publishers.

(9) Nassim Nicholas Taleb (2012) , Antifragile: Things that Gain from Disorder, Random House

(10) Telmo Pivani and Emanuele Serrelli, Exaptation in human evolution: how to test adaptive vs exaptive evolutionary hypotheses, Journal of Anthropological Sciences, vol 89, 2011.

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Agile Organisation — Is it The Silver Bullet or a Hidden Problem?

Mon, 06 Dec 2021 00:35:29 GMT

Agile Methodolgies Offer Much

There is much to like about the Agile approach when you read about it and listen to others sing its praises. It embraces adaptability, flexibility, speed of response and continuous interaction with the customer.

Agile can be defined as the ability to rapidly and efficiently adapt to changes in our environment.

Agile seems ideally suited to our VUCA ( 1 ) environment that is characterised by constant change and disruptions.

Our traditional mechanistic organisations are not enabling the natural creativity of people, and their top down, slow strategy processes cannot keep up with the demands of the fast-moving environment. In contrast, Agile offers rapid decision-making and learning by way of its iterative processes and adaptability.

But let’s examine the concept a little more closely to see how it copes with all the aspects of our VUCA environment — particularly the inherent complexity that makes strategy and decision-making that much more challenging.

Agile May be an Antidote to Bureaucracy

The core values of Agile seem to offer a ready cure for the stifling bureaucracy within many organisations. These include:

the importance of people interactions
practical solutions
ongoing collaboration with customers
responsiveness to change.

Some of the practices include a breaking down of the hierarchy, eliminating silos and having fewer restrictive process instructions. The Agile methodology attempts to create an environment in which people are empowered to act, resources can be mobilised quickly and the organisation can make decisions quickly.

At this point, let us also remember the importance of a good strategy in the Agile organisation. A clear strategy defines the difference between an agile organisation and a reactive organisation. ( 2 )

Good strategy enables an organisation to develop a stable platform of capabilities that can be deployed in different ways to produce a flexible and adaptive response.

And the strategy ensures that the organisation continues to learn and make appropriate decisions to adapt to change.

As my good colleague Munib Karavdic says — “good strategy allows the organisation to move from leaps of faith to leaps of logic"( 3 )

Strategy as Part of Agile

As we see above, strategy is an important part of the Agile organisation by setting the overarching direction for the organisation (its so-called ‘North Star’).

But the strategy also emerges from the several iterations where the organisation tests the reaction from the environment and customers as seen in the diagram below.

The iterations are a learning and decision-making process that is an important part of the strategy process. This is the way the organisation remains flexible and adapts to change and the feedback from the environment.

The assumption is that these rapid learning and decision-making cycles enable the organisation to evolve and adapt the strategy to a fast moving VUCA environment.

But, is this a valid assumption?

Let us explore the strategy process in a VUCA environment…

Strategy is Different in VUCA

Because of the complexity and inherent uncertainty in a VUCA environment, there are two important differences required for the strategy and decision-making processes to be effective.

1. A reductionist approach ( 4 ) to strategy and decision-making is not effective in a complex environment. A complex system cannot be understood by breaking it down into small parts and addressing each part separately. The system is only properly understood by examining the whole system and observing how the various parts interact.

2. Speed is often the enemy in problem solving and decision-making in a complex environment. There are rarely ‘best-practice’ solutions that apply in these contexts. In the main, complex problems are solved by innovative, breakthrough approaches. And this requires reflection and insight — an approach usually achieved by pausing, stepping away from the problem and achieving some perspective.

My observation is that these two important differences are often misunderstood when organisations pursue an Agile methodology in running their organisation.

In general, I have observed organisations applying Agile incorrectly by:

Failing to develop a coherent strategy at the outset. Instead they assume that agile IS the strategy and hope to address the resultant challenges by developing a series of poorly thought-through plans and an iterative process (this is the reactive organisation)
Maintaining the pressure on speed through the whole process — thereby encouraging a series of reflexive 5 decisions that rarely bring any new insights or innovative solutions to bear on the overall challenge.

Making Agile Strategic

Agile is indeed a valuable approach for creating greater flexibility and adaptiveness in our organisations. We should not throw the baby out with the bathwater. Agile is still useful but you need to take care in the way it is applied.

We should recognise the potential pitfalls that often accompany the implementation of an Agile approach.

These can be largely overcome by shifting the organisation from being simply reactive to being truly Agile (ie: a clear strategy is an important part of Agile).

This can be done in two ways:

Use scenario thinking to develop alternative futures that may unfold into the uncertain future. Strategies can then be developed to allow for success in each of these scenarios.
Emphasise the need for a pause when teams encounter unfamiliar problems that do not have readily available ‘best-practice’ solutions or the ‘right’ answers. These require individuals to ‘step back’ from the challenge and be given an opportunity to reflect and develop new insights into the situation. The availability of alternative scenarios in the strategy will guide them in their deliberations.

(1) Volatile, uncertain, complex, ambiguous

(2) The five trademarks of agile organisations, McKinsey and Company, January 22, 2018

(3) Dr Munib Karavd ic, www.wave.design

(4) Reductionism is the traditional management process whereby we break down a big challenge into smaller parts, and then attempt to solve each part separately.

(5) Reflexive decisions are those formed by habit and previous experiences in other situations

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Case Study: Changing The Way We Change

Sun, 05 Dec 2021 01:30:53 GMT

Changing The Strategy in an Engineering Business

Our team had a valuable experience working on a change program for an international engineering business during June - October 2021.

The business was engaged in a strategic shift to reduce its reliance on equipment sales into a specialist sector (declining margins) and move towards providing a full service offering that included software and consulting services (potentially higher margins).

Although the shift made strategic and financial sense, there were several barriers to change to overcome, in order to execute the strategy successfully. These included:

Many of the middle managers and staff had strong backgrounds in the operation and maintenance of this equipment in the highly specialised sector
The software — used to operate and integrate the equipment into the customers’ businesses — was considered by middle managers and staff to be a low level ancillary product
The training and education services that assisted customers in the proper use of the equipment was considered ‘low value’ and not thought of as ‘core business’ — and was usually performed without charging a fee.

In summary, there was strong resistance amongst managers and staff to the idea of becoming, what they termed, a ‘service business’, despite the potential financial and longer term strategic advantages.

The Change Process

Given the professional nature of the workforce, it was clear that in order to get commitment for the new strategy, we had to use an approach that engaged people in the development of the new strategy.

While this was likely to take longer — and we were unable to fully control the outcomes, leadership agreed that this was the best approach.

We developed a process that would allow us to benefit from the diverse views held by all staff. This involved a series of workshops (we called them ‘experiments’) to figure out the best way forward.

While this took a little longer, it allowed us to agree with staff on the best program for changing the business. As can be seen from the table below, the program differed quite considerably from the traditional change management approach:

What Did we Learn?

A change program is essentially a learning process. People began to understand the goals and benefits of the change as they became involved in developing the new strategy and how it should be implemented
You can’t always predict the outcomes from change programs. A number of elements in the new strategy were quite different to the initial views held by senior management. In some cases, they were significantly better because they incorporated views from people directly involved with the customers
The ‘best practice’ ideas that originate from other examples may not be the best practice in a different setting. We found that some of the practices that were successful for other organisations simply did not work in this business
In order to get commitment to the implementation of a new strategy, you need to give people the opportunity of involvement in its design and development.

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Case Study: Global Technology and Information Services Company

Wed, 27 Oct 2021 04:55:20 GMT

Insights on Leadership Development

Setting up strategy & accountability

We recently completed a leadership development program with a global company that employs many thousands of people in many different locations.

The program was delivered exclusively online using a range of communication and collaboration platforms. Apart from the challenges of finding suitable times across the different times zones, the program proved to be extremely successful, and we enjoyed high levels of engagement and interaction with the participants.

A key lesson emerged in the setting of strategy and holding managers’ people accountable for their performance — the need for managers to frame the discussion about strategy appropriately.

What did we work on?

The business is large and diverse, made up of many businesses and business units that have been acquired and developed over the past 15 years. Our role was to assist the leaders in the various divisions to develop their business strategy in a way that achieved two goals:

1. Continue to meet customer needs and add value to their businesses through integrated technology and information solutions

2. Contribute to the overarching corporate strategy by adhering to the core values and corporate principles, despite the diverse nature of the group.

It was important to ensure sustainable and improved profitability as well as continuous investment into R+D for the future.

We used the ‘three horizons’ approach, initially developed by McKinsey, to facilitate a focus on both current and future performance.

Framing discussions about strategy

In most organisations, it is possible (and desirable) to describe the strategy in terms of the ‘three horizons’ approach. Contrary to popular belief, this not a reference to the sequence in which certain initiatives should be undertaken.

Instead, it refers to the three types of initiatives that are generally required to maintain the viability of a business:

• Managing the core business and ensuring its operational effectiveness and efficiency (Horizon 1)

• Adjusting products and services to meet the emerging requirements of customers — usually performed collaboratively with customers (Horizon 2)

• Innovating and developing new concepts and business model for the future (Horizon 3)

The horizons refer to the time it will take for the initiatives to impact the results for the business — not the sequence in which they need to be undertaken. So, H1 initiatives have a direct and immediate impact on business results, H2 initiatives will bear fruit later down the track, and H3 initiatives will have a longer term impact on the viability of the business.

Importantly, the skills, resources and KPIs for each horizon differ. To hold a particular individual accountable for performance in a given role, it is important to define the relative emphasis they should give to each of the three horizons. This is because the three horizons have conflicting demands on skills, resources, and management style.

For example, a manufacturing unit may have an emphasis on Operational Excellence (H1) with lesser demands on H2, while the R+D unit may seek to emphasize H3 (innovation) with some attention to H2 (responding to customer opportunities).

A good way to frame these conversations is to think about them as ‘Exploit’ goals or 'Explore' goals. Given this, the horizons diagram could be represented as follows:

By using the three horizons approach, coupled with a discussion of ‘exploit’ vs ‘explore’ goals, we were able to work with leaders to define their business strategies, and then also to ensure the alignment of management through the different businesses.

Defining goals as ‘exploit’ and explore’

Once each business had defined its business strategy in terms of the three horizons, managers through the organisation needed to develop their own operational plans to achieve the overall business strategy.

The business unit leader was able to frame the discussion with their respective managers in terms of the emphasis that would be expected across the three horizons.

This is where the distinction between ‘exploit’ and ‘explore’ became extremely useful. While the total business unit had to address all three horizons in order to manage both current and future performance, the expectations for the performance of individual managers was framed in terms of whether the emphasis was ‘exploit’ or ‘explore’.

For example, the managers who managed elements of the manufacturing and processing parts of the business were expected to deliver ‘exploit’ strategies that included KPIs of productivity, efficiency, and a degree of responsiveness to changing customer requirements.

On the other hand, those in marketing and R+D functions had a clear ‘explore’ focus with KPIs that included innovation activity, customer partnerships and entrepreneurial activity.

The overall outcome ensured that the businesses were able to develop a series of business strategies suited to their customer requirements, and an operational planning framework that ensured appropriate alignment between the various parts of the business.

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Addressing ‘Wicked Problems’ Successfully

Mon, 25 Oct 2021 07:52:46 GMT

5 pathways you may not have considered to enhance your strategic thinking

As situations become more complex and uncertain, so the need increases to understand what is behind events shaping our lives. Strategic thinking has been identified as one of the critical skills you will need in order to make your way through this maze of change and disruption.

There are many approaches and frameworks that claim to represent the best ways to develop strategic thinking skills - it can be quite confusing if you are looking to develop your own capabilities, or those of your business.

I have found five specific approaches that are useful as you seek to develop this capability — five pathways that you and your organisation can use to enhance your ability to think strategically.

These are presented below:

Pathway 1: Stop Thinking About Your “Industry”

Defining your “industry” and doing an “industry and competitive analysis” has been a traditional approach to the way we have made sense of our environment, markets and jobs for the last 40 plus years. Ever since Michael Porter developed the notion of competitive strategy, we have defined what we do and against who we compete, in this way.

However, the continuous evolution of technology has meant that the traditional barriers to entry into an industry have all but disappeared. Competitors appear from anywhere and definitions of an industry become almost meaningless.

Worryingly, they tend to create strategic blindspots whereby you become so focused on your industry and products, that you can easily miss developments that threaten your very existence.

Instead, I suggest you think about “jobs to be done”. This concept, initially developed by Clayton Christensen ^[1] explains that the best way to describe you and your business is to understand the jobs that you do for them. Not only is this a better way to understand who is the competition, but it is also the key to innovation. By recognising the jobs to be done for your customer, you are far more likely to be able to innovate and develop new way of meeting a real need for the customer.

Examples include Amazon, who found a better way to do the job for people looking for books; Airbnb who developed a new way for people to find cheap, convenient holiday accommodation; and Uber who do the job of finding clean and convenient transport for people who wish to go to specific destinations

Pathway 2: Separate strategy and Planning Processes

When planning the future for yourself or your business, it’s a good idea to separate the strategy exercise from the planning exercise.

Strategy involves the important processes of diagnosing the challenges you face and then developing specific views (a philosophy) as to how you will deal with them. As you know, this usually comes from deep reflection and thinking — often by removing yourself from the detail and viewing the situation “from the balcony” instead of the dance floor. In other words, you need to move away from the immediate situation and ponder on it.

Planning, on the other hand, is a more linear process that is achieved by focus and concentration on the task — an action oriented task that centres on developing a set of actions to implement the strategy.

Why separate them? Because action tends to drive out the reflection. In action mode, it is difficult to free up your brain to do the necessary reflection and achieve the insights so necessary for strategy. So, separate the two parts. Give yourself some space for the strategy, and then get into the planning as a separate, but related activity.

Pathway 3: Practice “Mentalising” Complex Problems

It’s easy to become overwhelmed when facing a complex problem with many different stakeholders and points of view. How do you find a solution that meets all the needs?

One way to do is to imagine that the situation is a movie you are watching or a novel you are reading. When doing this, you would begin to understand the different characters in the story line. You would develop a sense of their personalities, preferences, needs and likely actions.

Think about the complex situation in this detached way (on the balcony again), and figure out what each character wants, their motives, and how their needs can be met.

Once you have done this in a detached way from the balcony, you will be able to see the leverage points in the situation. How to get most of the stakeholders what they want and be able to reach an optimised solution.

Note: An optimised solution is the ultimate outcome in a complex situation with competing stakeholder requirements. Sadly, there are very few 'best practice' or 'right' solutions in complex systems.

Pathway 4: Change Your Time Horizons

A difficult and complex problem can pose a dilemma for you. Sometimes, the options may include decisions that appear to have real costs and downsides associated with them.

Warren Buffet is known for his astute decision making — particularly in complex decisions he makes, where his decisions seem to pay off in the longer term. His rule? Quite simple actually.

When facing such a decision, he asks himself three questions:

- How will I feel about this decision in 10 hours?

- How will I feel about it in 10 days?

- How will I feel about it in 10 months?

Substitute your own time frames — but the purpose is to place yourself into different times horizons (on the balcony again) and reflect on how you will view the decision at different points in the future.

This approach will give you additional perspective on difficult decisions that seem to have some negatives in the short term. You should be able to understand and explain the short-term downside against the longer term benefits expected.

Pathway 5: Stay in Touch With The Edges

In almost all societies, organisations and groups, it is those at the fringes that seem to be contemplating change and disruption of the system. Admittedly, some of their thinking may be unrealistic and quite radical, but they usually provide the initial impetus for any shifts that eventually do appear.

Andy Grove, cofounder of Intel, made the observation that snow melts from the edges. He was pointing out that the first signs of change and disruption often come from those who are furthest from the centres of power and decision making. Seemingly unencumbered by the pressures of high office, these groups often express ideas and perspectives which can often become part of the core of the society or organisation in the future.

The message is clear. Stay connected with the fringes, even if only to be aware of the thinking and views being expressed at the edge. On a more practical note, it suggests that we should include all sides of the debate in our decision making, invite contributions from the controversial and divergent opinion-leaders, and pitch your ideas to those who are typically critical of you.

This ability to consider and account for diverse views will produce a much richer understanding of the situation - and greatly improve the quality of your strategic thinking.

Five Pathways to Better Strategic Thinking

You may notice that these five pathways all seem, to a lesser or greater extent, rely on the ability to reflect before jumping into action. Climbing onto the balcony is an important way of enabling each of these five pathways.

While some of these approaches may appear a little counter-intuitive, they are all grounded in good practice to get the most from your brain and cognitive ability.

Travel down these pathways and enjoy an elevated level of strategic thinking.

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Case Study - The Bosch Group

Tue, 21 Sep 2021 07:06:09 GMT

Case Study

About The Bosch Group

The Bosch Group is a leading global supplier of technology and services. It is focused on several business areas, including mobility solutions (including vehicle components); industrial technology; consumer goods; and energy and building technology.

China is a key manufacturing and applications engineering location where the company employs in excess of 55,000 staff — the largest Bosch workforce outside of Germany.

Changes to the global business environment, particularly in the areas of clean energy and the shift to electric vehicles, present a number of strategic challenges and opportunities for the company. And China, as a key member of the business’s supply chain, plays an important part in the way that the global organisation responds.

Part of this response was the launch of a new action-learning program, “The Evolutionary Mind of the Leader”. Together with our associates in China, we were selected to develop and run this program in 2021.

Purpose of the project

The project was designed to raise the overall strategy and leadership capability in the organisation, while ensuring their wellbeing and resilience during the period of change.

Three key capabilities were to be developed as part of this program:

The ability to plan for the future in a complex and uncertain environment
Raising strategic thinking skills through the application of brain science and management science
Developing anti-fragile leadership practices that would allow the organisation and its people to learn from disruption and continue to thrive.

These three capabilities were developed through an action learning approach that allowed participants to implement new ways of thinking and leading by way of selected projects undertaken in their business.

Each session introduced the participants to new approaches and thinking frameworks. They were then given the opportunity to apply these in their local business. Five days later, the teams would reassemble and have to report on their completed project.

Key outcomes

There were several outcomes noted by senior management:

Examples of creative problem solving in complex areas of the business
An ability of several divisions to plan proactively in an uncertain and changing environment
Reports that a majority of individual participants felt increasingly confident in their ability to cope with the change in the organisation
Examples of project teams using scenario thinking to develop new ways of responding to complex challenges in their workplace
Enhanced cross-functional collaboration across different divisions in the business
A better understanding of the relationship and engagement required between headquarters in Germany and the operating divisions in different parts of the world.

Insights we gained from the program

Our observations and insights from developing and running the program included:

The need to structure online programs differently to those that are run face-to-face. Rather than accept a lower level of engagement from staff because of the virtual (online) format, we were able to design a program with increased flexibility, variety and engagement from participants
A recognition that the “parenting”stye of headquarters in global businesses is critical. Instead of seeking to continuously align and control the activities of divisions in different markets, it is significantly more productive to focus on the benefits of the diversity in thinking between the operating units — and then to share the key learnings across the whole business
Some of the legacy practices embedded into the operating philosophy of large global businesses are often based on previous “best practice” approaches. These are sometimes out of sync with the non-linear way in which fast-paced markets develop. As we observed, it makes little sense to apply linear thinking in a world that is changing at a logarithmic rate
By using scenario thinking, teams are often confronted with a particularly unattractive future scenario. By applying their minds to these unattractive (and undesirable) scenarios, some of the most innovative and breakthrough solutions can emerge..

What does Anti-Fragility mean to you?

norman@drnormanchorn.com (Norman Chorn) — Thu, 26 Aug 2021 04:45:50 GMT

HOW CAN ANTI-FRAGILITY WORK FOR YOU AND YOUR ORGANISATION?

WE KNOW THAT CHANGE IS CONTINUOUS AND DISRUPTIVE

It is almost a cliche that the global context will continue to disrupt both our personal and business plans for the foreseeable future. How do we prepare ourselves and our organisations for these conditions?

My recent research and writing has addressed the need to move beyond our current understanding of resilience — and to shift our attention to developing anti-fragile practices in our lives and organisations.

Anti-fragile is the way we design our lives and organisations — to enable us to learn, grow and get better as a result of disruption.

Some common examples of anti-fragility are:

The human brain : Our brain builds capability by eliminating those behaviours that produce negative outcomes (burning your hand near a fire) — and favouring those practices that produce positive outcomes
Markets : The market teaches firms how to learn from experience and to observe the failure of other competitors. This shows firms how to improve and get better. Only the fittest survive.

WHAT PRACTICES PROMOTE ANTI-FRAGILITY?

I have outlined six principles that assist in becoming anti-fragile. In each case, these can be applied for individuals and organisation. These practices can increase your ability to prepare for and learn from disruption — and enable you to get better as a result.

Implement redundancy in selected cases
As individuals , we should be wary of allowing our job to define who we are. This is too narrow and incomplete a definition. Instead we could cultivate outside interests and hobbies, develop a bigger circle of friends and, if possible, try to develop alternative sources of income. This wider support system will be invaluable during periods of severe disruption and change. It may not be apparently useful at present — but it could become a real saviour later.

Organisations , on the other hand, could explore the traditional view that capacity can be as important as efficiency in certain areas. Where a process has been optimised for efficiency — for example, where you maximise capacity utilisation of an asset — you often lose the flexibility to adjust to unforeseen circumstances. Allowing some slack in your resources — below maximum capacity utilisation — provides an enhanced ability to respond to emergencies and change. A common example is the use of dual braking systems on trucks. The total efficiency of the system is low (because one of the systems is largely redundant for most of the time), but the braking system will still function when one of the systems fail.
Leverage human adaptability
For individuals , the focus is to emphasise our natural human quality of using feedback to make incremental improvements to the daily practices on which we spend our time. Do this consciously — try small ‘local’ experiments that won’t bring complete disaster to your daily routine if they fail. Keep doing this and eliminate the things that don’t work rather than searching for the ‘silver bullet’. This will ensure a continuous improvement in the way you go about your daily life.

Organisations are encouraged to give their people sufficient ‘elbow room’ to allow them to adjust to emerging situations in their jobs. A good example is Airbnb, where facility owners are encouraged to add their own personal touches to accommodation in an effort to position their property as a favoured venue. This has resulted in many attractive destinations from which to choose. Uber, on the other hand, provide little room for their drivers to improvise and adapt to unique demands and circumstances. This has contributed to a decline in popularity for the service.
Allow some ‘fuzziness’ between cause and effect
Individuals should not seek to eliminate all the randomness in their life. It can be tempting to create regular patterns in aspects of your life, for example, to use the same route to work every morning, and go to the same restaurant every Friday night. This eliminates the need for decision making and adjusting to new circumstances. But, getting used to coping with small, sudden changes to your schedule will build your ‘resilience muscles’ — and serve you well in cases of severe disruptive change.

Organisations are encouraged to design some of their processes and systems with multiple pathways and dependencies. They should plan for and allow small, local mistakes in parts of the system. This has a dual benefit. It not only reduces the risk of total system failure, but also allows the system to learn from the smaller errors, and then apply the learning for the benefit of the whole system.
Favour people with skin in the game
Individuals are encouraged to be wary of ‘expert advisors’ who specialise in giving advice, rather than ‘doing’. This is not to say that expert advisors have no value — it’s just that many of them get little direct feedback about the impact or effectiveness of the advice they give. Instead, we should favour advice from those who have skin in the game. Individuals who pilot aircrafts and bomb disposal squads are examples of those who get direct feedback about the quality of their work.

For organisations , this is about decentralising decision making as far as is feasible — to those who have first-hand knowledge and expertise about the issues at hand. Where this occurs, faster decision making and continuous improvement is promoted as these people get direct feedback from the decisions they make, and they can make incremental adjustments to the way they work. They have ‘skin in the game’.
Use non-linear thinking in complex situations
For individuals , this highlights the need to step back and allow more reflection time in situations that are new and challenging. With this approach, several options can be considered and weighed up. Importantly, complex situations generally involve high levels of uncertainty — and that generates a range of future possibilities. Effective thinking in these situations means that you have recognise that different future outcomes exist, and you have to consider how you would deal with each of those.

Organisations should consider separating strategy processes from planning. Strategy is a learning process that integrates a number of perspectives in a non-linear fashion, while planning is a logical and linear process that seeks the ‘correct’ answer. It is best to conclude your strategic thinking (what does this really mean — non-linear) in a separate forum before undertaking the planning (what can I do about it — linear). Another important consideration is to change your strategy and planning templates and frameworks regularly. This ensures that you approach the thinking and planning freshly each time, rather than undertaking a compliance-type ‘tick the box’ exercise.
Build diversity in connections and sources of advice
Individuals should widen their network of relationships and seek advice from diverse sources. In particular, practice pitching your ideas to critical people and discussing your plans with people who hold very different views from you. People often seek advice from those who will give them the advice they want — but to improve your quality of thinking and decision making, you will need to seek more diverse opinions.

Organisations should take the opportunity of leveraging the intelligence from the whole of the organisation, particularly those with critical and contrarian views. Stakeholders with divergent interests and ideologies should be consulted. This practice will allow for a systems perspective and an understanding of the context for the decision. Both are required to generate better strategic options.

BUILDING ANTI-FRAGILITY

A number of these principles and associated practices may seem counter-intuitive. And they are — based on the assumptions of a linear world. However, the conditions in our world are changing at a logarithmic rate, and our thinking has to make the adjustment to more non-linear processes that are consistent with complex, uncertain conditions.

Processes such as ‘agile’, ‘lean’ and ‘continuous improvement’ should continue to become more anticipatory and move beyond mere efficiency and optimisation.

Anti-fragile does not pretend to be the silver bullet at this time, but it does give us pause to reconsider some of our favourite and popular “best practices”.

Action is the Enemy of Thought

Fri, 26 Feb 2021 16:35:16 GMT

What's The Issue Here?

In the fast-paced world of today, we are urged to undertake ‘business at the speed of thought’ and become increasingly action orientated. Intuitively it makes sense to increase our speed of response in this rapidly changing environment.

But, as we move to action, have our organisations become more effective at understanding the change and responding appropriately? Is the quality of our strategy and decisions producing better results? Lately, we’ve been receiving feedback from clients that are unhappy with the extent of the strategic thinking and performance in their organisation. Could this be due to an overemphasis on action and speed?

Our research shows that senior executives are having to do more of the thinking themselves and that their people are not contributing sufficiently to creative thinking and problem solving. This is likely to have implications down the track in an increasingly demanding environment.

Speed Kills

Our proposition is that the emphasis on getting things done quickly is killing off strategic thinking in organisations. Action may well be the enemy of thought in these situations!

We find that an action orientated culture is often accompanied by knee-jerk reactions to events. Action oriented organisations tend to focus on a narrow repertoire of actions and solutions - usually those that have worked well in the past.

In addition, these organisations may display a lack of self regulation in their decisions - their actions often have unintended consequences and can take them off the critical path towards their mission. They experience ‘strategic drift’, which can result in a lack of focus and poor results in a relatively short space of time.

So, why does this happen?

Insight Takes Its Time

Strategic thinking has three distinct phases:

Generally, the analysis phases are where the data is collected and where we decide on the action to take - and these can take place quickly. The insight phase, on the other hand, is an abstraction phase in which the data is grouped and regrouped until an insight emerges. The insight phase takes time and requires a different set of conditions to the data collection and action planning.

So, we have fast thinking and slow thinking phases in the strategy process1. The fast thinking is known as reflexive thinking, and occurs quickly when we experience a level of perceived familiarity (cognitive ease) with the situation and the data we have collected.

The slow thinking is known as reflective thinking, and is induced by a level of discomfort (cognitive unease) about the situation and data. Importantly, this will only occur when we set aside the time to reflect and have sufficient cognitive energy.

Neuroscience research tells us that during times of action and speed the insight process is less likely to happen and our action will be driven by reflexive thinking.

Our brain seeks to conserve its energy wherever possible. Consequently we tend to err towards reflexive thinking when in a hurry or when we lack the required mental energy. As the term implies, reflexive thinking relies on generalisation and association - and is driven by those habits and patterns of behaviour with which we have experienced past success.

Action is The Enemy of Thought

Action oriented cultures often increase the tempo of our decision making and thus induce a higher level of reflexive thinking. We simply lack the time for reflection and tend to seek associations and generalisations in the way we interpret data and make decisions.

Where we do encounter an unfamiliar situation and experience some cognitive unease (a cue to engage in some slow and reflective thinking), this is often overlooked as an irrational feeling. Instead, we get caught up in the action momentum and a surge in energy - resulting in reflexive thinking and action.

Action-oriented cultures also tend to require higher levels of alertness and anxiety for people to remain ‘on top of the situation’. These higher levels of alertness sap cognitive energy and induce ‘continuous partial attention’, leaving less energy for deeper thinking. And the anxiety promotes a stronger limbic response which favours associative decision making and habitual behaviour over considered, reflective thinking.

So What Do We Do Now?

The pressure to keep moving and respond is relentless in most organisations. In general terms, the solution is to shift from A.C.T. (action cancels thought) to T.C.A. (thought - choice - action).

Some of the initiatives to address this include:

1. Focus on the cognitive load on the organisation rather than simply time management

The ‘time management’ principle of using time efficiently makes the false assumption that the human brain is a computer that can perform continuously over long periods of time. Instead, the brain prefers short, sharp sprints with periods of rest and distraction in between.

Create deliberate pauses between meetings and planning session to give brains an opportunity to recover and reflect. And keep those marathon meetings to shorter, more focused sessions to manage the cognitive load on the organisation.

2. Deliberately induce cognitive unease in key strategy and decision-making meetings

By using the same strategy frameworks and decision tools we can sometimes reduce the decision making to a compliance ‘tick-the-box’ exercise. The familiarity with the process produces cognitive ease and we default to fast and associative decision making - reflexive thinking.

Instead, consider changing your planning tools - and even your external consultants - on a regular basis. The lack of familiarity will heighten the level of cognitive unease, and so induce a deeper level of reflective thinking.

3. Separate the analysis process from the insight process in decision making and planning

The analytical phases of data collection and action planning rely on high levels of external focus and concentration. Many organisations can perform these tasks with great efficiency and speed.

The insight process, on the other hand, requires a different set of conditions. Insight relies on time and space away from the task at hand. As the term implies, it is an internal mental process in which the gathered information is grouped and regrouped in many different ways in order to produce a new understanding.

Often, without warning, a new insight is derived. And with it comes a different level of understanding about how the challenge might be addressed in new and creative ways. Combining the analysis and insight phases into a single process will generally drive out the insight.

Organisations will tend to move directly from data collection to action planning. In most cases, this fast thinking will rely on association and habitual behaviour - and will not generate the insight that characterises a winning strategy.

4. Ensure that our strategy is clear, internally consistent and well communicated

This seems like an obvious suggestion. However, it becomes critical in the case of action-oriented organisations where people are often in a hurry and under stress. In times of high stress and time constraints, our brain tend to revert to reflexive thinking in order to conserve our mental resources.

Where we have a well articulated and understood strategy, reflexively driven behaviours are more likely to align with this strategy - and strategic drift is less likely to occur. Although this will not produce insightful strategy, it does ensure that we remain on course to our organisational goals.

5. Plan meeting times with purpose

The natural rhythms of the brain are important to ensure that meetings achieve their purpose. Mornings are when mental energy is highest, and when we are more likely to access our executive functions such as analysis, logical thinking and prioritising.

These functions are housed in our pre-frontal cortex (PFC), an energy hungry part of the brain that can only function optimally for a short time (some say 2-3 hours a day). Importantly, the PFC is able to make trade-offs and assess risk - an important aspect of organisational decision making and planning.

When the brain resources are depleted - often in the afternoon, we rely more on our limbic system, the older part of the brain that manages the vast storage of memory in the brain. As the brain tires, it is more prone to seek alternative and creative connections. As the level of focus and concentration declines in the afternoon, we are more likely to generate creative solutions and approaches to challenges. Afternoon meetings are best for brain storming and creative problem solving.

Developing Mindful Organisations

In the same way that organisational culture is not simply an aggregation of the members’ personalities, a collection of mindful individuals does not automatically result in a mindful organisation.

Organisational mindfulness is produced via a series of purposeful organisational practices and processes that are informed by brain science. It recognises that, despite the ever increasing pace of change in the environment, successful organisations will always be characterised by appropriate thinking and decision making before rushing into action.

About The Authors

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Dr Terri Hunter is a brain-based organisational psychologist with the BrainLink Group. She is an expert in team development and executive leadership coaching, which she approaches from a neuroscience perspective. Her areas of focus include team effectiveness, leadership development and brain training.

DESIGN YOUR FUTURE, THE ROLE OF ORGANISATION ARCHITECTURE

Fri, 26 Feb 2021 16:35:14 GMT

Leaders have indirect roles

They shape the context.

What can leaders really do?

Can organisations influence their future? Can they shape their

operating environments? The answer is YES, if you believe in

the role of enterprise leadership.

But what leverage does the leader have on the enterprise? How

can they impact on its future?

The reality is that, except in the smallest of organisations,

leaders have only an indirect influence. Notwithstanding this,

this indirect influence can still be very powerful. This power is

wielded through the design of the ORGANISATION’S

ARCHITECTURE.

The organisation architecture

Like any building or structure, an organisation has a natural

architecture. Like the building’s architecture, the organisation’s

architecture is a response to the demands placed upon it.

In this case, the organisation’s architecture reflects its business

model and how it has decided to go to market.

In terms of this, we can identify four major spaces in the

organisation’s architecture - each with a number of important

building blocks.

Four important spaces

The four spaces that form the core of the organisation’s design

are:

a. The arenas in which the organisation has chosen to

be active

b. The capabilities the organisation has deployed in

order to operate effectively within these arenas

c. The relationships that are in place to enable the

organisation to operate effectively within the arenas

d. The financials that result from operating within these

arenas.

Our experience suggests that these four spaces - the core of the

organisation’s design - are the natural domain of enterprise

leadership. Not only CAN they influence these areas, they are

EXPECTED to show clear Thought Leadership in this

domain.

As we see on the following page, these four spaces have nine

building blocks - each with clear decisions to be made by

enterprise leaders.

Four key spaces

Nine building blocks

Arenas - space 1

The arenas define the various competitive spaces in

which the enterprise operates - see diagram below.

There are 4 key building blocks in this space:

1. How we segment our customers

2. What is our value proposition to meet the needs

of that segment

3. How we interface with our customers in that

segment

4. How our offer is differentiated from that of our

competitors.

The competitive position of the enterprise is shaped by

the way the customers are segmented and, therefore, the

way that the various strategic arenas are defined.

Capabilities - space 2

This space defines the ability the enterprise to

successfully deliver its value propositions to meet

customers’ needs. Two key building blocks make up this

space:

1. What are the key business processes and

activities that create the value propositions

2. How should we configure the key resources

and organise the reporting structures of the

enterprise.

The business processes and organisation structure are

best determined after we have defined the value

propositions. This is why defining the strategic arenas is

the obvious starting point for developing the

organisation architecture.

Relationships - space 3

This building block defines the key partnerships that are

required to “create” the value propositions and “go to

market”. Accordingly, we can define the following

relationships:

a. go to market partners:

‣ alliance or joint venture partners

‣ channel partners

‣ key influencers of your customers

b. supply partners:

‣ suppliers and vendors

‣ license holders or technology partners

Financials - space 4

Two key building blocks make up this space:

1. Revenue streams derived from the value

propositions. This includes pricing, discounting

and volume incentives

2. The cost structure of the business, including the

make up of fixed and variable costs.

The Levers for change

Enterprise leaders have four key levers for making

change and shaping the enterprise’s effort. The

strategic arenas, capabilities, relationships and

costs spaces are key elements in the organisation’s

architecture - and they represent viable levers for

leaders to influence the future and shape the operating

environment.

Strategy is Alive And Well ...And Living in Uncertainty

Fri, 26 Feb 2021 16:35:12 GMT

A Premature Obituary?

Many pundits claim that strategy is dead and has no place in this uncertain and fast changing environment. They say it’s too slow and the outcomes are irrelevant as conditions change rapidly. Moreover, they argue, organisations should focus on being agile and concentrate on launching a series of short, sharp projects to respond to the changing environment.

My view is that this short term perspective is based on three flawed assumptions about strategy.

Why are these assumptions flawed?

1. Strategy is different to planning

Planning is a process where we set specific objectives ahead of the time, and then focus on the steps and

milestones to achieve these objectives. It is useful in a shorter timeframe where the conditions and constraints are relatively stable.

Strategy, on the other hand, is an ongoing learning process where we seek to position the organisation within its operating environment. It is fluid and is concerned with a series of aims rather than specific objectives.

It is NOT concerned with predicting or making assumptions about the future - but focuses on understanding the system within which the organisation operates, and identifying the various leverage points that might be used to advance the organisation’s position.

2. There is real payoff in developing strategy

Recent research across several industry sectors shows that organisations involved in strategic

conversations and setting (longer term) strategy consistently show superior economic and stakeholder performance.

Moreover, the research shows that the cost of short term approaches (a focus on simply being responsive and reactive to changes in the environment) is that these organisations become fragmented and slowly erode the value of their resources.

3. Agility is not a strategy

Agility is not a strategy - it is a means of developing and executing a strategy. Indeed, high levels of agility without an underpinning strategy could lead to a more rapid fragmentation and degradation of organisational capabilities.

A long-standing and robust typology of organisational styles is offered by Raymond Miles and Charles Snow in their description of organisations as:

Repeated research shows that Reactors have the poorest performance of the types - and that they experience more failure and ‘corporate rescues’.(See the longer version of this article for further detail).

Effective Strategy in Uncertainty

Three processes contribute to effective strategy in these conditions of change and uncertainty:

1. Build a rich picture

A rich picture is a systems-view of the system of which the organisation is a part. It graphically

represents the key elements in the system and their interdependencies; how and where the

organisation interacts with the system; and the potential leverage points that can be used by the

organisation to re-position itself. It is a key input into the next process - the strategic conversation.

2. Start a strategic conversation

Strategy is a conversation inside the organisation. Like most conversations, it benefits from wide

participation and a wide array of diverse perspectives.

Strategic conversations are systems with several components:

An overall aim articulated by leadership
Presentations by leadership to “frame” the conversation
Executive blogs and posts
Online discussions and forums
Knowledge sharing platforms
Workshops, meetings and discussions to explore detail

The strategic conversation provides an important input for the third process - the use of scenario thinking.

3. Use scenario thinking

Scenario thinking flips an issue that typically causes a logjam in strategy - an attempt to predict the future state of the environment. Rather than arguing about what the future holds, we focus on what the organisation will do in the event of a series of alternative futures.

Scenario thinking makes two important distinctions:

We no longer focus on only one future - organisations face multiple futures in an uncertain environment
We are no longer concerned with predicting the future . We focus instead on understanding the capabilities required by the organisation to thrive in the range of alternative futures. Even if the range of alternative futures is wide, there will usually be a set of common capabilities required across them all. These then become the subject of capability development.

By using the insights gathered through the strategic conversation, we generate a set of alternative futures faced by the organisation. The current business idea (value proposition, business model) is then wind-tunnelled in these different scenarios of the future.

By embracing the uncertainty in the environment (instead of simply predicting a single set of operating conditions), we are able to create a more resilient organisation for the future. In addition, we are able to generate a series of innovative ideas that can enhance the strategy and capability of the organisation.

Strategy is Alive and Well

Rather than being irrelevant in this fast changing environment - change and uncertainty are the very proving grounds for the real value of strategy. Rich pictures, strategic conversations and scenario thinking are three processes that can contribute to effective strategy for navigating through these times of uncertainty and change.

About Dr Norman Chorn

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Bridging Strategy and Execution

Fri, 26 Feb 2021 16:35:10 GMT

AN ARTIFICIAL DISTINCTION?

I’ve become increasingly concerned by comments that suggest that organisations should focus on the quality of their execution rather than their strategy), since this will offer them greater leverage and returns. The implication is that strategy and execution are separate activities within the organisation and we should place more focus on one rather than the other. This is an artificial distinction, and leads to several other misleading conclusions, such as:

• we can divide the organisation into ‘thinkers’ and ‘doers’ - with the ‘thinkers’ usually found in leadership positions

• moving from strategy to execution is a linear process - the one takes over when the other has finished

• strategy can be executed in a ‘top-down’ process - handed down by the leaders to the rest of the organisation.

These are invalid conclusions when considering complex, knowledge-based organisations. These organisations are usually referred to as complex adaptive systems1 and behave quite differently from simpler, traditional organisations. This difference has contributed significantly to the high failure rate experienced by organisations in the implementation of their strategy - particularly when this emphasises a shift in direction or style2.

The key reasons for the high failure rate include:

• staff are disengaged and uncommitted to strategy when it is presented to them as a fait accompli

• separating thinking and doing significantly inhibits the organisation's ability to respond

and adapt to uncertain and rapidly changing conditions

• top-down approaches are usually met with fear and resistance in our modern

knowledge-based organisations.

DESIGN THINKING CAN BRIDGE THE ‘DIVIDE’

How can we bridge this artificial ‘divide’ between strategy and execution? It is clear that this distinction does not serve us well in complex organisations - and is closely linked with many of the strategy failures we experience.

‘Design thinking’ offers some useful insights as to how we might bridge this gap - and calls for us to re-think the true meaning of strategy. From the mainstream of strategy thinking, Richard Rumelt3 offers a key insight when his research-based argument suggests that ‘good’ strategy is an integrated view of:

• the diagnosis of a situation

• the guiding philosophy that addresses the challenge in this situation

• a coherent plan of action to enact the philosophy.

Importantly, he argues that these three elements are inseparable for successful strategy. In other words, we cannot simply concentrate on the plan of action without close attention to the diagnosis and guiding philosophy. ‘Design thinking’ is all about this integration. It emphasises a number of key characteristics in the way we solve problems or address challenges in organisations4. These include:

• the need to be human-centric

• a bias to adaptivity

• systems thinking

• big picture / generalist thinking

• using diagrams and models to create pictures of the situation and solution.

So, how can we use these perspectives from design thinking to bridge the gap between strategy and execution in our modern, complex organisations? I suggest five key principles and actions below.

DESIGN THINKING CAN BRIDGE THE ‘DIVIDE’

Design-based strategy may be characterised by five key principles as follows:

1. A focus on purpose and broad boundaries

Strategy should be guided by an overall purpose and clear boundaries, but it is important to avoid setting tight objectives at the outset. An important distinction can be made between design-based strategy and planning. Planning assumes a high level of certainty and understanding of the situation. Based on this, conventional planning makes a set of assumptions at the outset (these are, in effect, predictions about the future) and then outlines a set of objectives to be achieved. Design-based strategy, on the other hand, embraces the uncertainty and assumes the need for observation and learning as the organisation embarks upon the strategy journey. Accordingly, the objectives are allowed to emerge along the way as the conditions and requirements become clear. Key guidance is provided by the overall purpose and boundaries, rather than by the detailed project plan. This presents a significant challenge for organisations who are accustomed to having a watertight plan with milestones and KPIs before any resources are committed. However, the use of watertight planning is fraught with danger and high failure rates in conditions of uncertainty and rapid change. Instead, design-based strategy allows for understanding and insight to emerge along the way - and objectives are then set as this understanding emerges.

2. Hold processes ‘lightly’

In a conventional planning regimes, processes are held tightly. Little deviation is allowed with respect to deadlines, the approach, and the metrics used to track progress. In a design-based approach, on the other hand, processes are held ‘lightly’. As Duck argues, holding lightly means that you allow the plan to change regularly in the light of fresh information and insight. Conventional planning pushes to make decisions so that these can be locked in and the project moved along. Design-based strategy is not about delaying the decisions, it’s about questioning and testing - doing the work to make sure the decisions are optimal for achieving the overall purpose. Duck points out that the challenge is to form a point of view as soon as possible, but then to lock it in as late as possible.

3. Recognise strategy as a continuous cycle

The third characteristic of design-based strategy is that it is continuous in nature. Tim Brown, a thought leader in the design thinking space , suggests that it is a continuous cycle. This is well demonstrated by the strategy cycle as depicted by Church et al

Conventional planning would move round the cycle once and then remain fixed on the mapping of the path - traditional ‘execution’. Design-based strategy, on the other hand, keeps cycling around and engages both the rational and emotional aspects of the strategy. It permits, indeeds encourages, a continuous questioning of the destination and pathway to achieve the overall purpose of the strategy. As mentioned earlier, the learning process allows a rethink of the process as new information and insights emerge.

4. Move towards collaboration

In the planning model, there is a tendency for the ‘thinkers’ to play the role of ‘experts’. The lessons from complex organisations suggest that the expert model seldom produces the best outcomes as there is rarely ‘one best way’9. In addition, attempting to ‘sell‘ a strategy from the experts is often met with fierce resistance and fear from a change-weary workforce. Instead, an appropriate approach seems to be collaboration, where we involve staff and key stakeholders in the different stages of the strategy cycle. Not only do we get the engagement that comes from participation and involvement, we also get a rich diversity of views and insights - key ingredients for innovative strategy. Key to this approach is the ‘pull - don’t push’ philosophy. Rather than seeking to prove you’re right and attempting to push through when encountering resistance, it seems best to draw dissenters towards you and encourage them to participate in finding an optimum solution. Pushing your viewpoint often galvanises resistance, whereas an approach that engages the key influencers will avoid a contest to ‘gain control’. 5. Develop rich pictures The fifth element of design-based strategy is to move beyond the use of project control sheets and action plans to manage progress. ‘Rich pictures’ are diagrams and pictures that show the relationships between the key players, processes and information that are relevant in addressing the challenge or solving the problem facing the organisation. The rich picture below is an example of a bookstore seeking to improve the performance of its supply chain in meeting customer demands. Note that the way this challenge is represented moves beyond data and facts - it outlines a series of elements:

• the key players in the challenge

• the processes and functions they perform

• the data that is available for decision-making

• the relationships that exist between the various elements

• any boundary that we wish to place on the scope of the ultimate solution.

The use of ‘rich pictures’ promotes the continuous cycle of design-based planning, in that it allows us to cycle from the future destination ➙ commitment ➙ collaboration ➙ mapping the path ➙ future destination, and so on. ‘Rich pictures’ also demonstrate the big picture in a way that is more accessible to our intuitive consciousness. In other words, it is more likely to evoke innovative and creative responses to complex challenges.

CLOSING THE DIVIDE

Design-based strategy is not the panacea to improving performance in a complex and changing environment. As mentioned before, there is seldom ‘one best way’. However, what it does demonstrate is that the distinction often made between strategy and execution may not be valid. In reality, it isn’t about bridging the gap between the two - it’s more about closing the ‘divide’ in our thinking and the way we conceive of strategy. I firmly believe we are on the cusp of some significant shifts in the way that enterprises think about and use strategy to improve their performance. The shift in the management consultancy space away from pure ‘advisory’ services towards an offering that integrates the ‘thinking’ and ‘doing’ is testimony to that shift. And a key to this is the understanding that design thinking brings to the practice of both strategy and leadership in our modern organisations.

Dr Norman Chorn is a strategist and organisation development consultant within the BrainLink Group.

He works with executives and organisations to develop future strategy and organisational capability.

His particular areas of focus are:

‣ strategy in conditions of uncertainty

‣ organisational and cultural alignment

‣ strategic leadership.

Building A Mindful Team

Fri, 26 Feb 2021 16:35:08 GMT

You want a beautiful team?

YOU WANT TO BUILD A MINDFUL TEAM?

You’re probably aware that mindful people are more productive and creative, make better decisions, and cope more easily with stressful conditions. And now you want to see these characteristics in your teams at work - right?

Well, that makes a lot of sense - except that we cannot simply train individuals in mindfulness and expect that to result in a mindful team! Mindful individuals do not necessarily make a mindful team. Teams are not merely a group of individuals who work together. Teams are complex systems of processes, structures and patterns of behaviour. So, what is mindfulness and how do we create a mindful team?

WHAT IS MINDFULNESS IN AN ORGANISATION?

Mindfulness is generally understood as being aware, focused and open to experiences in a non-judgemental way. In an organisational setting, it enables individuals to purposefully direct their attention and energy to the things that matter for the organisation. This is obviously a good outcome for an organisation. The neuroscience of mindfulness includes three key processes:

‣ Sense-making: how to see and make sense of the world around us

‣ Neuro-plasticity: how to rewire the brain and create new neural pathways to learn new things

‣ Bio feedback: the connection between the brain and body that allows us to receive information through our whole body - ie all our senses.

When applying these principles to a team, three processes stand out:

‣ Framing: how to define and scope the challenges faced by the team - and how these should be addressed

‣ Team learning: how to facilitate the learning and decision making processes within the team

‣ Connecting: how to connect the team to the rest of the organisation and enable meaningful information exchange.

HOW TO BUILD A MINDFUL TEAM?

The mindful team purposefully directs attention and energy to those things that matter

to the organisation. The factors that enable this are:

Dr Norman Chorn is a strategist and organisation development practitioner with the BrainLink Group. He uses principles of neuroscience to address the challenges of developing strategy in a complex and uncertain environment. His particular areas of focus are strategy in conditions of uncertainty; organisational and cultural alignment; and strategic leadership.

The Brain New World

Fri, 26 Feb 2021 16:35:05 GMT

The 'Brain New World'?

The ‘Brain New World’ is an attempt to understand the changes taking place in our organisations and the way we navigate through these unprecedented conditions of complexity and uncertainty. By using the human brain as an analogy, we explore aspects of the modern organisation and the way we approach strategy.

We see several things we can learn about organisations by recognising that an organisation not only has a brain, but in many respects, it is a brain.

Why is This Relevant Now?

Current conditions have placed our organisations at the confluence of four major forces:

The confluence of these forces has produced unparalleled complexity in our environments. With complexity comes greater uncertainty and risk. Furthermore, we know that complex systems are characterised by a number of significant features:

The butterfly effect:

You intervene at one point in the system, and something happens at another

System integrity:

The whole system is more than the some of its parts. In fact, the whole is also different to the sum of its parts

Unpredictable, emergent behaviour:

Because of the inherent unpredictability of complex systems, events and changes cannot be accurately planned. Instead, they emerge over time as the system develops its own dynamic

Brittleness:

As complex systems grow and connectivity increases, there is a tendency towards increased centralisation. This creates a brittleness in the system that can result in increased momentum (negative or positive) in the system and cause it to break down.

Importantly, organisations are impacted in the same way. Because most modern organisations are highly connected and made up of many interdependent parts, they too can be characterised as complex adaptive systems. And they too are subject to the same features of the bitterly effect, systems integrity, emergent behaviour and brittleness.

How Does This Impact Competitive Advantage?

Some believe that the concept of competitive advantage is not applicable to all organisations, particularly those involved in not-for-profit or public sector activities. However, the broader meaning of competitive advantage is that it measures the extent to which an organisation represents the most effective and efficient use of its resources - whatever its purpose or ownership.

In this sense, it is a useful way to measure the effectiveness of an organisation’s strategy. So how has the concept of competitive advantage evolved in response to increased levels of complexity? Or put another way, how has the purpose of strategy evolved in this time?

Table 1 below shows how this evolves as economies move from the industrial era to the information era - and more recently, to the relationship era. In each case, the form of competitive advantage - and therefore the strategy - evolves in order for the organisation to be effective. And the levels of complexity rise accordingly.

As a consequence, we are witnessing real changes in the nature and form of organisations. Organisations are developing the capabilities to execute on strategies based not only on efficiency, but the ability to use information and form authentic relationships and connections as well.

It is these changes that has prompted us to search for new metaphors to describe organisations. While the ‘machine’ metaphor has been a useful way to define organisations based on efficiency, we need another analogy to portray more complex organisations that focus on connections and the effective use of information.

Table 1 - The evolution of strategy and competitive advantage

What is the Brain New World?

The ‘Brain New World’ is the use of the human brain as an analogy to describe and explore modern organisations and their strategy.

The brain is a highly connected network and displays many of the characteristics of a complex adaptive system described earlier:

The butterfly effect

The brain is a system of highly connected and interdependent parts - changes in one part of the brain impact on other parts.

Systems integrity

The brain is more than the sum of its parts - it has an overarching purpose or function in humans.

Unpredictable, emergent behaviour

The brain learns and makes connections in an unpredictable manner - the process of creative insight occurs when information is connected in new and different ways.

Brittleness

Where a small number of neurons (the brain’s building blocks) become too highly connected and resemble ‘hubs’, they overwhelm the brain’s networks and cause system breakdown. This is the nature of an epileptic seizure.

Using this analogy, we can examine an organisation by using our knowledge of the human brain.

The Integrated Brain

Based on extensive research in neuroscience, we have learned that the human brain operates as an integrated whole and has an overarching purpose or goal.

More recently named the “1:2:4” model of the brain, this offers a number of powerful insights into the nature of organisations and their strategy ( 1 ).

Key findings on the brain

Applying the findings to organisations

The brain is an

integrated whole

As complex systems, organisations are integrated wholes. They cannot be changed or improved by breaking them down into their constituent parts. This ‘reductionist’ approach is a key hangover

from the machine analogy and ignores the fact that changes in one part of the system will impact on other parts. Organisations need to be viewed as a whole - from a systems perspective - in order to understand how they operate and respond to change.

It’s key role is to

seek safety

The underlying principle of ‘organisation’ is to eliminate uncertainty. Uncertainty and change represent danger. Organisations will, therefore, naturally resist change - particularly if they are predicated by the use of ‘burning platform’ (threat) messages

Non-conscious

processing of external

cues occupy most of

the brain’s functioning

This underlines the importance of hidden assumptions and distorted

perceptions that are shaped by the organisation’s prevailing culture.

External cues are understood and interpreted within the frame of

reference provided by the culture - and this generally occurs at a

non-conscious level. In most cases, organisations are not aware of

how their understanding and responses are predetermined by the

culture

These external cues

manifest in a tangible

reaction

The key to effectiveness is to process and analyse the external

cues to understand their cause, before ‘knee-jerk’ reactions. While

this is often very difficult, pausing and thinking before action enable

organisations to develop new insights into the real meaning of the

external cues. But this requires a strong commitment to the ‘pause’

- and is one of the key characteristics of good strategic thinking

The brain seeks to align

and regulate any

resultant decisions and

actions

The self regulation processes in organisations - such as

performance management and governance - play an important role

in ensuring integrity and alignment with values. However, they come

under significant pressure when the organisation experiences

negative (losses) or positive (significant success) external cues.

What are the Insights For Organisations?

Five key insights are presented below:

1. Limit the use of a reductionist approach to understand and manage organisations:

Breaking the organisation down into parts (eg sales, finance, operations) and then working on them individually will often fail to improve the organisation. It may even result in a deterioration of overall performance.

This is an approach typified by the ‘best practice’ movement whereby we seek to import a particular practice (eg a sales management technique) from one system and then embed it into another organisation. This assumes that the various parts of the organisation are not highly connected and that they can be modified without causing a reaction (usually unintended) in another part.

2. Recognise that it’s natural for an organisation to resist change:

Organisations are designed to eliminate uncertainty and change. Lead the change process by stressing the positive aspects - ‘towards messaging’ - and giving people an opportunity to understand and experience the benefits. Wherever possible, avoid the use of ‘burning platform’ messages that create a sense of danger and promote emotional responses that generally eliminate engagement and creativity.

Try to ‘build a bridge’ for people to understand how they will move from their current position to a future position. Many middle and junior staff lack the frames of reference and future orientation to understand a very different future - it simply makes no sense to them because they cannot conceive of how it will work.

3. Understand the powerful impact of the non-conscious aspects of culture:

The impact of culture on organisations is hardly a new insight. But we are learning that this is far more pervasive than initially understood. Because so much of the processing of these external cues occurs non-consciously, the organisation is largely unaware of its effect.

It shapes the choice of performance measures, how data is analysed and interpreted, what leadership behaviours are valued, and even the types of planning tools that are used. These factors will determine the repertoire of behaviours and strategies used by the organisation - mostly without a conscious awareness.

4. Appreciate the value of a ‘pause’ before responding to external cues:

Most organisations experience a need to respond quickly to an external cue, whether negative or positive. This need to be ‘action-oriented’ often drives out opportunities for reflection and the generation of new insights.

The drive for action - often disguised as a sense of urgency and ‘real time management’ - is the enemy of good strategic thinking. But there is usually a window of opportunity between stimulus and response - a chance to examine, analyse and re-think the true meaning of the external cue.The real value of this ‘pause’ is that it allows for an opportunity to combine and recombine the information available.

Often this results in new insights and understanding about the external cues - and opens up different avenues and options for action. We’re not advocating procrastination or ponderous decision making. Simply recognise that action can drive out thinking and the possibility of new insights - and leave the repertoire of behaviours and strategies unchanged. And this can be disastrous in a complex and changing environment.

5. Protect the governance processes - the self regulation functions - particularly during periods of negative or positive momentum in the organisational system:

The ability to self regulate is at its most vulnerable when the organisation is under pressure from negative or positive cues. When things are going badly for an organisation, it may be tempted to take short cuts, or to make short term decisions. Under pressure from a threat or perceived danger, the organisation often loses access to its logical and creative capabilities.

Similarly, when experiencing a series of positive outcomes (success), the same pressure exists to override the self regulatory systems that created the success in the first place. The sense of euphoria and ‘self belief’ is often so powerful that the organisation can develop an unrealistic sense of omnipotence.

Becoming A Brain New Organisation

We have a long way to go before we can claim we understand the new model of organisations in this complex world. The five principles above represent a start to building the type of capability needed by organisations as they seek to thrive in this brave new world.

References

( 1 ) See an outline of Gordon’s “1:2:4” model in the Appendix

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Appendix

Key findings on the brain

Implications for humans

The brain is an integrated whole

Rather than function as a collection of different parts that manage different functions, the brain is a highly interdependent system. Changes in one area impact on others, and the brain learn to compensate for deficiencies in one part of the system by developing ‘workaround’ strategies

It’s key role is to seek safety

The brain’s threat circuitry is greater than the reward circuitry. It is biased towards the elimination of threat over seeking reward. Furthermore, the brain’s rational and creative capabilities are severely curtailed in the face of danger, including the threat of social rejection

Non-conscious processing of external cues occupy most of the brain’s functioning

The brain has most (in excess of 99%) of its processing capacity dedicated to the non-conscious processing of external cues. In most cases, this processing occurs outside of your conscious awareness - but will affect the manner in which you respond and act

These external cues manifest in a tangible reaction

Once these external cues have been processed, you become aware of them by way of some physical reaction in your body, e.g. sweaty palms, increased heart rate or a feeling in your gut

These reactions are then processed and analysed

After becoming aware of these physical sensations, you begin processing and analysing these reactions - you think about their cause and what it means to you. This gives rise to a decision or action. However, you may not take the necessary time to ‘think’ about this before making a decision or acting

The brain seeks to align and regulate any resultant decisions and actions

The brain has a self regulation function which is designed to ensure that your decision and decisions are well considered and aligned. This may be less effective when you are tired or otherwise impaired.

Napoleon Was a Neuroscientist!

Fri, 26 Feb 2021 16:35:03 GMT

Why Napoleon?

We all know that Napoleon had magnificent victories at Toulon, Rivoli (perhaps his greatest of all time) and Austerlitz - but what’s the connection with neuroscience? What did he know about neuroscience in 1797? Well, it turns out that Napoleon unknowingly used an understanding of neuroscience to craft his approach to strategic thinking. In essence he set up the optimum conditions for his brain to create powerful strategic insights. In 1926, the English psychologist Graham Wallas, described four key stages of the insight process that were attributed to creativity. These are:

Preparation:

The conscious assembly of the facts and the study of any related ‘theory’ and history related to the situation

Incubation:

A non-conscious phase - where we deliberately move away from being intently focused on the problem at hand - during which the facts and information are combined in different ways to gain an overall picture or pattern of the situation

Illumination:

This is the sudden ‘knowing’ that occurs - much like the sudden alignment of the cogs in a slot machine when you win the jackpot! And like a slot machine, the occurrence cannot be forced. We can only create the conditions in which it is likely to occur.

This, too, is a non-conscious phase

Verification:

This is the conscious phase during which we translate the insight into an actionable solution.

From recent neuroscience research, we now understand the process of HOW the insight process works. Let’s examine how Napoleon used this instinctive understanding to craft his creative and insightful solutions to winning so many battles.

Napoleon 'At Work'

Let’s examine some of the key elements of Napoleon’s approach:

1. He was a diligent student

Napoleon began his military education at the age of eight when he was awarded a scholarship to the military college at Brienne. At the tender age of 15, he moved onto the Ecole Militaire (French Military Academy) where he studied advanced military tactics and strategy. Upon graduating, he was awarded a commission into the French Army.

At that stage, Napoleon had a comprehensive knowledge and understanding of military strategy, and was able to recount numerous case studies and examples of how battles had been won and lost in a variety of conditions, terrains and troop combinations. He was able to call on this vast knowledge base in all his thinking and planning.

The brain regularly sifts through its memory centres to draw knowledge from the past in order to formulate an insightful solution. You may know that a particular approach has repeatedly failed in the past, so this option can potentially be discounted. In addition, insight often comes from combining experiences or knowledge that has not been previously combined.

2. He immersed himself in the battle

Napoleon was well know for spending time with his troops during preparations as well as in the thick of the battle. Napoleon was keen to smell the smells, taste the tastes and experience the emotions of his troops. He believed that their insights were invaluable in building a rich and comprehensive understanding of the battle.

When generating a creative solution to a problem, the brain searches for faint signals of past successes and failures. This is a critical component of the insight process, and the more areas of the brain that can be associated with these experiences, the better the chance you have at sifting through these possible options quickly and selecting a viable course of action.

3. He retired from the battle to reflect

Napoleon was also diligent in making time for reflection and to clear his mind. The time in his quarters was spent thinking about the ‘bigger picture’. It’s not easy to ‘hurry up and relax’ as I’m sure many of you have found while taking a well-deserved, but too-short holiday. Similarly, the brain needs the time to engage in meditative, quiet time to process what has been happening and to make sense of it all.

The trick is to recognise that there is an important distinction between working hard and thinking hard. The former requires long hours and relentless effort, while the latter needs rest and a break from the routine.

This period of ‘resting the brain’ is a critical condition for preparing the brain to generate creative insights. It also allows for the important process of sensory gating whereby we minimise the external visual stimulus to the brain so as to preserve neural space and energy for the higher brain to do its creative work.

This occurs when we deliberately de-focus from the task and all its data - and turn ‘inwards’ to allow the brain to begin searching for new combinations of information that can ultimately result in the creative insight.

4. He waited for a flash of insight

Military historians often point to one idea as being central to Napoleon’s success. The idea is expressed in French as ‘coup d’oeil’ - the flash of insight. The flash of insight - sometimes called strategic intuition - was Napoleon’s approach of deconstructing a situation to look for different ways of understanding it.

This occurred during his time of quiet reflection. During these times of reflection, Napoleon mulled over the information he had gathered from his research and firsthand experiences from the troops - and sought different ways of combining and recombining this information. He made a point of not jumping to conclusions by simply using approaches that had worked in similar situations in the past.

This approach allowed Napoleon to develop the creative solutions that most often changed the course of the battle, and tipped the scales in his favour. The Anterior Cingulate Cortex - the part of the brain that signals the need for a different way of thinking - prompts the brain to try a different approach when you face a significant challenge and conventional thinking is not working.

The brain then begins the process of combining previously unconnected ideas and information. At the moment of insight, a new neural connection is created which produces the sense of ‘knowing’ - the aha moment.

In terms of strategic thinking, creative insights are developed when we consider the concrete facts and seek to group them in different ways. By trying different combinations - by grouping and regrouping the data - we are looking for different ways to combine the information so as to make sense of the situation.

5. He acted with conviction

The final element in Napoleon’s approach was the ability to resolve the challenge by acting on this strategic intuition - the decisive insight that would alter the course of the battle and place him in a winning position. In his earlier career as a more junior officer, Napoleon’s strategic insights were often treated with derision and resistance, but he had the courage to pursue them with resolve.

The flashes of insight carried with them the force of action that propelled him forward. Because he was then able to see the situation with such clarity, he could more readily muster the resolve to take decisive action.

I’d like to acknowledge the contribution of my colleague, Dr Dan Radecki, to the ideas in this blog.

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Create Competitive Advantage Through Strategic Flow

Fri, 26 Feb 2021 16:35:01 GMT

Pursuing strategic objectives often results in us trying to undertake conflicting goals.

But often, these goals can be reframed and successfully achieved

Are we pursuing conflicting objectives?

My last newsletter spoke about using centralised and standardised shared services as a means of addressing multiple customer groups and keeping operating costs down. We referred to the resultant increase in failure demand as the organisation is unable to absorb the customers’ demands for variety - and is then engaged in rework. This often results in an increase in total costs and a reduction in customer satisfaction ( 1 ).

This is a pervasive problem in many organisations, one that has prompted some commentators to conclude that the two goals - customer focus and operational efficiency - represent conflicting priorities within an organisation.

Sadly, simply recognising this does nothing to resolve the real challenge that many leaders face - how to respond to multiple customer needs without an unacceptable blow out in operating costs.

Organisational “flow” may offer new insights

The challenge is to focus on the enablers of both customer focus and operational efficiency. Often, customer focus is viewed as an external orientation in the culture, while operational efficiency is seen as internal . This often forces leaders into making difficult choices in setting up and managing their enterprises.

By recognising that flow ( 2 ) is a key enabler of both customer focus and operational efficiency, we can explore the opportunity for building an organisation that produces good operational efficiency while displaying high customer focus across multiple customer groups.

A customer-winning organisation that is designed to win and keep customers, and is still cost competitive.

Three enablers of customer focus and operational efficiency

The enablers that build a customer-winning organisation are related to flow in the processes and value propositions delivered by an organisation. These are:

the flow between the organisation and its key customer groups
the strategic flow in the key value propositions - and their propensity to develop competitive advantage
the flow within the key organisational units:

1. Flow between the organisation and its key customer groups

The critical factor here is to create a sympathetic flow between the customer demands and the organisation’s propensity to respond.

In my newsletter “Winning and keeping customers in a changing market” , I advocated using a behaviour-based segmentation approach where we segment the customers on their patterns of behaviour instead of the traditional demographic approach.

Once the key segments have been defined, we create a customer-interface unit that is responsible for delivering the relevant service to each of the key segments. But this is more than just an account management function - it is a unit of the organisation that is responsible for bundling the various elements of the service to the customer. And it delivers these services in a style and culture that is sympathetic to the behavioural needs of the customer group.

Because the style and culture of each unit is sympathetic to the customer group it serves, there is an economy of flow between each of the units and its customer group. As a consequence of this:

each unit’s processes match the customer requirements and are so able to absorb their demand with a minimum of handovers and complexity

failure demand is reduced and the overall cost of servicing the customer group is lowered.

2. Strategic flow within the value propositions of the organisation

The organisation produces customer-winning service when two conditions are met:

the value proposition within each customer-interface unit matches the needs and behavioural style of the customer group in a unique way. This is about delivering a service that adds value and solves customers’ problems

there is strategic flow in the execution of the value proposition. This flow is produced when all the resources and capabilities within the unit are aligned to the value proposition.

It is the latter condition we are focused on here.

Strategic flow occurs when you have made the requisite choices and trade-offs in the configuration of the organisational unit’s resources and capabilities.

Importantly, strategic flow, and the resultant “excellence” that is produced, will deliver competitive advantage as the organisation outperforms its competitors in the way that it meets the needs of its customers.

As the diagram below depicts, a speed and fast response is enabled when the structure is flat and staff are highly empowered, and so on.

A further point worth noting is that strategic flow and competitive advantage are associated with focus in the organisational unit’s configuration. In this sense, focus represents a deliberate imbalance and trade-off in the way the unit is designed and configured. For example, we can’t be fast and highly responsive if we are also highly consultative and participative in our decision-making, and vice versa.

3. Economy of flow across the organisation’s processes

As I wrote in my previous newsletter, economy of flow is the application of lean thinking whereby waste is eliminated by improving the flow through the various processes of the organisation. This is achieved by aligning the resources and processes of the customer interface units with the problems and solutions required by their respective customer groups.

But what of the resources and capabilities in the rest of the organisation that are not usually considered part of a customer-interface unit? I am speaking here of the traditional “support” activities that are often considered to be candidates for a centralised services initiative.

The current vogue is to strip out all of these “support activities” from the customer interface units and set them up as a set of standardised shared services facilities - often named as “corporate services”. As my previous newsletter outlined, the assumption is that we should then be able to achieve some cost savings via the resultant economies of scale.

However, as we saw, this often results in an increase in failure demand as a result of the complexity in the handover processes. So, is there any merit in setting up centralised service facilities in a knowledge-based service organisation? Of course there is, provided we pay attention to a few important principles in the way we do it.

In general, we want to ensure there is an optimum economy of flow through the key processes within the organisation. Accordingly, it is best to embed all processes within the customer-interface unit that are closely associated with the solving of the customer problems and adding of value to the customer.

This reduces the complexity of integration and propensity for failure demand. Even though some duplication of facilities might occur, this is still likely to reduce the total costs, because the organisation can meet the customers’ needs first time and there is limited need for rework and handovers.

In certain cases, however, centralised services are warranted. This is because, for example, the resource is scarce or it cannot achieve critical mass when devolved through the organisation. In these cases, there are some principles that can be followed to minimise the chance of failure demand and an increase in total costs. These include:

ensure that the service is not a critical part of the value chain that the customer interface unit relies on to deliver its value proposition. Doing so may impair the ability of the unit to absorb the variations in customer demand

ensure that the customer-interface unit doesn’t lose control of the customer interface. This defeats the object of having the customer-interface unit in the first place and impairs the quality of the customer service

ensure that the “strategic logic” of the units served (by the shared service) are not too different. For example, if unit A is involved in a fast response strategy and unit B is delivering a slower, more precise and low cost strategy, their requirements for the delivery of the “standardised” shared service will be quite different. A standardised service is unlikely to meet both sets of needs to the same standard, thereby increasing failure demand and internal costs.

Enabling customer focus and operational efficiency

As the analysis suggests, it is possible to deliver several value propositions across different customer groups and still achieve operational efficiency. Rather than viewing these objectives as opposing mindsets and focuses within an organisation, we can address their common enablers - the achievement of strategic flow through the organisation.

An appropriate approach to setting up shared services can facilitate this and - despite some apparent duplication of services - still reduce the total costs of servicing customers. And the ability to absorb the inevitable variations in customer demand will produce better customer service and customer satisfaction.

( 1 ) I reflect on my own attempts to resolve a billing issue with the centralised billing facility at my ISP

( 2 ) See my previous newsletter "Economy of scale is a myth" for a definition of flow and how it reduces waste within an organisation

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

By integratin g the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations. He specialises in creating strategy for the rapidly changing and uncertain future and can help you and your organisation.

Release Your Strategic Intuition

Fri, 26 Feb 2021 16:34:59 GMT

Strategic Intuition is powerful combination of rational thinking and creative imagination. It can be released by following a process that recognises the differences between Strategy and Planning

Combining Rational Thought And Creativity

What is Strategic Intuition?

Have you ever had a flash of insight where the solution to a difficult problem just comes to you? The answer seems to hit you suddenly and all the dots are connected. You have real clarity and you know exactly what to do. This is what Duggan ( 1 ) and others have called strategic intuition , where the flash of insight is a powerful combination of rational thinking and creative imagination. This is how Zuckerberg conceived of Facebook, Richard Branson developed Virgin Airlines and Matt Church created Thought Leaders ( 2 ).

But strategic intuition is very different to expert intuition . Expert intuition is where you are able to make a snap judgement because you have vast experience and recognise a familiar situation. A good example is the paramedic who is able to make instant decisions when she arrives at a scene of an accident because she has witnessed many such scenes before.

Strategic intuition, on the other hand, is slow and occurs when the situation is new and unfamiliar. It occurs when you recognise the situation as new - and turn off your expert intuition. This is an important distinction, because expert intuition is often the enemy of strategic intuition.

Releasing your Strategic Intuition

Releasing your own strategic intuition depends on a number of factors, as we shall see below. But an important aspect is the ability to develop the so-called “ beginners mind ”( 3 ) - i.e. where you deliberately push aside what you know from previous experience and open yourself up to new insights. As we know, existing paradigms offer efficient solutions to common problems, but they can restrict our willingness to see new and different solutions.

It seems that we can learn much about releasing our own strategic intuition by examining the successful exploits of Napoleon as described by von Clausewitz4 in 1832. Von Clausewitz identifies how Napoleon used the coup d’oeil (flash of insight) to conceive of many brilliant initiatives that not only defeated the enemy, but also left them completely flat-footed.

Four Key Principles

Translating Napoleon’s exploits into lessons for modern strategy, we see four clear principles:

1. Study the history and theory thoroughly

2. Immerse yourself in the situation and empty your mind

3. Wait for the flash of insight - it will come

4. Act with conviction.

1. Study the history and theory

Good strategists are always well prepared. They have studied the previous case studies and understand the theory well. But they are not captured by any of the theory or case study of previous success. Napoleon was a brilliant student and graduate of the French Military Academy.

2. Immerse your self in the situation and empty your mind

Become “one” with the situation and make sure you thoroughly understand the context and prevailing issues. Then practice “beginners mind” and consciously push aside any pre-conceived ideas or solutions you might have. This is where you deliberately separate any expert intuition you might have from the situation at hand. The critical factor is to recognise this as a “new” situation and to understand that snap judgements will not suffice.

3. Wait for the flash of insight

As you comb through the facts and details of the situation, your sub-conscious mind is hard at work - even though you may not realise it. Eventually, something will click and the fog will clear. You will have clarity and insight into the situation and be able to see the decisive point in the situation. Napoleon used to identify the decisive point in a battle that would turn the battle around and put him in a position of advantage. Recognising the decisive point in the situation is the overall purpose of strategic intuition.

4. Act with conviction

Once you have “seen” the decisive point in the situation, you should act with purpose and conviction. This is the axis around which the situation will pivot, and it is your “winning” strategy. Failing to act purposefully at this stage may mean that the window of opportunity closes and your advantage is lost.

Planning is NOT Strategy

As we see, strategic intuition is different to expert intuition. It depends on a recognition that the situation is different and casting aside the need to make a snap judgement. Moreover, it relies on you being able to make the distinction between Planning and Strategy.

Planning is where we set objectives and take actions to achieve a goal. We assume that the situation is relatively stable, and consequently, we are able to determine the objectives at the outset, before entering the situation.

Strategy , on the other hand, is where we seek to position and equip the organisation for the future. We recognise the uncertainty and instability in the situation, and accordingly, allow the objectives (in the form of the decisive point) to emerge as we are immersed in the situation. It is in these situations that strategic intuition will emerge.

Napoleon was a brilliant strategist. He used his strategic intuition by combining rational thought with creative imagination. You can do it as well. But it depends on you recognising the situation as new and different and resisting the temptation to make snap judgements based on your previous experience.

References

( 1 ) William Duggan, Strategic Intuition, Columbia University Press, 2007

( 2 ) Matt Church, Thought Leaders, Harper Collins, 2011

( 3 ) Miyamoto Misashi, A Book of Five Rings, Overlook, 1992

( 4 ) Carl von Clausewitz, On War, Penguin, 1968 (originally written in 1832 in classical German)

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

When The Going Gets Tough - The Tough Get ….Worse!

Fri, 26 Feb 2021 16:34:58 GMT

The Performance Myth

We’ve all been told that “when the going gets tough, the tough get going”, implying that high performers perform best when placed under pressure. But worryingly, research evidence is clear - performance deteriorates under increasing pressure - whether in sport, business or relationships! Although pressure and stress can be defined differently, increased pressure often results in stress. And stress has a significant impact on our brain and the way we perform. Stress leads to:

a narrowed focus where we become obsessed with the problem - rather than seeking creative solutions
an emphasis on reflexive decision making - driven by habit, emotion and usually defensive in nature
impaired behavioural skills - even for those management tasks in which we are normally highly skilled.

In stressful situations, there are three key approaches to minimise the effect of stress on our performance. These are based on a deep understanding of how our brain and bodies respond to stress.

Calm Your Brain

Our brains are severely compromised under stress and we lose most of our rational, higher-order functioning. Our pre-frontal cortex shuts down and the limbic system takes over - encouraging a heightened fear and emotional response. To “trick” our brain into remaining calm we can:

think of high-pressure moments as a (fun) challenge - not a life or death threat
focus on the immediate task rather than the outcome
chunk the challenge into smaller ‘bites’ - reduce the level of overwhelm
concentrate on the things you can control, rather than those you can’t
flash back to your previous successes for insight - and try to remain positive
categorise and ‘name’ the challenge you face - this will ‘normalise’ it and reduce its impact.

Attend to The Present

Sounds easy - just pay attention to what’s happening now! But it’s not that easy to do without regular practice.

The goal is to stay focused on the facts in a non-judgemental and calm way without jumping to conclusions. This is generally called mindfulness, and there is much evidence to show it improves cognitive abilities and has benefits for behavioural skills and self regulation. Some ways to improve mindfulness include:

recognise and ‘accept’ your emotions and feelings as they arise during an event - but try not to react to them
observe what happens - but remain disengaged as if it were happening ‘outside’ of you
create purposeful pauses during your day - take short breaks between meetings and go for a walk (just a minute or two) without engaging anyone
use the gaps between tasks wisely - treat these as opportunities to briefly revisit priorities and purposefully decide on what to do next.

Be Sensitive to Your Body

Your brain and body are closely linked, and your body registers many of the non-conscious signals detected by your brain. These body sensations give you important feedback that improve your ability to perform under pressure. Pay particular attention to:

Intuition:

A non-conscious recognition of patterns that match past events in which you took successful action. Your body will produce a slight surge of positive excitement (a somatic marker) that suggests a particular action is likely to be successful. You can trust this intuition if situations like this display regular patterns and if you’ve had successful experience in this field.

Gut feeling:

Sensations such as a feeling in the pit of your stomach or an increased heart beat. They generally signal that the brain has non-consciously detected something ‘wrong’ or ‘extraordinary’ in the situation. In general, this suggests that you should not simply follow your habitual course of action (reflexive decision or action). If possible, rethink the situation and try to figure out what’s really going on.

Low mood and a general level of anxiety:

When you experience a more general level of negativity, disengagement and low motivation outside of the situation, your brain and physical capabilities will likely be impaired. This will cause a risk-averse and defensive outlook.

Under these conditions, the feedback from your body is likely to be less reliable. In these conditions, pressure and stressful situations should be approached with caution. Check your judgement and seek the opinion of others before acting wherever possible. Being aware of your low feelings or outlook is the best way of dealing with the situation in the short term.

This is a brief summary of key strategies to improve your performance under pressure and stress. Further detail and more comprehensive strategies can be found in the full article, or by contacting us directly.

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

It's a Question of Focus Not Balance

Fri, 26 Feb 2021 16:34:56 GMT

A Controversial Starting Point

I know that several readers will find my opening argument quite controversial - after all, it goes against much of the conventional wisdom about effective organisations.

But, effective organisations display more focus than they do balance. So whatʼs the difference between focus and balance anyway, and why is it important?

The question is best addressed by examining the origins of competitive advantage in organisations - a concept that makes sense for both profit and not-for-profit organisations. I argue that in order for an organisation to develop competitive advantage, it has to pursue elements of focus in its resource allocation - and this is, in effect, an imbalance.

Pathways to Competitive Advantage

As the diagram below depicts, there are four generic sources of competitive advantage within organisations. Each pathway makes specific demands upon the resource configuration of the organisation - and these are not readily changeable in the short term.

This means that an organisation adopting a speed and action orientation posture will require a flat organisation with decentralised decisions and high degrees of empowerment.

An organisation which elects to compete as the lowest cost supplier will require a more highly structured design with strong controls and process rules. The customer franchise and intimacy platform requires a premium on team work, shared values and collaborative decision-making; while an organisation competing on innovation and new product development will have a fluid, network-style organisation with high levels of individual accountability and performance.

These resource configurations can be mixed but a simple examination will show that they represent trade-offs and compromises. For example, the speed posture is significantly different to the customer intimacy posture - and they are not easily combined in the same part of the organisation.

In other words, when a part of the organisation focuses on speed and action as its particular pathway to competitive advantage, it makes a series of deliberate decisions to over-allocate effort in certain areas of the organisation at the expense of others.

This is in effect, an imbalance of one set of factors over another. Hence, focus actually resembles an imbalance in the organisation.

Weʼre not suggesting that all is forsaken in the quest for focus - there are obviously elements of all issues in any organisation. But there is a definite focus in favour of some issues over others.

A Portfolio of Focuses

So, how do you achieve coverage of different focuses across the organisation? For example, how do you pursue customer intimacy in one market segment and speed to market in another?

Well, the answer is NOT to try and achieve a balance in all parts of the organisation. By simultaneously pursuing all four pathways in a particular part of the organisation, you are likely to achieve a “stuck-in-the-middle” position - and so fail to

become good at any one thing. It is a “jack of all trades” solution.

Instead, you can elect to pursue different strategic focuses and postures in different parts of the organisation if you follow a few key organisation design guidelines:

1.Recognise that one size doesnʼt fit all

Many organisations have a preference for standardising their performance management frameworks. This usually means that all management and staff operate to the same expectations and get measured in the same way.

This is clearly counter productive where we are trying to pursue different focuses in different parts of the organisation. Different parts of the organisation will have different strategic agendas - they will therefore need to be measured and managed in different ways.

Trying to achieve a common culture and way of doing things across the whole organisation is not only very difficult - it can be highly unproductive if we are pursuing different strategic objectives in different parts of the organisation.

2.Manage the organisation as a portfolio

Unless the organisation is a simple one-market, one product business, it is likely to have portfolio of businesses across several market segments. Organisations such as these should be managed like a portfolio, allowing each business in the organisation to define its business strategy in a manner most suited to the market and competition it faces.

This means that there should be a clear separation of corporate strategy at the centre (what is the shape of the portfolio and how will we fund it) from the business strategy (how will we compete in this particular business) that is developed in the business unit. Mixing the two inevitably causes confusion and represents an inherent conflict of interest - and the result is that neither strategy is well developed nor executed.

3.Ensure that the strategic agenda of a business unit matches its market

While each business unit should adopt the posture that permits it to achieve competitive advantage, this should be linked to the requirements of the market it serves.

So, a particular business unit might pursue an innovation strategy because this will give it an advantage in the market it serves. However, this is different to the case of a business unit pursuing a particular pathway because it is the preference of management - unrelated to the customers it is serving.

Differentiation in strategic style and culture that simply serves the preferences of management is likely to lead to unnecessary fragmentation of the organisation. On the other hand, differentiation linked to the needs of customers is the source of true competitive advantage.

Managing The Focus And Imbalance in The Organisation

A truly competitive organisation will allow business units to pursue pathways to competitive advantage that are related to the needs of their different markets. And they will accommodate the necessary differences in style and culture across the organisation that facilitates this diversity.

Each business unit will be focused in a different way. Each business unit will display a series of inherent trade-offs that produce the quite healthy imbalance in different parts of the organisation.

Culture is not the glue to bind disparate parts of the organisation together. A common culture is not only difficult to achieve, it can be quite unproductive in an organisation with diverse strategic challenges.

Leaders can achieve superior results by defining clearly the common purpose of the organisation and allowing the different parts of the organisation to develop the requisite style and culture to deal with the particular challenge.

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

By integratin g the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations. He specialises in creating strategy for the rapidly changing and uncertain future and can help you and your organisation.

Why “Best Practice” May Not be Best Practice

Fri, 26 Feb 2021 16:34:54 GMT

The Drive to Improve Performance

The term “best practice” came to common usage during the benchmarking craze of the 1990s. Since then, it has been pursued by many “learning” organisations, supported by a burgeoning consulting industry who claim to have uncovered the best ways to do everything from strategic planning to systems reengineering. The promise is quite compelling: “Benefit from others’ hard-won experience and improve your chances of success”. And, argue the proponents, “...become a learning organisation along the way".

But in our view, seeking best practice solutions may not be as beneficial as they first seem. In many cases, it may kill innovation, stifle insight and understanding, and can actually destroy value in your organisation!

It Turns Out That “Best Practice” May Actually be “Past Practice”!

The primary reason is that complex organisations are very dependent and responsive to their immediate environment. And unless the practice you adopt was developed in precisely the same context as yours, it may actually be harmful to your organisation.

As outlined in our previous article ( 1 ), many modern organisations can be described as complex adaptive systems - ie they are made up of multiple connected parts (people) that have the capacity to change and learn from experience. And they also have a range of characteristics that make them inherently unpredictable and unstable under certain conditions.

What Are Complex Adaptive Systems?

A complex adaptive system (CAS) is an organisation made up of multiple connected parts (people) with high levels of interdependency between them. These parts have the capacity to learn from each other and to change in response to their environment.

Research shows several important characteristics of complex adaptive systems as they occur in organisations ( 3 ):

This means that most organisations are capable of self management, but only if they are lead in appropriate ways (more about this later in the article).

Traditional “control-oriented” approaches can disturb their these self management and self-improvement capabilities - and actually destroy value in some cases.

So, Why Doesn’t “Best Practice” Improve Performance in Complex Systems?

Adopting “best practice” in complex systems can fail to improve organisational performance for two reasons:

The process of benchmarking and “best practice” relies on the traditional scientific method of observe → hypothesise → predict → experiment: We observe a successful practice in one organisation and then seek to implement it in another in the hope that we can replicate this good performance. But this is based on the assumption of repetitive events. And the notion of complexity invalidates repetition and prediction!

“Best practice” is a reductionist technique that imports an individual process (or structure) and implants it into a new system without necessarily considering the context of this new system: Reductionist approaches attempt to explain complex systems in terms of the laws of physics and chemistry by reducing the complexity to simple terms. It often leads to the assumption that we can directly control human behaviour. This, in turn, leads to a range of dehumanising processes and often, a significant alienation of people.

Put another way, analytical thinking , which takes things apart, fails to recognise that the system is more than the sum of its parts. We need to see the whole system and recognise that the thing we wish to understand is part of a larger system. This calls for synthesis thinking , rather than analytical thinking. Synthesis is another way of looking at the world and recognises the importance of the whole system - the system integrity.

How Can we Improve Performance in Complex Organisations?

Based on an understanding of complex adaptive systems and the use of synthesis thinking, we can identify five approaches to improve the performance of complex organisations:

1. Address complexity with complexity:

Ensure that the system has at least the same amount of complexity as the environment. The law of requisite variety reveals that we cannot expect a simple solution / organisation to cope with a complex situation. So, avoid looking for simple, quick fixes to complex problems.

2. Use a diverse range of models and approaches:

Using a diverse range of approaches or models improves the probability of success in an complex organisation or environment. For example, the use of scenario planning (which considers a range of alternative futures) is more likely to improve future performance than a conventional strategic plan (which attempts to predict what will happen).

3. Recognise the dependence on context:

“Best practice” is most often past practice - because the context in your organisation will almost always be different. Ensure that you understand the context and design a solution that maintains the overall system integrity.

4. Assume subjectivity and co-evolution:

Your plans will almost always be reinterpreted and refined by those in the organisation as they address the challenges of the environment. Expect this and regard it as feedback that can improve the whole system. Don’t insist on “rolling out” your strategy and expecting everyone to stick to the script.

5. Assist your people to make sense of the world:

The role of the leader is to help make sense of the world, promoting insight and understanding. Your role is to help your people understand the challenges they face, rather than telling them how to solve them. By working in this way, you will allow your people the “elbow room” necessary to promote real performance improvement.

References

(1) Talent Management is Dead - killed by complexity

(2) Can there be a Unified Theory of Complex Adaptive Systems?, John Holland, 1995

(3) Maurice Yolles, Organisations as Complex Systems, 2006, USA

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Why People Can't See The Future!

Fri, 26 Feb 2021 16:34:53 GMT

It's so Frustrating for Change Leaders!

“Why can’t people see the future? It’s so obvious that we need to change - yet the people can’t see that there is a better way!”

This is a cry I often hear from leaders and managers who are trying to implement change or improve things in their organisation. They complain that people don’t “get it” and seem rooted in what they know or their previous experience.

In this three-part series I’ll discuss three of the most common challenges I hear from leaders who seek to implement change:

People find it difficult to “see” the future
The “burning platform” - so commonly used in change programs - seems to run out of steam very early in the change process
It’s hard to engage the majority of people in the change process

This article deals with the first challenge of why people can’t see the future. Our work in neuroscience suggests some reasons for this, and what we might be able to do about it.

Why we can't see the future

There are three factors that contribute to people’s inability to see the future - or at least see it as clearly as the change leader.

Our brain is “lazy”:

My partner, a psychologist, dislikes this term. Nevertheless, it refers to the brain’s tendency to conserve energy and seek the quickest path from point A to B. Applying the pre-frontal cortex to rational analysis and problem solving takes effort and uses the brain’s limited resources. Accordingly, these scarce resources are only applied in situations where the brain is specifically prompted by a range of cues to slow down and focus on an analysis of the facts.

Research show that much of our thinking is “fast thinking”, a deliberate ploy to conserve the brain’s scarce resources. In this mode, we make decisions based on association and compatibility with pre-established beliefs. Importantly, this thinking - and the decisions that are made in this mode - does not tolerate much uncertainty.

The brain “fills in” any missing information from a given picture or situation in order to make sense of it quickly. This allows us to recognise things quickly and act accordingly. Indeed, much of our decision-making is based on this “fast thinking”, and we are not the rational decision-makers we believe we are!

The brain’s tendency to seek patterns and associate what we see with what we already know - associative memory - makes it very difficult for people to see and understand ideas they have no previous association with. They simply cannot recognise the new pattern in their “fast thinking”mode.

Difference signals danger:

The brain has an overarching organising principle to minimise danger and maximise reward. Indeed, it scans the environment every few seconds to achieve this. The brain perceives the threat of danger as five times the promise of reward. From this, we can infer that the brain spends much of its time making sure we are safe from danger or the threat of danger.

Most modern organisations present a greater probability of social pain than physical pain. Social pain is induced by a real or perceived sense of social exclusion, loss of autonomy, and a threat to social relationships. These are typical social threats that are perceived when a picture of a different future is presented or envisaged.

Importantly, the brain registers social pain in a similar way to physical pain, and the brain’s typical response to impending threat or danger is the well-known “fight or flight” phenomenon. In many cases, people are not even aware that they have entered a mild form of this “fight or flight” state. Research shows that this state reduces people’s ability to think rationally and logically. Productivity, innovation and problem-solving behaviour is affected, and engagement falls. As experience shows, disengaged people become quite transactional in their behaviour and display little discretionary effort in their work.

A different future presents a possible threat to people and this produces a diminished ability to see the logical benefits of a change. This potential change - the future - simply produces an emotional defensiveness and resistance to the change.

We have no memory of the future:

At first, this sounds ludicrous - how can we remember something that has not yet happened? However, our memory has important implications for the way we might understand the future, particularly a future we have not yet experienced.

Our long-term memory is the storage for information from previous experiences and learning. Semantic memory is an important part of this memory and stores general knowledge about the world we live in. It is formed by our educational, cultural and social environment. It is concerned with our general “knowing” about the world.

Episodic memory , on the other hand, is formed by specific experiences and events in our lives. It includes the information we have gathered by actually doing things or experiencing different phenomena. For example, your episodic memory would record your experiences of riding a bicycle, whereas your semantic memory would “know” that bicycles are generally ridden in summer wearing helmets, and that there are a range of competitive events for elite cyclists, such as the Tour de France.

Semantic memory stores and retrieves information in networks and classification systems that have been previously established within your brain. Your educational and cultural background will assist in establishing these pathways and structures.

If your semantic memory lacks the necessary networks, pathways and structures, you will be unable to process the information to which you are exposed. In other words, you will not be able to “see” the picture of the future that is presented. Your memory has no access to the information needed to make sense of it.

New pathways and classification systems can be created by way of new insights -i.e. where you recombine existing information in different ways to come to new ways of “knowing”. Insight is a somewhat different process for the brain and I discuss this later.

How Can We Help People to See the Future?

Being able to see and conceive of a different future is an important piece of a successful change initiative. We have seen the natural obstacles that exist in this regard, and the insights from neuroscience provide some indication of how we can address this challenge. I have outlined four initiatives that can assist people to see the future and facilitate more productive engagement in the change process:

1. Promote the use of “slow thinking”

2. Use socially based learning

3. Build semantic memory

4. Balance danger with appropriate reward

Promote the use of “slow thinking” at appropriate times

Since “fast thinking” is effectively the brain’s default mode of operation, we need to induce “slow thinking” to promote a rational and logical set of responses to any change messaging. In general, the brain is alerted whenever it encounters something that is unfamiliar and it subsequently produces a state of “unease”. However, this sense of cognitive “unease” also signals potential hard work for the brain and the threat of possible danger. So, this “unease” has to be carefully constructed to avoid a lazy “fast” rejection or a “fight or flight” reaction.

Here are some guidelines to promote slow thinking:

i. Set up cross-functional teams to address specific challenges facing the organisation. Encourage (in a facilitated process) them to share their different perspectives and to understand the different points of view being presented. Collective problem solving is an effective and creative way of addressing challenges due to the brain’s strong preference for social connection and collaboration

ii. Take great care to demonstrate that this team activity is an important aspect of the change process - and that the team’s input will be a vital part of the ultimate solution. (Be honest in this respect). The sense that “this is different” alerts the brain to the need for “slow thinking”, while also boosting the sense of self-esteem experienced by team members whose opinion has been sought

iii. Create a low-distraction environment for these problem solving activities. “Slow thinking” is very resource-intensive and easily prone to distractions. Create a conducive environment away from the day to- day activities of work. In addition, the brain is a serial processor - and any multitasking reduces the quality of the thinking and problem solving

iv. Ensure the team understands the tendency for the brain to display natural biases in decision making and problem solving. This can be

done at the outset and during the facilitation process. The brain has natural biases towards:

- stability: retaining the status quo

- action: displaying overconfidence

- pattern recognition: over-weighting of evidence consistent with existing beliefs

- social harmony: preferring harmony over conflict

- self interest: seeking outcomes that suit self interests

v. Space out the problem-solving meetings to allow adequate rest and brain downtime. “Slow thinking” activities significantly drain the scarce resources of the brain. The space between sessions allow people to reflect and process information

Use socially based, adult learning to promote new insights

(We recommend Scenario Planning)

As mentioned above, social learning addresses the brain’s preference for social connection and is consistent with adult-learning principles.

We recommend processes such as scenario planning in which the organisation explores a range of alternative futures that it faces. This produces a number of significant benefits for seeing the future:

• There is broad participation in a conversation about the organisation and its future. This promotes both a better understanding of the organisation as well as enhanced self-esteem amongst the participants

• The exploration of alternative futures reduces the sense of uncertainty and fear of the unknown. People’s sense of autonomy is also heightened by having more control over their future

• New insights are generated as people understand the organisation from a systems perspective. These new insights generate new ways of “knowing” and are responsible for creating new neural pathways

Purposefully build semantic memory

(We recommend well designed leadership development initiatives)

Our semantic memory is built by creating new pathways, networks and classification systems. An enhanced semantic memory will increase our range of “knowing” and allow us to recognise more possibilities when considering the future. It will also allow us to recognise the concept of “alternative futures” - an important concept in scenario planning.

In an organisational context, semantic memory can be developed in two ways:

• Well designed, experiential leadership development programs will provide the opportunity for people to learn and apply new frameworks, models and ways of thinking to their own work situation. The ability to apply these tools to their own situation is a key factor in promoting “generative learning” - the process whereby people generate new understanding of their own worlds.

Experiential learning allows us to move from simply being aware of a concept to generating a sense of “ownership” of the concept. This creation of semantic memory enhances our ability to retrieve new knowledge and apply it in the way we behave

• Study tours are particularly useful for constructing alternative mental models of a different future. By visiting and experiencing an organisation that has made a transition to a new and different future, people can visualise how this has been done. Our visual memories are highly developed and enable us to store vast quantities of related information as an “archetype”. The new pathways and classification systems created in this way will enhance the semantic memory, enabling people to see and understand a different future.

Balance the sense of danger with appropriate reward

As mentioned earlier, the brain’s overarching organising principle is to minimise danger and maximise reward. The brain reacts to potential danger by activating its avoidance circuitry. This can create the familiar “fight or flight” situation in which logical thinking is impaired and people become disengaged. The reward and self-regulation circuitry, on the other hand, is activated by the possibility of reward. This promotes focus, optimism and heightened levels of creativity.

However, these responses need to be carefully balanced to achieve optimum performance. Too heavy an emphasis on reward promotes an excess of dopamine secretion - resulting in excessive risk taking and overconfidence. Too great a reliance on threat or impending danger results in high levels of cortisol secretion - and the resultant defensiveness and “fight or flight”.

Balancing the two will achieve a state of alertness, coupled with managed risk taking and innovative behaviour. In practice, this can be achieved by:

• Promoting the use of “towards” imagery as opposed to “away” imagery in the change messaging. A “towards” message would promote movement towards some future state that promises rewards for the organisation and its people. An “away” message emphasises the need to change because of external threats such as new competition or customer dissatisfaction

• Construct a reasonable timeline for the change process so that there is visible movement and incentive to shift the way we do things. Nothing is worse than a change process that stalls and loses momentum - people revert to previous behaviour and become cynical about the process

• Introduce “gamification” to the performance management process. Effective gaming design activates both the reward and avoidance circuitry in a carefully balanced way by introducing a system of incentives, feedback and rewards with reasonably predictable outcomes.

Some of the suggestions here include:

- balancing teamwork and competition

- constructing a transparent compensation system

- making results highly public

- visibly rewarding exemplar performance in symbolic ways

Improving our change leadership

I have addressed some of the issues related to the difficulties of seeing the future, and presented some guideline on how we might address these.

Further articles will focus on the use of the “burning platform” in change programs and why this approach runs out of steam early in the change process. We will also address the challenge of engagement - and why this is so difficult during a change process.

The challenge of change is significant for those who have stewardship over an organisation in these times. There is much yet to be explored and learned. Many leaders will still prefer the “old, tried and tested” ways of command and control.

But neuroscience presents us with an additional lens through which to view change. It doesn’t claim to be the panacea, but it does provide us some “hard” scientific evidence to support approaches that have been traditionally considered as “soft” .

Is Organisation The Missing Link In Execution?

Fri, 26 Feb 2021 16:34:51 GMT

Missing link?

One of the keys to succeeding in an uncertain environment is to focus on developing organisational capabilities rather than predicting the future. The trick is to develop these capabilities across a range of futures rather than making a bet on what the future will be like. Obviously, this focus on capability building should be guided by our strategic intent and the manner in which the organisation intends to compete.

Traditionally, this task of building organisational capability rests with the HR specialists. Their goal is to link their learning and development programs with business strategy - so that the capabilities align with the organisation’s strategic intent. But this alignment is seldom fully achieved. In fact, during my time in industry and consulting, we have come to regard this alignment between business strategy and HR strategy as somewhat rare and elusive. And poor strategy execution is the major consequence of this lack of alignment. Why does this occur? And what can we do about it?

In the main, the breakdown occurs because leaders focuses on strategic intent and competitive advantage, while HR practitioners address the make up of competencies within the organisation. While the connection between competitive advantage and competencies seems clear, there is an important link between the two that is often omitted in organisations.

This is the element of organisation design - the manner in which the competencies are configured in order to produce the desired capabilities.

What is the relationship between Organisation Design and Capability?

HR specialists recognise that competencies are a combination of ability, motivation and style. Capabilities, on the other hand, are achieved by combining the people competencies with organisation design.

And while executive teams focus on strategic intent and HR specialists address the development of competencies, the issue of Organisation Design often fails to attract an appropriate level of interest. Or worse, it is relegated to an administrative issue where the focus becomes about “dividing the organisation equally amongst the executives” or even the ego aspirations of certain individuals.

And this is why organisation’s capabilities often fail to match the strategic intent set by leadership.

Organisation Design shapes capability

My key premise is that capabilities are shaped by the way the organisation is designed - ie the way that we configure the competencies. Competencies are, therefore, the raw materials we use to shape capabilities. (Competencies are important raw materials, but they are not the finished product).

A ccordingly, we can deliberately shape these competencies, via different organisation designs, to produce different organisational capabilities.

Shaping Organisation Design

In simple terms, we use organisation design to shape competencies into different capabilities - and this will result in different forms of strategy. The diagram below illustrates this point:

In each case, a particular organisation design is associated with a particular set of capabilities and a resultant strategy. Accordingly, organisation design is the means whereby competencies can be shaped to produce specific capabilities and strategy.

This relationship between design, capability and strategy has been empirically tested by many researchers and holds up under different conditions, industries and markets. The evidence suggests that design should be deliberately used to shape capabilities as determined by the strategic intent.

How can we use Organisation Design to shape capability?

The relationship I have outlined suggests that there are five key steps to be followed. While I present them in a logical sequence, it is often an iterative process in real life, and leadership teams may find that they have to move backwards and forwards as the situation evolves.

Here are the five steps:

1. Identify the arenas or markets in which the organisation plans to compete or operate

2 . Define the source of competitive advantage that is required to be effective in this arena or market. The organisation’s strategic intent should be helpful here. If not, you may not have thought the issue through completely

3. Describe the set of key capabilities that will allow you to achieve this form of competitive advantage. You don’t have to identify every single capability that is required - just those KEY capabilities upon which the source of competitive advantage really depends

4. Agree on the organisation design that will produce these capabilities. Use the table above to associate particular forms of design with the KEY capabilities you need

5. Define the competencies that the organisation needs for the appropriate organisation design.

The Management Mirage - Things are not Always What They Seem

Fri, 26 Feb 2021 16:34:49 GMT

I returned recently from a working holiday in Africa where I enjoyed some time at a well-know game farm. I was struck, in particular, by the ostrich and elephant - and the myths that surround their behaviour in the wild. It reminded me of the difficulties and challenges we encounter in managing our complex organisations.

Of Ostriches And Elephants

Legend has it that the ostrich buries its head in the sand when confronted by an enemy or something it doesn’t want to face. This is often used as a metaphor for a leader who refuses to acknowledge a particular issue or situation. The reality is that the ostrich is actually seeking out ants in an ant-hill in order to weatherproof its feathers!

The common ant has a concentrate of formic acid that the ostrich uses to seal its feathers and improve its insulation. In terrain where ants are not plentiful, the ostrich will seek out ants by inserting its head directly into an anthill.

Rather than escaping reality, the ostrich is proactively seeking out the means to increase its resilience to the cold and wet environment in which it typically lives!

The elephant is subject to the myth that it is particularly destructive to its habitat by pushing over trees in order to feed on the young shoots generated by those felled trees. In reality, the elephant is creating space in often overcrowded bush and thereby allows new growth to occur more readily. The problem is that elephants like to wander over large distances each day and can therefore return to the newly grown vegetation in due course.

When their movement is restricted by artificial means (such as human-made fences and barriers), their natural tree-felling behaviour causes destruction in the restricted space. So, the real destructive agent is not the elephant, but the human who confines the elephant to an unnaturally small feeding ground.

It occurred to me that this was a good metaphor for many of the challenges we face as leaders in our modern, complex organisations. Things are often not what they seem to be at first glance. There is usually a bigger picture - an overarching context - that provides new meaning to situations. And importantly, this new meaning often means that the appropriate response is different to what was initially apparent.

The Detail is Important - But Not as Much as The Big Picture

As the two examples demonstrate, examining the detail will reveal useful information about the specific behaviour of the ostrich and elephant, but may fail to reveal WHY they behave in that way. In our fast-moving organisations, many challenges and issues arise on a daily basis. It is tempting to respond rapidly to these situations and “cross them off our to-do list”. After all, we don’t want to be accused of procrastinating and holding up progress!

But, the reality of any complex system is that behaviours and issues rarely occur independently of their context.

In my last two articles , I demonstrated how most knowledge-based organisations are complex adaptive systems. As a consequence, they display several characteristics that demonstrate the importance of understanding the big picture:

“butterfly effect”
changes in one part of the system inevitably impact on other parts of the system
“systems integrity”
because the whole is more than the sum of its parts, each element in the system cannot be understood by simply examining it in isolation
“emergent order”
when faced with changes in the environment, the system will develop new capabilities that allow it to adapt to these changes over time.

So, when we spontaneously respond to a new challenge in a certain way because we think we know what’s going on, or we believe it to be similar to other problems we have encountered, we could be making a mistake. As in the case of the ostrich and elephant, we may be misjudging the situation and taking entirely the wrong action.

Use Systems Thinking to Generate The Big Picture

Because organisational behaviour and issues occur within a specific context, the following model is useful to assist our thinking and diagnosis of these situations:

The model suggests that we can react to situations at four levels - each with a specific implication for the diagnosis and subsequent response.

So, at the simplest level (level 1), we simply react to what we see without considering the bigger picture. As we move up a level, we begin to see the overall pattern of events. Level 3, the systems level, allows us to understand some of the causes of the event, while level 4 recognises that we can influence the shape of events by our culture and the way we think.

Each time we “go up” a level, we are considering a “bigger” picture - thereby gaining a more complete understanding of the situation or challenge.

The table below demonstrates each of these levels and the way our diagnosis and response will change as a result.

Moving to Big Picture Thinking in Complex Organisations

By understanding the big picture when we are faced with a challenge or issue, we are more likely to diagnose the situation correctly and act appropriately. This way we can successfully see through the “management mirage” which so often clouds our thinking and action.

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Stay out of the dark room!

Fri, 26 Feb 2021 16:34:47 GMT

A digital approach to strategy.

STRATEGY IS FAILING

Well, to be precise, it is the way we practice strategy that is failing. Research on strategy success and failure suggests that strategic initiatives fail 50-80% of the time. While the reasons for failures are varied and include a flawed proposition or a fundamental misunderstanding of customer needs, leaders are often heard to complain that they simply cannot get their people and organisation to do what they want done. Leaders add that there is insufficient innovation in their organisations and consultants report low staff engagement as a key factor in this poor performance. As a consequence, it has become popular to claim that strategy formulation is unimportant - and that the real leverage lies in the execution of the strategy. We argue that this is not a helpful distinction to make, and that it does not lead to an appropriate course of action to address the high failure rate of strategy.

SO, WHY IS STRATEGY FAILING?

As mentioned above, there are many valid reasons for strategy failure, and we don’t intend to address them all. Instead, we want to focus on some specific aspects related to the way that strategy is practiced, and the distinction often made between ‘formulation’ and ‘execution’.

The traditional approach to strategy formulation is to spend weeks and even months analysing information, often with the help of consultants. Consultation internally is typically limited to data collection by means of interviews and focus groups with staff. A wide array of information is analysed by the strategy team, including data gathered from stakeholder interviews internally and externally. This is followed by recommendations to the CEO, executive team and Board. And little, if any information, is exposed to the rest of the organisation until ratified at the top. Execution only begins once recommendations are ratified, often with a delayed start, in a separate phase by a different team.

We refer to this approach as the ‘dark-room’ approach to strategy. The obvious analogy is with old-fashioned photography, where there is a long pause between taking the picture and finally exposing the photograph to the light of day. This is symptomatic of the outdated view that strategy formulation is separate to strategy execution, and that the former should be the domain of a few people in designated ‘leadership’ positions.

So, why should this approach to the practice of strategy be associated with such high failure rates? Research suggests that failed strategy is generally 3 associated with:

An incomplete diagnosis of the situation: This occurs where the information gathering and analysis fails to account for the diversity of views and expertise that exist in a complex organisation. In fast-moving and uncertain environments, it is inconceivable that a few carefully selected people, no matter how skilled and talented they are, can capture the richness of information necessary to understand complex situations.

An incoherent picture of the strategy: By failing to involve a wider number of staff in the diagnosis of the situation, the all important rationale (“why”) behind strategy can get lost. Leaders are then obliged to try and “sell” the strategy to the rest of the organisation (after the recommendations are endorsed) through all the noise, uncertainty and angst created by the new strategy. This is usually associated with high levels of misunderstanding and cynicism. This, in turn, leads to fear and resistance through the organisation.

Low staff engagement with the organisation and strategy Our new understanding of the human brain4 suggests that some of its major goals are social inclusion and perceptions of status and fairness. Our brains will react negatively to situations where any of these are threatened - without us even being aware of it. The consequences are significant for human productivity and innovation. In general, it results in a transactional relationship to the organisation

(the ‘9 - 5’ mentality) and a disengagement from the goals and aspirations of the organisation.

Alarmingly, this negative impact is heightened amongst knowledge workers - leaders are likely to get only grudging acceptance when they announce a new strategic direction after emerging from the “dark room”. As a result of these reactions during the analogue process of “dark room” strategy, it is no wonder that leaders complain about not getting their strategy implemented. What, then, does a digital approach to strategy involve? And how might this offer the promise of

improved strategy execution? The two approaches are compared in the following table:

A DIGITAL APPROACH TO STRATEGY

By digital approach, we are not referring to a web-based strategy per se (although web is likely to feature in any strategy nowadays). We characterise a digital approach to strategy as having 3 elements: open strategy, many-to-many synchronous communication, and seamless integration between strategy formulation and execution.

An open strategy development process immerses a representative cross-section of people within the organisation. This is opposite to the traditional “dark room” approach, where the strategy is only communicated widely only after it has been endorsed by the Board.

A many-to-many, synchronous communication approach occurs between those responsible for developing the strategy, and the rest of the organisation. Old fashioned analogue approaches are asynchronous, one-to-many communications such as a business analyst conducting data gathering interviews, or a facilitator conducting staff focus groups at periodic intervals to gather intelligence. Those responsible for developing the strategy then disappear for weeks or months back into their “dark room” to assimilate the information they have collected, and develop recommendations. In contrast, a synchronous communications approach is not periodic; it is an ongoing working methodology with staff at different levels, who are participating in various working groups, working concurrently on developing and implementing different ideas, with coordination by a core project team in a many-to many relationship. This is a crowd-sourced approach.

A seamless integration between strategy formulation and execution phases is noticeable through iterative stages - pilots - with built-in learning and feedback processes. Ideas are trialled through small-scale, low-risk pilots, which means some execution of ideas is happening concurrently with formulation of other ideas. This removes the artificial divide between formulation and execution phases, and again speeds up execution. The strategy development and execution architecture needs to be carefully designed to take these 3 elements into account, and it is likely to include a number of working groups involving a significant proportion of representative staff, with a small, core project team.

This may sound like it is merely an approach of extensive staff consultation. This is not staff consultation, but rather it is co-opting and engaging staff with the strategy development and execution process. In a digital approach, staff are invited to join working groups with carefully architected responsibilities, that contribute in a meaningful way to the strategy development and execution. They have a shared responsibility with the core project team for generating a work product and outcome. This means the core project team are relinquishing some of their control of the outcome to the working groups, but still mentoring and guiding the teams through their work. This enables the core team to

leverage their efforts considerably, and get accelerated results.

BENEFITS AND CAVEATS OF A DIGITAL APPROACH

By moving out of the dark room to a digital approach, organisations can be more nimble and flexible, enabling faster responses to market conditions. In the same way as digital cameras have sped up the process of producing a photo, digital strategy enables ideas to be executed much faster. With a digital approach to strategy, staff participating in the strategy formulation process are already modifying their work to fit with the new direction. It creates a tide of enthusiasm, a ‘buzz’ that generates a critical mass in the organisation without management needing to ‘sell’ the new direction. It is a pull rather than a push approach.

Different perspectives can be tapped throughout the organisation, which generates better quality data and decision making in a world of uncertainty, with an abundance of information, and a diversity of views. The caveat for a digital approach is to consider carefully how to approach highly sensitive information. Strategy may be highly market sensitive, for example exploring a merger with a competitor, or sensitive for staff, where jobs may be at stake. This will make a digital approach challenging, and each strategy initiative will need to be carefully orchestrated with an appropriate execution architecture. However it is worthwhile bearing in mind that in our digital era, even the most sensitive information can no longer be assured of protection by the world’s most sophisticated security. Wikileaks is a probably the most high profile example. This may cause executives to re-consider their approach to handling such sensitive information, and how a digital approach can be modified to suit such situations.

Talent Management is Dead - Killed By Complexity

Fri, 26 Feb 2021 16:34:46 GMT

Talent Management is focused on the recruitment, development and rewarding of highpotential people in your organisation. But this focus on the individual may not create the value we expect in complex organisations.

The “War for Talent”

Since McKinsey coined the team in 1997 , they have argued strongly that effective Talent Management (TM) is a driver of value creation in organisations. This has launched a spate of TM practices in consulting companies, as well as a multi-billion dollar industry for software vendors like Oracle, SAP and IBM. Enterprises have responded by launching major TM initiatives in their organisations, and recent global surveys suggest that managing talent is now a major issue for CEOs in OECD countries.

It is a compelling argument: Manage the recruitment, performance, compensation and development of talented individuals, and you will be rewarded by superior value creation in your organisation. Indeed, McKinsey and others suggest that enterprises should focus on those practices that differentiate highly talented people and establish programs to reward and develop them as “high potential” (HIPO) employees.

However, my argument is that this may not be driving value creation the way we believe it is - particularly in the complex organisations of our modern era. Indeed, in some cases it may well be destroying value and limiting the natural adaptive qualities that we seek for organisations to thrive in changing environments. And a lot of this is due to the high

levels of complexity that we find in our organisations.

What Is The Impact Of complexity?

As our organisations have evolved through successive waves of technology since the industrial revolution , the levels of complexity within these organisations have increased. Complexity may be described as the increasing interdependency and interaction between the various parts within a system. This is due, in part, to the explosion of information and communication within and between organisations.

Snowden’s groundbreaking work on complexity suggests that, as complexity increases in organisations, “best practice” becomes less effective because of the uncertainty and unpredictability of complex systems.

As we move into complex situations, Snowden argues that the system (the organisation) develops “emergent”

properties - new capabilities to deal with the changing environment. Simply put, it means that complex systems work out unique ways to ADAPT to their changing environment, without direct intervention or control from above (senior leaders).

This is a well established property of complex systems. More importantly, these systems do not respond favourably to the conventional practices of management and leadership. Indeed, direct interventions can actually disturb the interconnectedness and interdependence, and thereby inhibit the system’s ability to adapt!

Three Common Errors In Talent Management

Using complexity theory to understand our modern organisations, we can identify three common errors made by leaders as they use Talent Management to create value:

1. Developing individuals in an attempt to develop the organisation

Working on the individual parts of a system does not improve the functioning of the whole. Because the organisation is a system, the parts of the system (although important) are not as critical as the way they FIT together.

What really improves the system as a whole is working on the interactions between the parts. Organisational systems are not improved by tinkering with the parts (individuals), but by working on their interactions. This is generally called organisational development.

2. Empowering individuals in an attempt to enhance the effectiveness of the organisation

Because individuals work within the system and interact with other members of the system, it is not the empowerment of the individual that yields best results for organisational effectiveness. Self management must be team-based.

So, we need to focus on empowering the team. The team’s output (effectiveness) is enhanced when the whole team is able to develop emergent properties and adapt to the changing environment. Again, this is a focus on the system, rather than on the individual.

3. Viewing a functional department as a team within a complex organisation

A functional department is a grouping of functional specialists - eg an accounting or marketing department. Because business processes work across the business (ie accounting staff have to coordinate with marketing, sales and production staff), the functional department has to be coordinated horizontally.

As a consequence, the accounting department is really a group of people working in parallel - they are not a team. A team is a number of people who work for and with each other, and coordination occurs laterally, amongst peers.

In general, they interact with one another with a focus on responding to their environment. Emergence and adaptation (to the changing environment) occurs as a result of the interdependent interactions within a team, not a group.

So how can we create value in our complex organisations?

Talent Management, with its focus on recruiting, developing and rewarding the individual, may actually be hindering the creation of value in organisations by disturbing the emergence and adaptation processes within teams. At best, it is not facilitating improved interactions within the organisation and thereby limiting the emergence of adaptive capabilities.

At worst, it is hindering and even disturbing these interactions, and destroying the natural adaptive capabilities within complex organisations.

Accordingly, we can identify three approaches that can create value in complex organisations - approaches that enhance the emergence of adaptive processes:

1. Focus on developing the organisation rather than its individual talent

While the focus of TM is on the recruitment, development and reward of talented individuals in the organisation, complex organisations are likely to respond more positively to a focus on the whole system - ie the way the various elements interact and are aligned to the business model.

Problem solving and adaptation in complex systems is about the quality of the communication and interaction between the elements. Clearly, we need to begin by having the appropriate quality of people on board, but value creation is enhanced more by enhancing their interactions than by “picking winners” and developing the individual skills of a few. And this improved interaction improves teamwork and improves the retention of valuable staff.

2. Operate as a “host” rather than seeking to directly control

Leaders should accept that no one can be fully in control in a complex system. They should invite people to participate in problem solving processes and trust in their natural creative abilities.

The leader as host provides conditions and processes for people to work together and interact. And they show support for their people doing this.

References

( 1 ) Steven Hankin, McKinsey & Company, 1997

( 2 ) The War for Talent, McKinsey & Company, April 2001

( 3 ) See: Future Trends in Leadership Development, Centre for Creative Leadership, December 2011; The 3 Future of Talent Management, Oracle White Paper, June 2012

What Our Brain Teaches Us About Good Strategy

Fri, 26 Feb 2021 16:34:44 GMT

Hard Science Backs Soft Skills

We have seen a marked increase in the interest shown towards brain research over the past few years. The field of neuroscience is gaining popularity fast and has turned its attention to the world of work and the study of effective leadership.

David Rock, an Australian researcher, coined the term “Neuroleadership” in 2006 ( 1 ) to demonstrate how an understanding of the human brain could enhance the effectiveness of leadership and workplaces.

The work of Rock and others demonstrates that the effectiveness of the so-called “soft skills” - usually advocated by psychologists and social scientists - is borne out by hard science and evidence!

Moreover, in our complex organisations and environments of today, the traditional tough and “hard” approach to strategy - favoured by many traditionalists - is often associated with rather soft and unflattering results.

‘Good' Vs 'Bad' Strategy

My recent article ( 2 ) outlined the key differences between ‘good’ and ‘bad’ strategy. Good strategy is characterised by three factors:

a good diagnosis of the problem / challenge and its causes
a coherent solution to the problem / challenge
a commitment to the solution that is gained from involvement and participation.

Consequently, strategy has a high propensity to fail when it:

jumps directly to “what we’re going to do” without an explicit analysis of the problem / challenges and its causes
has no coherent solution (clear pattern of actions) - based on the situational diagnosis - that addresses the problem / challenge
does not involve and gain commitment to the solution by the people who have to execute it (my colleague Lisa Carlin calls this “dark room strategy” - in that it’s developed secretly in a dark room and then exposed to the rest of the organisation after all the planning has been done).

So, Why Does 'Bad' Strategy Often Fail?

An understanding of the brain helps us to understand why bad strategy often fails - and why good strategy is likely to be more effective.

Why is it better to explicitly diagnose the situation before jumping straight to“what are we going to do”?

A study of the brain tells us that the brain often tricks us into misperceptions about a particular situation. Research by Roxburgh ( 3 ) in 2003 identified a series of flaws in the way that otherwise highly effective executives operate. These are all related to the way the human brain functions. They include:

The brain is often overconfident and tends to have a somewhat unrealistic view of one’s abilities. This is a particular problem when making estimates or assessing situations

The brain has an aversion to loss (or a threat) that is greater than the excitement of prospective gain (reward). As a consequence, there is an inherent bias towards the status quo which means that a chosen solution is likely to reflect initiatives that were previously successful, not necessarily those that are suited to the current situation.

A peculiar operating flaw of the brain is its tendency to ‘anchor’ - relating something new and unknown to that which is well known. In many cases, past performance is not a good indicator of future performance - particularly in vastly changed circumstances.

Why is it important to develop a coherent solution - a clear pattern of action - to address the problem / challenge?

The part of the brain that is devoted to complex problem solving and prioritisation - the pre-frontal cortex - has a remarkably limited capacity. Estimates vary, but the consensus is that about 4-6 pieces of information can be retained and acted upon at any point in time. And this consumes a significant amount of mental energy.

So, the aim is to increase the efficiency of this valuable mental capacity. One way to preserve and optimise this valuable resource is to create a coherent ‘picture’ of the solution - some sort of visual representation. The key is not the actual picture or visual, although this is useful. The key is that the visual is a powerful and integrated ‘picture’ of the solution. It summarises the information.

It presents the required actions as a coherent pattern of actions that can be easily understood and remembered. There two reasons why a coherent pattern or ‘picture’ of the solution is so powerful:

A coherent pattern or picture is a highly information-efficient construct. It is easier to hold that form information in your mind and act upon it.

The brain has a long history of creating mental imagery. Through thousands of years of evolution, the machinery of the brain that holds this information is highly efficient and effective.

The organisation and its people are far more likely to understand, retain and act upon a solution that is a coherent pattern of action (a ‘picture’ of the solution) rather than a disparate collection of individual initiatives. And it obviously helps if the solution has been derived from a good diagnosis of the situation!

Why is it important to develop commitment to the solution through participation in the problem solving phase?

Again, the answer to this question is often answered by referring to the importance of the ‘soft skills’ approach advocated by psychologists and social scientists. But ‘hard’ scientific research into the functioning of the human brain now provides clear evidence to support this.

The research by Rock and others show that the brain is a social organ - ie it is very responsive to the dynamics of the social situation. As such, the brain responds in a particular way when it perceives situations of:

a loss in status
a loss of autonomy
a loss in social relatedness

These situations evoke a neural response in the brain as powerful and painful as a blow to the head! ( 5 )

Importantly, they are perceived as threats by the brain. Threats which evoke a biological response that diverts significant energy and brain capacity to the limbic system - the part of the brain that manages the “fight or flight” response. All of which results in a significant reduction in productivity, commitment and engagement by individuals and teams.

A loss in status: Where an individual or team is excluded, intentionally or otherwise, from a solution-finding (planning) process, the brain perceives this as a loss in status. The stress-response kicks in at this point, and the brain releases cortisol and other stress related hormones. The result is a diminished problem solving capacity and a reduction in productivity.

A loss in autonomy: Where people feel they have sufficient control over their responses to the environment, they are able to control their stress levels. However, when their sense of autonomy is threatened (for example, when they lose control over decisions about a problem or challenge they understand), this generates a threat response for the brain. Again, this is accompanied by a reduction in brain capacity and engagement.

A loss in social relatedness: Cooperation, collaboration and teamwork all rely on good relationships, underpinned by trust and empathy. The brain develops this trust by making ‘friend-or- foe’ decisions and then treating people or groups accordingly. Importantly, the ‘foe’ conclusion is arrived at when people are cut off from social interaction. Perceiving someone (or another group) as a foe, induces the threat response with all the negative side-effects discussed above.

What Does This All Mean For Good Strategy?

There are three guidelines for ‘good’ strategy from this analysis:

1. Even though you think you understand the problem / challenge faced, undertake an explicit diagnosis of the situation. Do it on paper. Review it with colleagues. That way you have a better chance of overcoming the natural misperceptions of your brain

2. Think about the solution wholistically - as a picture. Ensure that the different elements all hang together and that there is a coherent story running through. This way you improve the chances of the solution being understood and remembered by people

3. Avoid the ‘dark room’ when developing the solution. Expose your process and invite participation from your people. That way you avoid the perceived loss of status, autonomy and social relatedness - and the loss of productivity that ensues.

We note that leaders or managers who create situations in which the brain functioning is compromised, are often unaware of the implications of their actions.

Leaders may not be consciously aware of the natural biases created by their brains or the fact that visually coherent solutions are more easily understood or remembered. In addition, they may even be insulted by the notion that they are “threatening” their staff when conducting strategic planning ‘in a dark room’ without consultation.

However, consciously or not, these errors all contribute to ‘bad’ strategy that will inevitably result in less than optimal performance by the organisation. The hard evidence provided by the neuroscientists’ research all point to the fact that unless we account for the impact of the brain in people’s behaviour, we may be doomed to growing frustration about the performance of our complex organisations.

I’d like to acknowledge the contribution of Lisa Carlin for her comments about ‘dark room strategy’. We are planning an article that deals with that subject shortly.

References

(1) The neuroscience of leadership, David Rock and Jeffrey Schwartz, Strategy + Business, Summer 2006

(2) How to recognise bad strategy, and what to do about it, Norman Chorn, Leadership Insights, Sep 2012

(3) Hidden flaws in strategy, Charles Roxburgh, McKinsey Quarterly, 2003, Number 2

(4) Your brain at work, David Rock, New York, 2009

(5) Managing with the brain in mind, David Rock, Strategy + Business, No 56, 2009

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

How To Recognize "Bad" Strategy

Fri, 26 Feb 2021 16:34:42 GMT

How to recognise bad strategy

A recent Dun & Bradsheet analysis ( 1 ) reports on the alarming rate of small business failure over the last 12 months. The report states that Australian business failures have trended steadily upwards since 2008, with the greatest increase in the last three years. Clearly, the economic and tight credit conditions are significant contributors.

A key finding of the D&B report ( 2 )states that these failures place Australia in the same risk category as a number of countries being impacted by the euro-zone debt crisis, such as Portugal, Spain and Italy!

But a further analysis of these failures reveals something more alarming. The more in-depth analysis of this situation by the Australian Securities and Investment Commission ( 3 ) (ASIC) reveals that the "poor strategic management" of these businesses was a much higher contributor to failure than the poor economic and trading conditions. And this applies to medium and larger businesses as well!

I am concerned by the view expressed by several leaders and commentators that strategy is "unimportant" or "irrelevant" in these uncertain and complex times. I believe it reveals a knee-jerk reaction and superficial understanding of the concept of strategy. Moreover, it often encourages ad-hoc and poorly conceived responses to a very challenging operating environment.

And what to do about it!

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

How to craft Strategy in Uncertain Times

Fri, 26 Feb 2021 16:34:40 GMT

What’s the problem?

I’ve had an ongoing conversations with several of my clients in the past months. It centres around the difficulty of developing their strategy in these highly uncertain environments. Some are dealing with the fluctuating exchange rate and its impact on imports and exports, while others are concerned about the uncertainty surrounding government’s intentions on industry policy and future tax regimes. They complain that the assumptions they set at the beginning of their strategic plans are usually incorrect a few months after the plans have been completed. Most tell me that they are fast losing confidence in the utility of these plans, while others tell me that they have all but given up doing them at all because of the uncertainty in their operating environments. The irony of this situation is that, in times of great uncertainty, the importance of strategy increases. These clients probably need strategy now more than ever before!

So, why do organisations find planning so difficult in these times and what can we do about it? Before answering this question, it may be useful to recount a conversation between Christopher Columbus and his brother Bartholomew that took place over 500 years ago!

Go West, young man!

Christopher Columbus had just convinced Queen Isabella to finance his latest expedition to discover the “New World” and was engaged in a conversation with his brother Bartholomew, his partner in their chart-making business: “Why do you think sailing west to the Indies is the right answer?” asked Bartholomew. “Because everyone confines themselves to what they know - I’m interested in what is possible”.

But Bartholomew knew that his brother needed to be better prepared, and so he persisted “Since you cannot see beyond the horizon to plot a specific course, how will you know whether to head due west or north-west?” Christopher explained that plotting a course into the unknown was like making a chart by using a sextant. He believed that the sextant had the ability to combine first-hand, situational knowledge with the enduring cycles of stars in order to chart direction.

The two brothers spent weeks going over old captain’s notes, log books and other pieces of information that Christopher had accumulated form his previous voyages. Using a sextant, they created a working model of where the most favourable lands were likely to be found. They created a new map, based on the desired destination and star positions, that would guide Columbus at sea. Finally, they determined the distance and time - about 8 weeks at sea and some 2,400 miles - to go from Spain to the Indies. And the rest, as they say, is history.

Can organisations build a market sextant?

So, why can’t organisations build a market sextant that might guide them through the uncertain waters? Why is this so difficult in the context of modern organisations and their uncertain environments? The issue seems to be related to the way that we conduct our business planning - and the

fact that this planning does not seem to suited to our current conditions of uncertainty. Three factors are pertinent here:

‣ a somewhat single-minded approach to the pursuit of objectives

‣ attempting to predict future assumptions in planning

‣ confusing “planning” with “strategy”.

1. The single-minded pursuit of objectives

Most business plans will set a few, prioritised, objectives and then allocate resources to achieve these via a series of action plans. We understand the importance of focus, so we try not to get distracted by a range of other things that otherwise demand our attention. Unfortunately, as we focus on the objective in our sights, we become quite single-minded. This single-mindedness tends to drive out learning and adaptation. As things become more difficult, we “try harder” - but usually by doing more of the same things. As a consequence, we don’t really make much significant progress.

We are unable to adapt to and accommodate the high rates of change that occur

around us.

2. Trying to predict the future

Conventional business planning relies on making a series of assumptions at the beginning of the process. These assumptions that address factors such as market growth, exchange rates and the state of the political environment, then provide the

context for the setting of objectives and action plans. Once these assumptions are proved wrong, the validity of the plan becomes questionable. In reality, making assumptions about future conditions is like attempting to predict the future. While this may be possible in a relatively stable and orderly environment, current market conditions render this quite unsuccessful. As a consequence, our efforts at planning by using assumptions become quite unsuccessful in these turbulent conditions.

3. Confusing “planning” with “strategy”

A third factor is the confusion of planning activities with strategy. Many organisations speak of the need for developing their strategy, and then proceed to use a planning process instead. So, what’s the difference? In essence, planning is an event-driven process where we set an initial objective, and then pursue it via a program of actions. The objective is determined at the outset of the process, and the action plan is a way of focusing the organisation’s resources around its key priorities. Strategy, on the other hand, is an ongoing, iterative process where the emphasis is

on learning and adaptation. While the broad intent is clear from the outset, detailed objectives are not set at the outset - because, by definition, we don’t know what issues will be encountered along the way. Instead, objectives emerge along the way as we encounter new situations, learn and adapt. As a consequence, strategy is better suited to uncertain and changing conditions where there is a need to learn and adapt to the environment.

How to build you own market sextant

Based on an understanding of these issues, how can we build our own market sextant to guide organisation through times of uncertainty and change? What can we learn from Christopher Columbus’ approach? How can we develop effective strategy in these difficult times?

There are three key steps to follow:

• Study the existing maps

• Adopt an explorer’s mindset

• Build a chart of the new territory.

1. Study the existing maps

We study the existing maps by considering all the available information and history about our market or industry. Generally, this includes studying and understanding three important forms of information:

a. Key trends in the industry: These are developments that have established themselves and are unfolding into the future. Examples include factors such as the globalisation of the industry, generational change and the increased use of mobile communication

b. Drivers of future change: These are factors that are changing the way that the industry works and develops. Examples include the capability of technology to produce equivalent experiences, customers’ access to more information and impending industry legislation.

c. Key uncertainties: These are “flip-flop” events that can radically change the outcome of future change - and which we cannot predict. Examples include the impact of political change, exchange rates and government policy. In summary, this is about “doing our homework” thoroughly and having good insight into the way the industry currently works, and the factors that are capable of changing it.

2. Adopt an explorer’s mindset

An explorer is someone who goes out seeking to learn and understand new phenomena. Importantly, they have “space in their heads” to accept new

discoveries and ways of doing things. Three factors seem important here:

a. Immerse yourself in the study or journey:

Exploration is not an armchair activity. It is about being there and immersing yourself in the new information, situation or market. A good example is the use of ethnographic research, where researchers go up close and study their customers and observe their behaviour first-hand, rather than relying on broad statistical data to provide them with an understanding of customer needs. This is about people and events rather that just data.

b. Develop a beginner’s mind - be deliberately naive:

This is about emptying your mind of pre-conceived ideas and theories and allowing your strategic intuition to take over. Ask the obvious questions, no matter how “stupid” you may think they are. Be available for new insights and understanding from your journey!

c. Become a “Curious George”:

Just like the lovable cartoon character, be curious about your environment and observations. You need to act as a child who visits Disneyland for the first time. Seek to find out as much as you can and allow your curiosity to guide you. It's about finding out as much as you can and taking nothing for granted.

3. Chart the new territory

Finally, you are ready to build a chart of the new and uncertain territory. Based on your new understanding of the industry and market, you can now construct a three-part chart of the way forward. In essence, this involves assembling three pieces of

information:

a. Define the problem or problems faced by your industry and market:

This is best done with compassion and empathy, so that you develop a deep understanding of the issues current and potential customers face. Define these problems from the perspective of the customer and what they experience - rather than from your perspective in terms of what you may want to sell them. Be warned, this is much harder than it appears! You have to become truly customer-centric.

b. Identify the causes of this problem:

Here you begin to develop your “theory” or “model” of why this problem exists - ie what are the causal factors that contribute to this problem for customers or the industry. These theories or models should be developed and built with objectivity and rigour so that you are able to offer a sensible explanation as to the cause of the customers’ or industry’s problems.

c. Propose the solution to the problem:

Now that you have identified the cause of the problem, you may legitimately propose a solution. Accordingly, this can be done with confidence and legitimacy. Usually, this is expressed in terms of a value proposition to the market that can be communicated in several ways, depending on the particular circumstances of the customer or market.

How do you navigate through an uncertain environment?

Crafting strategy in an uncertain environment relies on a deep understanding of the industry (and customers) in which you operate, and an ability to learn and adapt to the emerging problems faced by your customers. The ability to study the existing maps, behave like an explorer and chart the new territory will ensure that you remain relevant to your industry and customers as the world changes. And this is the only way to prosper though the tough and uncertain times we encounter.

Four tools to lead complex organisations

Fri, 26 Feb 2021 16:34:38 GMT

CAN YOU LEAD A COMPLEX ORGANISATION?

This reads like a heading from one of those popular questionnaires that purport to test one’s talents or abilities. But it’s not simply a provocative question or teaser to gain your interest. It’s a genuine question about the applicability of conventional leadership approaches to our modern complex organisations.

And if they’re not applicable - what can we do about it?

The capabilities of modern complex organisations - known as complex adaptive systems - are well understood. They have the capability for:

• responding to a changing environment through continuous adaptation

• developing new emergent capabilities by learning and innovation

• coping with multiple demands and tasks in different parts of the organisation.

However, complex adaptive systems also have a number of less ‘desirable’ characteristics.

These include:

• unpredictability - interventions often produce unexpected outcomes

• cause-effect relationships are hard to determine

• best practice from other organisations are not readily applicable

• errors and failure usually accompany attempts at innovation.

Viewed in this light, these characteristics might be thought of as the ‘price’ to be paid for leading a responsive and adaptive organisation. But given these characteristics, leadership models that use conventional performance-management and control systems often fail. Indeed, in many cases, they actually destroy value in these organisations and render them less capable of adaptation and growth.

So, if conventional approaches don’t suit complex organisations, what does? Our work suggests new guidelines for effective leadership in a complex organisation. And we identify four tools that may be used to guide these organisations in a way that preserves their innate ability to learn and adapt in their changing environments.

ROLE OF A SYSTEM STEWARD

‘Stewardship’ is a concept not often used in the leadership literature. It is usually used to signify a considered and responsible approach to nurturing, growing and managing a set of resources in a sustainable fashion - in this case, an organisation.

The term system stewardship is used by Michael Hallsworth where he describes the challenges inherent in complex systems. He argues that a complex system can never be managed or led in a conventional way - it can only be guided and nurtured, if its unique capability to learn and respond is to be retained.

We use the metaphor of hosting to imply something similar. That is, leaders cannot really control a complex organisation. Instead, they host it and facilitate the learning and adaptation that takes place within it.

As we begin to understand this approach to leadership in a complex environment, three key guidelines emerge:

Firstly, leadership in a complex organisation is not so much about improving the performance of the organisation. Instead, it is about creating the conditions in which performance can improve. Secondly, complex environments demand learning, innovation and adaptation. These are not centrally controlled or imposed processes, but rather capabilities that emerge from the organisation itself. Finally, stewardship of the system is the role that leaders play to ensure that this learning, innovation and adaptation occurs.

FOUR KEY TOOLS

Four key tools can be identified to enable successful stewardship in this way.

They are:

• Purpose of the organisation

- defining the broad outcomes to be achieved (usually not financial) and defining the business of the organisation

• Guiding principles by which the organisation will operate

- the ‘rules and boundaries’ for the organisation

• Performance feedback

- understanding how the organisation is making progress towards the achievement of purpose (beyond simple

lag-indicators such as profit)

• Response to feedback

- how leaders respond to possible ‘drift’ away from purpose and / or guiding principles.

BECOMING A SYSTEM STEWARD

Leading a complex organisation can be described in terms of these four tools of system

stewardship.

Purpose

The key role played by leaders of complex organisation is to robustly define the organisation’s purpose. This means answering the question why. Why does this organisation exist and what is / are the key outcome(s) it seeks? (This is NOT a statement of the financial goals of the organisation - profit is just one of the possible results of an organisation successfully pursuing its purpose). In addition, the purpose would include a statement of which stakeholders and customers are being served, and what value the organisation seeks to provide to them. By defining the purpose clearly, you are defining the overall direction in which the organisation should head. See the table below for an example.

Guiding principles

These principles provide the boundaries, rules and framework within which the organisation needs to operate. Where the organisation and environment are highly complex, high levels of adaptation are required. Consequently, these boundaries will be fairly general and will encourage learning and adaptation. An example is the provision of financial planning services to individual families. Here the organisation might set guidelines

relating to the types of investments considered inappropriate and the maximum level of debt / risk for the client. The financial planner is then given the scope to develop an innovative package the suits the individual family’s needs and goals. Conversely, where the organisation’s response needs to be highly uniform and stakeholders’s requirements are similar, the boundaries can be more explicit and extensive. A good example of this might be a network of fast-food outlets providing low cost, nutritious meals. In this case, the organisation might have a framework that

determines the combination of ingredients and food types in each meal, as well as the total cost of each meal. Each outlet is then left to determine how to operate within those guidelines by using local ingredients and suppliers.

Performance feedback

The feedback process is about tracking the progress made towards the achievement of the organisation’s purpose and goals. Importantly in complex organisations, simply monitoring KPIs is not enough. Complexity requires that the leader seeks to understand how the outcomes are being achieved, not simply the results that are produced. In many cases, this may require a more informal, inquiring process into the functioning of the

organisation. An analogy might be a netball coach who cannot judge the performance of her team by simply monitoring the win-loss ratios. She has to watch the games and see how the players and team are performing. She will observe different parts of the game - defence and attack, for example - and construct a picture of how the team is working together overall. This procedure of understanding the processes whereby the complex organisation achieves its purpose and goals is vital to obtaining feedback about performance. Only in this way can the leader create the conditions in which performance can improve.

Response to feedback

The reaction to feedback is a critical process in leading complex organisations - provided the feedback process has been set up correctly. Based on the feedback, the response may range from subtle signalling to direct intervention. In general, the greater the complexity and the need for learning and adaptation, the more indirect the response should be.

Some of the indirect responses include:

• signalling:

where the leader signals her preferences by way of presentations, blogs and informal communication through the organisation

• increasing transparency:

where the managers and staff are subject to open questioning and challenge about their decisions - they make the decisions themselves, but have to be prepared to be challenged on them

• capacity building:

where the organisation builds skill and capability in those areas where direction should be changed or performance improved

• making connections:

where the leader enables connections with outside bodies or between parts of the organisation in order to share thinking

and spread ideas.

An example is an organisation that has a cumbersome capital expenditure process that slows its response to a changing environment. The leaders begin to comment and discuss this challenge explicitly, and then include these views in their internal communications. Capex approvals are made more transparent by discussing them openly at regular executive meetings. Finally, outside experts are invited into the organisation to discuss the

issue and to facilitate an exercise whereby management can explore it in greater depth.

THE CHALLENGES OF SYSTEM STEWARDSHIP

Leading a complex organisation is not for the faint-hearted. It requires an agile mind, patience and the ability to tolerate high levels of paradox and ambiguity. But perhaps the biggest challenge is to resist the temptation of intervening directly in the organisation! Although you, as the leader, may believe you ‘see’ the answer to a particular challenge, direct intervention is rarely the best course of action. This is not simply because you may

be disempowering an individual manager (although this is a significant disadvantage in itself), but because of the inherent characteristics of a complex organisation. As we are reminded at the beginning of this paper, complex organisations rarely display simple cause-effect relationships, and direct interventions in one part of the organisation inevitably produce unintended consequences elsewhere. Moreover, your direct intervention can disturb the natural process of emergent learning and adaptation. The evidence suggests that using the four tools of stewardship might produce the best outcomes for the leadership of complex organisations.

I’d like to acknowledge Charles Britton, who first brought Michael Hallsworth’s work to my attention.

Economy of Scale is a Myth

Fri, 26 Feb 2021 15:49:59 GMT

WHY SHARED SERVICES DON’T DELIVER

In the horns of a dilemma

“We want multiple value propositions for the different market segments we serve, but also need to reduce our costs by eliminating duplication of services”. This is a typical conversation I’ve been having with clients since my recent newsletter on strategies for winning and keeping customers. They acknowledge the need to have a series of different value propositions and customer experiences for the different market segments they serve, but they are also keen to remain cost-competitive. And so the conversation turns to the creation of shared service facilities inside their organisation.... What’s the problem here? Surely, the creation of a shared service capability, such as HR, IT or Finance, allows us to achieve economies of scale by sharing expensive resources (people, office space, computers etc) and standardising processes through the organisation?

Well sadly, there is little evidence to suggest that the total costs of the service provision are reduced*. Yes, there are efficiency gains in the costs of many of the individual activities, but the overall costs of the exercise are usually higher due to what has become known as failure demand. Failure demand is the additional demand that arises from the organisation’s inability to meet the customers’ needs properly the first time, and the rework required to fix the problem caused. And that doesn’t take into account the customer dissatisfaction and possible defection to another supplier.

I’ve seen this problem in many organisations. They want to save costs by eliminating (what they see as) duplicated costs across different parts of the business. And so they create a shared service capability which aims to share expensive resources and standardise processes across the organisation. In this way they aim to achieve greater efficiencies and cost savings through economies of scale. But the “internal” customers, who are essentially captive to these services, are increasingly dissatisfied and have to make other arrangements to work around the service deficiencies.

This often includes hiring contractors for “special projects” to supplement these services, or simply suffering the inefficiencies of poor service levels. And the “external” (real) customers? They simply have to keep coming back and trying to get their needs met and problems solved. All at a high cost - both in resources and lost customer franchise. This is the nature of failure demand. Why are economies of scale not producing efficiencies? What’s the real cause of this problem? Well, it seems as if there are several causes that relate both to the nature of the work and the way it is organised:

1. Economy of scale has only a limited impact on people working in a knowledge based service organisation

The research shows that knowledge-based workers involved in service delivery are not motivated by the same criteria as piece workers in a manufacturing operation. So, getting them to work more quickly or efficiently by organising them into a “production line” is usually counter-productive. And, as we centralise the services to save on duplication, we increase the complexity of the processes geometrically by way of the need for handovers and integration. This causes the increase in failure demand, and a resultant increase in total costs to the organisation. The economy of scale hypothesis is based on a manufacturing context where the key challenge is to produce outputs at the rate of customer demand. In service provision, the challenge is to design a system that absorbs the customers’ demand for variety.

2. Standardised services only rarely meet the needs of different customer requirements

In a service environment, the “product” is only created at the point of interface with the customer - ie in the interaction between the customer and service provider. This is unlike the manufacturing scenario, where the product is made centrally and then shipped out to the customer. Because each customer interaction is relatively unique (customers are all slightly different), the service product has to be created slightly differently each time. It is this ability of the organisation to absorb the customers’ demands for variety that actually reduces the total cost to the organisation. The reduction in total cost due to the reduction in failure demand may, at first, seem counter-intuitive. After all, we seem to be suggesting that allowing for variation actually reduces the total cost to the organisation! But, the standardisation of services increases the number of handovers in the process - and this increases the degree of fragmentation in the provision of the overall service. This increased complexity inevitably results in more errors and rework - with a resultant increase in demand failure. So, the standardised service is certainly busier with a greater volume of throughput - but much of it is rework and duplication to correct the errors made by not meeting the customers’ precise needs.

So, what does produce efficiencies?

It is ironic that so much of the thinking on efficiency within a service organisation is based on “lean thinking”, but often overlooks the fact that a key driver in this approach is the elimination of waste. And waste is eliminated by, amongst other things, improving the flow through the process. So, it is not the volume of transactions that produce the savings, but the elimination of waste through improved flow. In this context, economy of flow means that:

✓ the process matches the requirements of the customer and is able to absorb the customers’ demand for variety

✓ the number of handovers and resultant integration is reduced so as to limit the overall complexity in the system

✓ the failure demand (requirement for rework and duplication) is reduced to lower the total cost to the organisation.

How can this be achieved?

If the goal is to improve customer focus and to improve the efficiency of the system, how can this be achieved in an organisation? Returning to the opening quote of this newsletter, this was a conversation with a client some while ago. The organisation is a major transport and distribution company who faced a multitude of clients across the market. In my previous newsletter, we described how we segmented the market for this company so as to allow for economy of flow within each of the newly defined segments - see the table below: By defining the business of the company around the three key market segments, we were able to produce economies of flow within each segment. This meant that the company was able to set up three “business units” - one to deal with each of the market segments. While this approach required some duplication of resource to enable a series of different customer interfaces, the reduction of waste (total cost) across the whole business was substantial!

The organisation design - and the recognition that efficiencies would be produced by allowing economy of flow - mean that each business unit was able to more readily absorb the demand for customer variety. Indeed, they were set up for that very purpose. Consequently, the failure demand reduced dramatically and the company was able to achieve high customer focus and a reduction in operating costs.

This solution obviously requires a different approach to the way that the organisation is designed and built. This is the subject of my next newsletter and the workshop I am running in Sydney on 5th September, 2011 (see the information and registration link below).

How can we achieve customer focus and cost reductions?

While there are no silver bullets to resolve this problem, there are a few key pointers that should be borne in mind:

• Economies of scale

- increasing the sheer volume through a process - will not necessarily produce efficiencies in a knowledge-based service organisation

• Standardising of services

- Standardising of services will often produce an increase in failure demand and total cost - because of the inability of the system to absorb the variety in customers’ demands

• Efficiencies

- Efficiencies and cost reductions are more likely to result from economies of flow in the system. This is an outcome of better market segmentation, business definition and organisation design.

Re-examining Personal Resilience

Fri, 05 Feb 2021 10:40:12 GMT

I’d like to question the usefulness of “bouncing back” as a definition of personal resilience. The ability to roll with the punches and get back after being knocked assumes that things will eventually return to normal, and that you can continue as you were.

Perception is NOT Reality

Tue, 19 May 2020 16:17:02 GMT

This article covers some common misperceptions that managers and businesses struggle with, along side potential solutions. Improving our sense of reality being of the utmost significance. Find out more below.

Do What Comes Unnaturally

Tue, 17 Mar 2020 17:20:48 GMT

Despite our strongest instincts to do what helps us feel secure, it is often in a leader's best interest to do the opposite. Find out why below.

Busting the Common Myths of Decision Making

Wed, 19 Feb 2020 17:22:15 GMT

There are many views on what it takes to make a good decision, but what are some of the common myths that are actually wrong?

The Invisible Hand of Your Strategy Framework

Fri, 15 Nov 2019 11:24:34 GMT

What's This About?

When Adam Smith wrote his book The Wealth of Nations in 1776 ( 1 ), he coined the term “invisible hand” to describe the invisible forces that cause markets to move towards an equilibrium of supply and demand. It has become a basic tenet of economics, and describes one of the underlying assumptions of the free market.

In other words, when policy makers choose a free market as their preferred system of resource allocation, they make the underlying assumption that this “invisible hand” will guide the market towards a state of equilibrium ( 2 ). Similarly, any tool or framework used in the development of strategy has a series of underlying assumptions - often invisible to the users. And these tools can shape the outcome of the exercise, irrespective of the intentions of the organisation!

So, my contention is that we need to become aware of these underlying assumptions, and ensure that the framework and tool we choose suits our overall intentions and the prevailing environmental conditions. Otherwise, our strategy may well produce a series of unintended consequences and fail to achieve our intended goals.

Strategy And Underlying Assumptions

Strategy is a learning process - rather like a game of chess. Each time you or any other player makes a move, the chess board changes and you have to rethink your approach. So, it's about diagnosing the situation from a systems perspective, forming an overall philosophy about how to deal with the challenge, and then planning a coherent sequence of actions to put your philosophy into practice.

Each time you diagnose the situation and form your approach, you do so by using an explicit or implicit framework / tool to guide your thinking. These frameworks and tools are generally underpinned by two sets of assumptions about:

the intention or purpose behind the strategy
the prevailing environmental conditions.

Simply put, these assumptions can be summarised as follows:

We can use these two sets of assumptions to assist in choosing the right framework or tool for your strategy.

Selecting The Appropriate Strategy Framework

The matrix below suggests a series of approaches that fit the different assumptions about your intentions and environmental conditions:

We have assessed eight popular approaches for developing insights and forming strategy. Each has been analysed in terms of their underlying assumptions and applicability for your purpose, as well as the prevailing market and environmental conditions.

The key takeout from this analysis? Check the overarching reason and purpose behind your strategy exercise, and ensure that the approach you are using suits this purpose as well as the prevailing conditions in the market.

See the appendix for a more detailed description of the different framework and tools for the development of strategy.

Appendix: Eight popular strategy frameworks

References

( 1 )An Inquiry into the Nature and Causes of The Wealth of Nations, A Smith, W Strahan, London, 1776

( 2 ) My example here should not be taken as an acceptance or rejection of the free market principle. I refer to 2 this purely as an illustration of the “invisible hand”

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Using Accretion To Develop Strategic Insights

Thu, 14 Nov 2019 11:30:27 GMT

Accretion?

Accretion is defined as ‘growth by a gradual accumulation of additional layers' ( 1 ). It has its origins in astronomy, where it is used to describe the formation of stellar systems. The gravity of a heavy molecule attracts smaller molecules to it, and the smaller molecules stick to the heavier one.

As the heavier molecule becomes even heavier, it attracts smaller objects to it. And so the process continues until you have a large object in space with significant gravitational pull. I like this analogy because it can explain how strategic insights are achieved by a series of smaller ideas - and how a change in thinking takes place.

How does this happen? There are two key stages in accretion:

1. As you begin considering a problem or challenge, you gather pieces of information and a series of ideas

2. As these ideas accumulate, the smaller ones stick to the larger ones until a ‘tipping point’ is reached. This causes an eventual avalanche that changes the whole landscape.

In other words, accretion explains how a series of small ideas or steps can eventually cause a significant upheaval in the status quo - an avalanche that creates a new insight or breakthrough in your thinking process.

This can sometimes be experienced as a ‘eureka’ moment - and has signifi cant implications for the development of strategic insights.

How Does Accretion Help Strategic Thinking?

Strategic thinking may be understood in three distinct phases:

This may appear to be a linear, sequential process - but this is not the case . Our brain - a key tool in strategic thinking - is best described as a complex adaptive system.

As a complex system, it learns and makes connections in an unpredictable, non-linear way. As we gather information and ideas about a situation, these ideas are put into the “ideas garden” of our brain. The larger ideas - having more gravitational pull - attract the smaller ideas and they stick together to form an even larger idea.

These idea fragments float around grouping and regrouping, until some order begins to emerge in the constellation of ideas in our “ideas garden”. This is the first stage of the accretion process.

The second phase is best explained by the sandpile effect identified by Per Bak, a Danish scientist ( 3 ). He observed that if you piled sand, grain by grain, until it made a cone (a pyramid-like shape), you CANNOT predict when that cone will have an avalanche and collapse!

Furthermore, he observed that the sand cones, which look relatively stable, are in fact deeply unpredictable. There is no way of knowing what will happen next. This unpredictability is an important characteristic of complex adaptive systems, and describes the way our brain functions in these situations.

The sandpile effect suggests that we cannot predict when the collection of ideas in our “ideas garden” will generate an avalanche - i.e. the insight that changes the way we see and think about a situation.

Instead, we know that the process of solving complex problems reflects the tendency of complex systems to be constantly poised on the edge on unpredictable change. Bak argues that this is one of the fundamental forces of nature. So, if we cannot predict when and how a new insight will emerge - what can we do to encourage the process?

How To Encourage Accretion And Strategic Insight

There are five things we can do to promote the development of strategic insight through accretion ( 4 ):

I’d like to acknowledge the work of Executive Coach, Erik Kruger (erikkruger.com), who started me thinking about Accretion.

References

(1) I was introduced to the notion of accretion by Erik Kruger, a talented writer who encourages the concept of accretion as a means of improving personal performance. I find his thinking to be insightful and helpful. See his blogs at https://bettermanblueprint.com

(2) How creative accretion leads to epiphanies, C Gilkey, Productive Flourishing, April 2014

(3) Self organised criticality, P Bak and K Chen, Scientific American 264, 1991

(4) The two dynamics of change, C Gilkey, Productive Flourishing, October 2010

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Boost Your Strategic Thinking

Wed, 13 Nov 2019 11:32:13 GMT

What's the big deal?

Current conditions are pretty challenging for leaders. Complex environments and high uncertainty make decision making difficult and risky.

There are few simple solutions - and decisions seem to have multiple options and consequences. So how do we manage through this?

Many would argue that we have to be more “strategic” in our approach. Job advertisements and role descriptions describe the ideal candidate in these environments as being strong “strategic thinkers”. What does this really mean and how can we develop that ability?

So, what is strategic thinking?

One way to understand strategic thinking is to recognise it as the way you focus your attention and energy in a given situation.

I’ve identified five key elements:

1. Non judgemental

This may seem obvious, but a critical part of strategic thinking is to view a situation in a non-judgemental way, without bias or preference. While obvious, it is not that easy to implement, We shall refer later to the critical skill of ‘mindfulness’ that is so central to being non-judgemental.

2. Systems view

In essence, this means that the situation should be explained in terms of all the key elements to which it is related. This is usually best done graphically by mapping the key relationships between the elements, and explaining the linkages. The diagram below is an example of this mapping for the release of a new pharmaceutical drug:

3. Multiple perspectives

Good strategic thinking will look at the situation from multiple perspectives - ie view the situation from the position of each player in the situation.

This provides an understanding of the different motivations of the players and how their needs may be satisfied. This is critical to the next element - the key leverage points.

4. Leverage points

Most situations have one or more leverage points - those factors that can unlock the problem and provide a possible solution to the situation.

By understanding the perspectives and needs of the different players, the leverage points that point to a solution may be identified.

5. Test hypotheses

As you assess the situation from a systems perspective, a range of possible solutions or theories can be identified. These should be treated as hypotheses - possible solutions to be further assessed.

Each hypothesis is then tested to identify one that produces the optimum outcome.

What Drives Strategic Thinking?

A key to improved strategic thinking hinges around the ability to appropriately focus your attention and energy at crucial moments. This is about ‘mindfulness’ and the creation of specific mental pathways to understand and make sense of these situations.

In simple terms, there are two ways in which we perceive and make sense of a given problem or situation:

The Reactive Approach - a tactical focus

This is the fast, almost instinctive approach that we often bring to problem solving. It relies on previously used solutions and preferences, and is focused on producing the best outcome for you and your needs.

It is also described as the narrative approach, because it relies on your values and your “story” about who you are and what you want. Since it relies on instinctive pattern recognition to formulate a solution, it can be quite deceptive and miss important information. However, we use this approach often as it requires less mental effort and resource.

The Deliberative Approach - a strategic focus

This is a purposeful, more time consuming approach that requires some mental effort and consideration. It adopts a non-judgemental systems view of the situation and considers what is most needed (as opposed to what you want).

It is also termed the direct network approach and follows a different mental pathway to the Reactive Approach. Mindfulness is a critical requirement here, because of the requirement to consciously focus attention and energy on a systems view of the situation. It also reduces the effect of personal preferences and needs on our perspective.

How Can I Boost My Strategic Thinking?

I outline five key actions to help in boosting your strategic thinking:

1. Understand the history

The appropriate starting point is to study the history of these or similar situations. In essence, this means doing any research you can in order to understand how these situations occurred in the past, how they were resolved, and the latest thinking / theory on how to deal with these issues.

This provides a few reference points and possible hypotheses that can be tested later.

2. Immerse yourself

Strategic thinking is not an armchair exercise - at least not in the early stages. You need to gather as much first-hand information as possible about the situation and the key players in the system.

By immersing yourself in the situation, you provide your brain with important non-conscious cues that are called upon later when analysing the situation and generating new insights. But importantly - you should consciously ‘forget’ all that you learned during the study of the history and theory.

Some call this developing a ‘beginners mind’ - where you observe and listen to your first-hand information in a naive and non-judgemental way. Avoid jumping to conclusions at this point - your role is to observe and be aware of all that you see, hear and feel. (This can be difficult to master).

3. Retreat and ‘calm’ your brain

Now you need to move out of the phase of intense concentration and focus - and into a period of reflective insight. This means removing yourself from the immediate situation and blocking the flow of visual and auditory information related to the problem.

This ‘retreat’ will allow your brain to mull and non-consciously group and re-group all the information gathered to date. As the term implies, ‘insight’ comes from inside. It is the work performed by your brain while you are not consciously focused on the problem or situation at hand.

There is much research and evidence of this non-conscious insight process - as well as its ability to generate new and creative perspectives on the the problem. There are also specific actions you can take to calm your brain and increase the likelihood of a better solution. They include:

focus on the immediate task at hand, rather than any possible outcomes
chunk the information into fewer pieces or categories - this makes it easier to manage
reframe the problem as a challenge, instead of possible ‘life or death’ consequences
name and label the concerns you have about the situation - this reduces the sense of overwhelm
concentrate on the controllable factors, rather than those that are uncontrollable
try to remain positive in the situation by remembering previous successes in this space

4. Mentalise the situation

Mentalising is the term to describe the objective, systems-thinking approach adopted by good strategic thinkers. It involves:

lo oking at the situation as a system and identifying the key players and their interdependencies - view them as characters in a movie or novel
asking yourself about their motives and intentions - and what they are likely to do to pursue these
identifying the leverage points in the system - what would it take to move or change the position of one these players?
thinking about the what needs to be done and what creates the best long term value
removing your preferences (and those of people around you) from the situation - and trying to view the situation dispassionately

5. Reject binary solutions

Binary solutions are often the product of reactive thinking - they involve the usual ‘win-lose’, or ‘only two-options’ solution.

Reject these solutions, particularly in complex situations and problems. Force yourself to generate as many alternatives as possible. This increases the chances of generating a creative insight that breaks the logjam in the situation.

Practice Makes Perfect

Neuroscientist Daniel Hebb explained thought processes in terms of the connections between the neuron assemblies (nerves) in the brain (3).

His research, now key to our understanding of cognitive processes, identified that mental pathways that are continuously used will become physically associated with one another in the future. In other words, the more we use a particular pathway, the easier it becomes to follow that pathway in the future. The pathway can become totally automatic.

The implication is clear. The more we practice the Deliberative Approach and Mentalising process, the more likely we are to use that approach in the future. And the better our strategic thinking will become.

To be clear, the approach is not easy at the outset - particularly if we have tended to rely on a more Reactive and ‘gut feel’ approach in the past. It will take mental effort and discipline.

But the rewards - better strategic thinking - are likely to be valuable to you in the future.

What is strategic thinking? How do we do it really? What does this really mean and how can we develop that ability?

References

1) Mindfulness and the Quality of Organisational Attention, K Weick and K Sutcliffe, Organisational Science, 2006

2) Social Status Modulates Neural Activity in the Mentalising Network, K Muscatelli et al, NeuroImage, 2012

3) The Organisation of Behaviour, D Hebb, Wiley, 1949

About the Autho r

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

By integrating the principles of neuroscie nce with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations. He specialises in creating strategy for the rapidly changing and uncertain future and can help you and your organisation.

This is the year to challenge the NORM

Mon, 11 Nov 2019 11:42:48 GMT

This year, we must challenge the “norm”

WHAT AN INCREDIBLE NEW YEAR!

Whatever your world view, the start of 2020 has been momentous. We’ve been overwhelmed by the drought, bushfires — and the rapid spread of the coronavirus has given added emphasis to the term ‘viral’. It’s easy to be overwhelmed by the implications of it all. As I reflected on all of this during my summer break in the southern hemisphere, I have become aware that so many of our traditional coping mechanisms are failing us. I thought about my own work and how I have been trying to make sense of it all. I am realising that I need to challenge the norm in three critical areas of my own work — leadership, strategy and organisation. My views on these issues are summarised in the diagram below:

NEW WAYS TO THINK ABOUT LEADERSHIP

The complexity and multiple demands of leadership today may seem to require a bewildering array of skills and talents from leaders. The use of 360° assessments and competency models seek to “iron out the deficiencies” in leaders’ capabilities and make them well-rounded generalists.

But the real contribution of a leader is her unique style and the ability to bring something new and different to the organisation — rather than simply possessing a rounded set of competencies. Talent management should focus on building a portfolio of diverse and innovative people across the leadership cohort — rather than seeking to develop an individual’s competence across a wide range of capabilities.

We should be seeking out and growing the unique and individual talents of people — this is what provides the resilience capable of thriving in an unpredictable and demanding environment. So, be an incomplete leader! In today’s world, the leader’s role is no longer to command and control, but to cultivate and coordinate the actions of others across the organisation. When leaders see themselves as incomplete — having strengths and weaknesses — they are more likely to make up for their missing skills by relying on others.

DIFFERENT APPROACHES TO DEVELOP STRATEGY

The complexity in our business environment produces unheralded uncertainty and change. This much we know. So, why do we continue to use outdated tools and processes for our strategy and planning? The task of setting strategy is difficult enough — but we make it harder for ourselves if we rely on traditional approaches that are based on outdated assumptions about the environment. Complex systems (like our environment and our organisations) are characterised by unpredictable and emergent outcomes — and we need to approach these systems in quite different ways.

Firstly, we should separate the processes of planning and strategy. Planning focuses on building a logical set of actions / initiatives to achieve a pre-determined objective. It assumes we can articulate and quantify this objective with some certainty and clarity. Strategy, on the other hand, is about positioning the organisation for the future in an uncertain environment. It requires a deep understanding of the key variables in the environment, how they interact and unfold into the future. Both planning and strategy are important, but they need to be separated to get full effect from both.

Secondly, we need to recognise that organisations (and we, for that matter) face alternative futures at any point in time. The future is not pre-determined, it depends on the actions of others as well as ourselves. This suggests the use of tools and techniques to promote scenario thinking — the ability to envisage alternative futures, and then prepare for how we might need to operate in those future conditions. The shift is from predicting the future towards developing those capabilities required to operate in alternative futures. And finally, we should recognise that action is often the enemy of thought. Our continued obsession with responding quickly and being action-oriented can drive out strategic thinking.

In addition to the analysis of what’s going on, strategic thinking also requires some insight into what this means. We call this strategic intuition — the ability to explore different ways to make meaning of all the information to understand the true nature of the challenge. Strategic intuition requires some quiet reflection and becomes almost impossible in a frenetic action-oriented environment.

NEW ORGANISATIONS FOR UNCERTAIN ENVIRONMENTS

Resilience is another important requirement for organisational success in an uncertain environment. In essence, it’s about developing a wide zone of tolerance — the ability to remain effective across a diverse range of future environmental conditions. I believe that three characteristics contribute to resilience in organisations.

Firstly, these organisations have an evolutionary strategy - ie: the purpose of the organisation (the “why”) remains very clear, but the strategy emerges and evolves as the organisation interacts and learns from its environment. The notion of ‘emergence’ is characteristic of complex systems - the process is ongoing and should take place as a strategic conversation through the organisation. This internal adaptation process is crucial, since a rigid organisational strategy and structure has little hope of surviving in a constantly evolving landscape. Key to an evolutionary strategy is the notion of distributed leadership through the organisation. The strategic conversation is shared widely with many inputs and perspectives. I believe there is more danger in limiting the internal access to your strategy so as to maintain confidentiality, than there is in your ‘competitors’ finding out about your strategy.

Finally, we need to understand the high level of interdependence between the various functions and elements within an organisation. Complex systems are characterised by high internal integrity - we cannot make changes in one part of the organisation without it affecting the rest of the organisation. Because of this, the traditional reductionist approaches of management (whereby we focus on functions and parts separately) are much less effective. We need to understand and work on the organisation as an overall integrated system.

MOVING AHEAD

So, 2020 is a good time to challenge our usual approaches to leadership, strategy and organisation. Even if we simply re-affirm our existing ways of doing things, we will have started the important task of recognising that the practices that have got us this far are perhaps insufficient for the next stage of the journey.

When we think of the year that has just been, 2017 has to be a time to challenge the traditional approaches we’ve been using to understand leadership, strategy and organisation.

Leadership in a DIGITAL AGE

Wed, 18 Apr 2018 23:53:00 GMT

A DIGITAL AGE?

The digital age is far more than the automation, digitisation and use of the many technologies that enable our e-commerce capabilities. It reflects the new social and economic order that pervades our markets, organisations and societies as a whole. It’s about people’s desire and ability to participate, influence and be fully involved in their community and work life.

The digital age embraces the democratisation of information and the use of technology to empower people – allowing them to become more active in influencing the organisations that serve them (as customers) and in which they serve (as employees, leaders and entrepreneurs).

NEW FORMS OF LEADERSHIP

In this environment, the shape of leadership is significantly changed. Nonetheless, one of the prevailing themes that remains is the need for leaders to influence and add value to their organisations. The common cliche′ is that one has to shift from “command and control” to “persuasion and influence”. But how and when is this done, for there are still instances where the traditional approaches may be appropriate?

I believe there are three considerations when leaders seek to influence and add value to the organisation:

Understanding the context,
Identifying leverage points, and
Using appropriate processes.

UNDERSTAND THE CONTEXT

Key to understanding the “digital context” is to recognise that it is usually made up of a large number of interdependent players, influences and forces that shape its characteristics. It is, in effect, a complex system.

Complex systems have a range of characteristics that require more than a simple ‘cause-effect’ analysis in order to understand. Indeed, we know that a single cause has multiple effects in a complex system. This contributes to the unpredictability of these systems, and the fact that interventions can often produce unintended consequences. A careful analysis of the whole system – rather than a reductionist approach – is necessary to understand how these systems function.

Consequently, two strategies are useful for understanding the context. The first is to deliberately adopt more than one mental model (framework) to analyse the system. This has the effect of producing a richer understanding of the situation. What you see of the mountain depends on where you stand.

The second is to “mentalise” the situation. This is where we analyse the various players in the situation as characters in a movie or novel. We seek to understand their personalities, drivers and motives – and thereby identify their triggers and leverage points. This approach also has the advantage of removing some of the personal bias and pre-judgement you might have of the situation.

Careful analysis of, and reflection on, the situation is an important part of understanding and appreciating the complexities of the context in a digital world.

IDENTIFY LEVERAGE POINTS

Once we understand the context, we are better positioned to identify the leverage points to achieve the outcomes we seek.

In many cases, this revolves around the way we think and plan our approach to achieve goals in a complex situation. Because our organisations are also complex systems, top-down planning and strategy rarely works. In addition to promoting resistance and disempowerment, a top-down approach can produce unintended consequences in an uncertain environment.

One way around this is to actively frame the planning approach and challenges we present to our people. This can be achieved in two ways.

Firstly, be very deliberate about the planning approach and framework used in the strategy process. Every planning and strategy framework has a range of underlying assumptions inherent in it’s use. Unknowingly, the choice of a particular approach can significantly influence the nature of the outcomes achieved. In particular, pay attention to the overarching objective of your strategy (ie what are you trying to achieve with the strategy) and the prevailing conditions in your market.

These factors will assist in selecting the appropriate planning and strategy approach you select. See the appendix for a summary of some popular approaches and the appropriate circumstances in which they should be used.

Secondly, the specific organisational or business challenge in different parts of the organisation can be purposefully framed to maintain the overall integrity and effectiveness of the organisation.

When considering the popular “three horizons” approach to planning growth and development in an organisation, it is possible to define two quite distinct challenges faced by different parts of the business.

The “exploit” agenda involves the a primary focus on developing operational efficiencies while also responding incrementally to changes required by the market. The “explore” agenda, on the other hand, suggests that the priority is to be aware of market needs and focus on innovation to create new opportunities for the future.

Clearly the exploit and explore agendas as not mutually exclusive, but we know that the style, tempo and time horizons in these approaches place very different demands on the organisation. Hence, a clear understanding of what is required in particular parts of the business will allow a more focused and optimised resource allocation across the organisation.

USE APPROPRIATE PROCESS

How can leaders influence their organisation in a digital world? Three things should be considered here:

The leader’s role is not to directly improve performance, but to create the conditions in which performance can be improved
While learning and innovation are critical factors in dealing with a complex environment, these cannot be centrally imposed or controlled
The focus should be on facilitating and enabling the system within which the learning and innovation takes place. This may be understood as “system stewardship”.

System stewardship involves deft and purposeful “nudges” to the system by using five processes:

LEADING IN A DIGITAL AGE

Leading an organisation in the digital age is not for the faint hearted. It requires great mental and behavioural dexterity to understand the needs of the situation, and then nudge and shape the organisational system to deliver the appropriate response.

While there are critical times where a direct command and control intervention might well be required, it seems that the greater proportion of time is spent ensuring the organisation is fit and capable of supporting the necessary learning and innovation.

Examine the DARK side of your leadership

Wed, 04 Apr 2018 02:47:00 GMT

ATYPICAL BEHAVIOURS

I have been reflecting on my business experiences over the last 12 months. As with most of you, I found this to be a particularly challenging time. Happily our own business activity remained reasonably buoyant, but a key feature was the uncharacteristically difficult behaviour I encountered from some leaders in certain situations. In particular, their poor treatment of subordinates and colleagues seemed inconsistent with what I had observed in my previous experiences with them. Clearly, many of these atypical behaviours were the product of stress and the need to make tough decisions. Knowing this helped a little in dealing with them. Nonetheless, I got to wondering if there were any noteworthy patterns that might be worth further reflection.

AN ACHILLES HEEL?

The research into leadership effectiveness is noted for the fact that the findings are often inconclusive and divergent. Large numbers of studies have produced many different results and the field remains dynamic and there is much we don’t yet understand. Research into leadership failure, on the other hand, produces quite conclusive and consistent findings (1). It seems that bosses who undermine the loyalty and commitment of their team quickly find that there is no team to lead. The Achilles heel that ends many leadership careers seems to be the poor treatment of others (2).

In discussing this phenomenon with organisational psychologists, they pointed out that most personality characteristics have a “shadow” side. Initially observed by the eminent psychologist Carl Jung, this darker side of one’s personality is most often the result of excessive amounts of some of your key personality traits – themselves often identified as your major strengths.

Put another way, it seems that your key strengths may well have a mirror image that produce major flaws in your style of leadership. I may well have been observing examples of the shadow side of these leaders as I noticed their uncharacteristic behaviour!

THE “DARK SIDE”

Being fascinated by this notion, I came upon some interesting research that seeks to uncover leaders’ dark sides by analysing what derails them under pressure. The research, conducted amongst 11,000 leaders in the UK, identified 11 “derailers” — strengths which turned into flaws under pressure (3).

In reality, each of these so‐called derailers was actually a potential leadership strength. The derailment occurs when the strength is overused, or used too enthusiastically. This is likely to happen when leader’s confidence is too high, when they are inexperienced, or when they are under extreme pressure and find themselves “pushing too hard”.

It is interesting to note that these strengths exist within you as complete dimensions, ie you possess the ability to display both sides of the coin – both the strength and the shadow side. We learn to manage the shadow side as we gain experience and stay grounded. Quite literally, we become skilled at mastering and controlling some of our less effective (and less attractive) impulses.

However, as we become stressed or over‐enthusiastic, so we run the risk of manifesting our shadow side behaviours. Our strengths can literally derail us!

This illustrates the potential hazards associated with rapid promotion into positions of power and leadership or when a leader is overcome with his/her sense of power and ability. When this occurs, previously mastered and controlled impulses can re‐emerge to detrimental effect as restraint falls away. Interestingly, significant stress produces a similar effect on the leader.

The paradox here is that these self‐defeating aspects of personality will often be favoured, even cherished, by those that possess them. Quite naturally, the more benefit we reap from a particular strategy, the more we will exploit it. From this perspective, the problem for leaders is often their success, and especially extreme success.(5)

SO, WHAT DOES THIS MEAN?

So, what are the implications of the shadow side characteristics of leadership? Three key issues seem to jump out of this:

Maintain an awareness of your personal strengths and potential shadow side behaviours. Be aware of the predominant style of your team as well, as this could produce difficulties when the pressure is on
Try and remain “grounded” and humble about your strengths. In particular, beware of getting the “hots” (I simply must do this!) about a particular course of action. This may be an early warning signal that you are losing perspective and crossing over to the darker side of your strength
Be careful of rapidly promoting individuals and simply assuming they will go from strength to strength. They are likely to take this as a cue that their personal strengths are valuable to the organisation and that they should use them more forcefully.

I hope that these reflections are useful as you take on the rigours of 2018.

References

1) Hogan, R. (2007). Personality and the fate of organizations. Mahwah, NJ: Lawrence Erlbaum Associates. 2) Dotlich, K. & Cairo, P. (2003). Why CEOs Fail. John Wiley & Sons.

3) Corkindale, Don’t let your strength become your weakness, Harvard Business Publishing, 2009

4) Trickey and Hyde, A decade of the Dark Side: Fighting the demons at work, 2009

5) Hogan, R. (2007). Personality and the fate of organizations. Mahwah, NJ: Lawrence Erlbaum Associates. 6) Hogan, R. & Hogan, J. (1997). The Hogan Development Survey Manual, UK Edition. Psychological Consultancy Ltd.

6) List of Strengths and potential De-railers (below)

Learning from 2017 – a year of Distinctions

Fri, 15 Dec 2017 06:33:00 GMT

WHAT A YEAR!

2017 will go down as a year of distinctions – twelve months in which we saw extreme positions vigorously pursued by people and commentators. We saw the clash of progressive vs conservative politics, the economic debate of wealth creation vs wealth sharing, the “yes” vs “no” vote, and the unending argument for and against climate change (to name but a few).

This caused me to reflect on some of the positions taken by leaders and organisations in our society. They reflect significant distinctions in the philosophy and behaviour with which they tackled the challenges of 2017. I use these distinctions to understand leadership, organisations and strategy. I believe there are key learnings from these that are useful as we plan ahead for 2018.

SEVEN KEY DISTINCTIONS

‣ Action vs thought

‣ Leaders vs leadership ‣ Align vs engage

‣ Focus vs balance

‣ Plan vs strategy

‣ Pressure vs stress

‣ Pleasure vs happiness.

1. ACTION vs THOUGHT – NATURAL ENEMIES?

I have written previously about the trade-off between being overly action-oriented and the ability to think strategically (1). It seems that leaders and organisations who pride themselves on a high operating tempo may rely too much on reflexive decision making – choosing solutions and approaches that are well practiced and have produced good outcomes in the past.

As conditions become more complex and uncertain, there is a danger in applying old solutions to new problems. And yet, we see that leaders and organisations often revert to habitual approaches as the pressure increases. The reflexive approach is an instinctive response to both pressure and operating at a high pace.

As conditions become more complex and uncertain, leaders would be well advised to pause and reflect. This is an important pre-condition for generating innovative insights into new challenges (2).

2. LEADERS vs LEADERSHIP – ELITIST OR PLURALIST?

I observe this confusion within talent development in several organisations – and it reflects the mental model that they hold about a “leader”. In some instances, effective leaders are defined by a particular competency model – and their organisation places much emphasis on selecting and developing so-called “high potential” people. The assumption is that these leaders can have a disproportionate impact on improving organisational performance.

Perhaps they can. However we know that complex systems (which most of our modern organisations embody) have to be understood as complete systems, particularly if we wish to introduce change and improvement. This means adopting a view of the whole “leadership system” and focusing on developing the way that all the elements (people, processes, systems) work together, rather than focusing primarily on one of the elements. Developing the leadership system is the work of organisation development, rather than talent development (2).

3. ALIGNMENT vs ENGAGEMENT – AN ISSUE OF CONTROL?

But is this a reasonable expectation when conditions are dynamic and people are expected to use their judgement and creativity?

Seeking alignment is possibly an exaggerated control-oriented approach, particularly in fluid conditions with complex challenges. It might be more appropriate if, instead, we sought to develop engagement from our people? Engagement implies a commitment to the goals and purpose of the organisation, but it suggests that people are free to use their ingenuity and resourcefulness in addressing organisational challenges.

Simply semantics? Perhaps. But the mindset and methods for building engagement are very different to those where the key outcome is to ensure that everyone is closely aligned.

4. BALANCE vs FOCUS – A MATTER OF DESIRE OR EFFECTIVENESS?

This is an old chestnut of mine. I observe many organisations seeking balance in their approach to strategy and organisation design. This is understandable, given the positive connotations associated with “balance”.

But we know that strategic effectiveness is closely related to focus. And focus is imbalance. It is a deliberate over-allocation of resource and effort in one area of the organisation at the expense of others.

I am not suggesting that organisations develop a lopsided approach to their strategy or design, but simply that trade-offs are required to achieve focus, particularly in a resource constrained environment.

5. PLANNING vs STRATEGY – A MISUNDERSTOOD DISTINCTION

Another common source of confusion. The traditional process of planning is to begin with a statement of purpose, and then proceed with a series of objectives and action plans. The emphasis is on developing a series of milestones and then holding people accountable to achieving these in a given timeframe.

Strategy, on the other hand, is rather like a game of chess. Each time you or any player makes a move, the board changes and you have to rethink your approach. Strategy is, therefore, the process of ongoing learning and deciding on the best approach to move forward.

Contrast this with planning, where the emphasis is mainly on achieving the stated milestones and holding people accountable. The irony is that, in these circumstances, learning is almost eliminated after the initial objectives have been set – even though these objectives may have become irrelevant as the environment changes.

6. PRESSURE vs STRESS – IT’S ALL IN THE MIND!

Robert Zapolsky asks the question “why don’t Zebras get ulcers?” Despite the extreme levels of stress they encounter when pursued by lion and other beasts of prey, they do not suffer from stress-related ulcers as humans do.

Stress causes the release of adrenaline and cortisol, hormones that increase blood pressure, heart rate and energy supplies. These hormones are key to our “fight or flight” ability and are useful in short term bursts. However, during longer periods of stress, they can cause numerous health problems such as ulcers, heart disease and memory impairment.

Most leaders experience pressure at work. Multiple demands, high workload and short timeframes all contribute to feeling pressured. Pressure is an external force related to the demands of your situation. Stress, on the other hand, is caused by rumination – the continuous worry that you might not be able to cope, or focusing on the consequences of possible failure. It is generated internally by “self-talk”, self-doubt and considering the consequences of worse-case outcomes.

So, why don’t Zebras get ulcers? Because they do not ruminate. Minutes after being pursued by a lion and seeing one of their group being killed, they are back at the same water-hole, drinking and getting on with daily life. Zebras are incapable of the rumination which causes people to continuously relive the stress and fear of the moment.

Manage your self-talk and doubt! I spend much of my time assisting leaders to overcome their negative self-talk and to reflect more objectively on their situation.

7. PLEASURE vs HAPPINESS – ARE WE ON THE RIGHT PATH?

My list of distinctions ends with the pursuit of pleasure in the belief that it can lead to happiness.

Pleasure is a short lived feeling that comes from something external – alcohol, a generous bonus and so on. In essence, we take pleasure from one of these events.

Happiness, on the other hand, is a deep sense of contentment and self comfort that comes from within. While pleasure can produce momentary bursts of happiness, it does not last.

Why? Pleasure seeking activities release the neurotransmitter dopamine, that influences the reward and pleasure centres of the brain. So our brain registers “pleasure” and we feel

good in that moment. Repetitive releases of dopamine (in pleasure-seeking behaviours) cause the dopamine receptors in the brain to recede, to protect themselves from the high levels of dopamine. And so, we need increasingly larger doses of dopamine (pleasure- seeking behaviour) to get that same good feeling. This is one of the sources of addiction.

Happiness, on the other hand, is associated with the neurotransmitter serotonin – the absence of which can cause anxiety and depression. Furthermore, excessive dopamine can destroy serotonin, and so rob us of feelings of happiness. Serotonin will contribute to feelings of contentment, calmness and self-comfort. It is boosted by a focus on human connections; contributions made to others; adequate sleep and exercise; and good food that is high in fish and omega 3.

So, despite the marketing and advertising hype that tries to sell us products and services claiming to give us happiness, it seems that true happiness comes from other sources.

LOOKING TO THE YEAR AHEAD

I hope these observations and reflections from 2017 provide some insight as you lead and manage in the year ahead. I know that they have given me pause for thought and allowed me to develop new goals for 2018.

References

1. See “ActionistheEnemyofThought” – https://www.brainlinkgroup.com/wp-content/uploads/2015/12/ Action-is-the-Enemy-of-Thought.pdf

2. See “UsingAccretiontodevelopStrategicInsights” – https://www.brainlinkgroup.com/brainlink-resources/

3. See “TalentManagementisDead” – https://www.brainlinkgroup.com/wp-content/uploads/2015/12/Talent- management-is-dead.pdf

Why Is Organisational Change So Hard?

Wed, 01 Jun 2016 10:44:34 GMT

We are constantly reminded that organisations are expected to change in ways that would have been unthinkable even a decade ago – and to do so quickly and with minimum disruption. Indeed, many researchers agree that change agility will be a key differentiator between successful and unsuccessful organisations in the future (if not now).

So why haven’t we all embraced change? Our clients tell us that it still takes time and effort to encourage new ways of operating. One reason is that organisations are made up of people and people are neurologically hard wired to consider unplanned or externally imposed change as a threat.

The human brain consumes some 20percent of the body’s energy every single day, just going about our daily business. When something unforeseen happens, the demands on our cognitive processes increase, thus using more neural energy.

Our good friend, neuroscientist Dr Evian Gordon tells us that the brain’s organising principle is safety 1st and only once our physical and psychological safety needs are met does the brain seek reward. We have 5 x more safety circuitry in our brains than reward circuitry. That’s why we are here – our ancestors were able to detect and avoid danger long enough to pass their genes down the line to us.

"As we grow and experience more things, our personal comfort zone or “what we know” expands".

In order for that expansion to continue, we have to experience more things. The Catch-22 in that statement is that while our brains are trying to keep us safe and in familiar processing patterns, we are less inclined to try new things.

The introduction of unexpected change sets up a fast threat response in the limbic region of the brain. There are 3 possible responses to this threat: fight, flight or freeze. In organisations fight is often labelled as change resistance. Flight usually involves looking for a new role and freeze leads to a syndrome called “stay and quit” i.e. the person still shows up at work but becomes ineffective as they worry or ruminate about the changes.

Neuroscience provides us with some tips on how to make change more acceptable.

This threat response is minimised at a personal level through:

1. Verbalise and make sense of the change

2. Use our social connections

3. Seek multiple perspectives

4. Once you have identified the benefits, tap into the brains reward system

Then the day will come when the old “change” become “the way we do things round here”.

The “brain” new world

Sun, 27 Jul 2014 01:32:00 GMT

How can we use the brain as a metaphor to better understand our world - a world of complexity and uncertainty?

We apply some of the key characteristics of the human brain to make sense and navigate our way through our challenging environment.

Download the blog here.

How Innovation can disrupt your Market and Competitors

Sun, 15 Apr 2012 01:32:00 GMT

At present, many organisations face uncertain and often turbulent conditions. Advantages of economies of scale has been overtaken by newer, faster, technologies; social networks have eroded the advantage of better market knowledge; and superior products have been copied through the ravages of hyper competition. In short, growth seems harder to achieve.

Achieving growth in today’s uncertain environment requires innovation. Innovation is a strong driver of disruptive strategy and competitive advantage. But for many, it seems harder than ever to achieve this competitive advantage, as a means to fuel growth.

A simple proposition on growth...

Competitive advantage is necessary to fuel growth. You need to provide your customers with a reason as to why they should buy from you rather than a competitor.

This competitive advantage needs to be predicated on difference - i.e. Your proposition to the market is different (and better) than that of a competitor or substitute. Such a disruptive approach to growth changes the rules of the game so that traditional market leaders lose their stranglehold. Soon, the attributes that you bring to the market become the standard and preferred offering.

So how do we achieve this difference and disruptive growth? Three simple rules.

Compete where no one else competes - This is a category creation strategy. It focuses on seeking out unserved market opportunities that can be served by an innovative combination of existing technologies. Best of all, it has the natural competitive advantage of no competition - at least in the beginning!
Identify a job to be done for the customer - The focus is on the areas where the customer has a problem, or cannot get a complete solution. It requires thorough research to truly determine the nature of solutions required.
Create new business models in well served markets - Such a disruptive approach focuses on providing a cheaper or more convenient means of serving the customer through a radical transformation of the business model. Technology has enabled many of these strategies, and they often centre around the simplification of the supply chain. Dell Computers and Amazon.com are such examples.

How do you unleash innovation that drives disruptive growth?

We can see that there are three ‘levels’ of thinking that organisations utilise.

Creative thinking - This involves harnessing creative ability across the whole organisation, and a relentless curiosity about organisational capabilities and the market.
Strategic thinking - This means recognising that the organisation faces many different futures, all depending on behaviour and decisions.
Transformational thinking - This includes your personal attitude, the design and culture of the organisation, and the processes put in place to facilitate innovation. It’s about engaging staff, bringing people in from outside the leadership to envisage change, and defining the market by understanding customers’ needs in terms of the problems they need solved (not the products they buy).

Leaders need to ensure innovation occurs on these three levels, in order to have a meaningful impact on the organisation.

Driving innovation and growth

Fri, 16 Mar 2012 07:24:00 GMT

Whether your organisation is operating in a new or existing market, competitive advantage is always key to achieving growth. Such a competitive advantage is predicated on difference, which can sometimes be hard to attain.

Innovation is the driving force behind this difference, and as the leader of an organisation, it requires courage on your behalf to stand out from the crowd. You need to be able to look at, and do things differently to everyone else. In fact, a recent study surveying CEOs worldwide found that many perceive innovation as the single most important leadership competency.

Be that as it may, we know innovation and growth isn’t all that easy to achieve. For starters, competition is tough, budgets are tight, and creativity training doesn’t always work.

So what can you do, as the leader of your organisation? Do not worry - you’re not expected to be the primary source of innovation or creativity! But you do need to lead the innovation process, and recognise that your leadership innovation has the most impact in the organisation. How you focus your organisation is going to be the most effective way towards achieving growth.

The process starts with designing and building what I call the innovation architecture , which consists of four elements;

Your own attitudes and beliefs - This involves accepting you are unlikely to have all the capabilities to run an organisation, so create space for others to fill in the gaps. Furthermore, recognise that it’s possible to influence your own future, through your personal actions and decisions.
The organisational purpose and strategy - We know that clarity of purpose directs creative effort. So be clear about the organisational purpose - it’s not always about making a profit! You must be able to describe the core strategy of the organisation.
The organisational design and culture - Embrace and allow diversity to flourish in your organisation. Diversity in the ‘gene pool’ of your organisation directly relates to its ability to adapt to changing conditions through creativity and innovation.
The organisational practices and processes - Put in place practices and processes that legitimise ‘maverick’ behaviour - those who show they are legitimately engaged in seeking creative and innovative ways of doing things.

Before you embark on your journey towards innovation and growth, ask yourself whether you are trying to do it all yourself. Ensure you truly believe innovation is the key to growth. Be clear about the purpose of your organisation, and embrace diversity within it. Above all, be supportive of the practices in place - protect all attempts in achieving innovation and growth by providing air-cover for your people.

Does (management) education teach you anything?

Wed, 22 Feb 2012 00:43:00 GMT

It’s become quite fashionable these days to criticize the value of our education system. And I don’t mean the criticism focused on lifting Australian educational standards to match international best practice. This is necessary if we want to retain our place as a truly competitive nation.

No, I’m talking about the criticism that is leveled against the value of formal management education in driving innovation and creativity. The argument suggests that the structure and theory learned at college and university make people risk averse and unwilling to create new opportunities. They point to people like Steve Jobs, Bill Gates, Dick Smith and Kerry Packer to suggest that formal education serves little purpose in creating successful business enterprises.

Let’s get some perspective on the issue:

Yes, there are some dud management colleges and university courses where the qualifications aren’t worth much. Yes, there are many graduates from management courses and degrees who actually can’t do anything useful.

In general, however, bright and exceptional people (like Jobs, Gates, Smith and Packer) will usually succeed, with or without formal education. They have a natural ability to learn and adapt - and they generally identified opportunities early and didn’t bother finishing their education.

But most of us have to learn how to learn. We have to learn how to assimilate, integrate and analyse information to make intelligent decisions. We have to learn that correlation does not imply causation. We have to learn how to interpret outlier data. We need to know the history so we can build on what has gone before and not reinvent the wheel.

Colleges and universities teach us how to learn. They allow us to advance our own knowledge by building on the work of others. Once we have learned, it is our natural progressiveness or conservatism that comes to the fore. Our personality will then determine whether we seek to play it safe or go out and create new things. Now, maybe colleges and universities attract a high proportion of those who want to play it safe in the belief that an education will give them security. But that is quite different to alleging that a management education through college or university will suppress innovation and creativity.

Management education is an important ingredient in improving the overall effectiveness of Australian enterprise and our overall levels of productivity.

Norman is a Future Strategist and Organisational Architect. He believes in the value of management education and informed decision making.

There’s No Future In Predicting The Future

Mon, 13 Feb 2012 05:13:00 GMT

Living in the new normal

Conventional planning no longer works.

The new normal

The term “new normal” has been coined to describe this period of incessant change and uncertainty. It outlines the fact that we have new rules and dynamics in the global economy, new social and political structures, strong pressures from our distressed environment and a technology revolution that continues to disrupt all of the above.

Because the environment is in a state of continuous flux, our conventional planning approaches are no longer effective. Why? Because they rely on a series of assumptions for variables such as exchange rates, market growth and customer preferences.

These assumptions are nothing short of predictions about the future - bets we take about future conditions in order to achieve our planning objectives. When these prove invalid because of unexpected shifts in the environment, our plans become useless. No wonder that numbers of executives have abandoned planning in these uncertain times!

Developing strategy for the future

But it is possible to set strategy for the future. We just have to change the way we approach the challenge. Our research shows 7 key principles underpin effective strategy in changing and uncertain environments:

1. The future does not exist a priori

In essence, this means that the future is not predetermined or “waiting” for us to reach it. The future is not a reality that exists in another time dimension. Fatalism has little place in setting strategy for the future!

2. The future is a set of possibilities that can be influenced by our purposeful behaviour

The choices we make today will drive our actions. These actions will always have a set of consequences that we then “discover” tomorrow. The discoveries we make will then influence and shape the choices we make on the following day. And so, we can influence the shape of our future.

3. No monarchy has fomented its own overthrow

Because the elite in organisations and society usually have a vested interest in retaining their positions of power, it is difficult for them to envisage a future that is radically different to the present. Others, unencumbered by power and privilege, are better suited to studying and envisaging the future.

4. Embrace the uncertainty in the situation

Rather than attempting to predict the future, it is better to embrace the uncertainty inherent in a situation. Accept that events can unfold in different ways due to this uncertainty.

5. Recognise that alternative futures are possible

As the uncertainty presents different pathways for events to unfold, it is best to recognise that the organisation faces alternative futures. Instead of attempting to predict which future will unfold, accept that there are alternative futures with which the organisation will have to contend.

6. Focus on developing the capabilities needed for the alternative futures

The essence of strategy in an uncertain and changing environment is to understand the “winning” position in each of these alternative futures, and then to identify the capabilities that will be needed to support these positions. Capability development is the key to success in this approach.

7. It is better to be vaguely right than precisely wrong

As Clem Sunter ( 1 ) remarked, we cannot be precise about the nature of the future. Much like NASA’s journey to the moon, we set off in the right direction and keep modifying our approach as the information become more precise and we keep learning.

Planning is not strategy

Generally speaking, planning is about setting objectives and actions to achieve a goal. We make assumptions about future conditions and set firm objectives, based on what we know now. Strategy, on the other hand, is about positioning and equipping the organisation to deal with the future.

Strategy develops objectives as the future unfolds and learning occurs. The focus is on having the capabilities needed to deal with the alternative futures facing the organisation.

The future is not what it used to be

Implications for developing future strategy

The world has changed. The “new normal” means that our conventional planning approaches - with their emphasis on assumptions and pre-determined objectives - no longer work

We should not attempt to predict the future. Recognise that alternative futures are possible and should be accommodated

We are likely to need to assistance of those outside the power elite in order to envisage a range of alternative futures

The future can be influenced (and even shaped) by our purposeful behaviours

Our focus should be on building positions and capabilities for the alternative futures

Instead of running to where the football is, we should run to where the football will be.

This is different to the conventional approach for developing business and corporate strategy. But it seems more consistent with our views on organisations that learn and adapt to a constantly changing environment. Welcome to the world of future strategy.

References

(1) Clem Sunter, The Mind of the Fox, 2001

About the Author

Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!

Examine the Dark Side of your Leadership

Mon, 06 Feb 2012 01:00:00 GMT

Since working with leaders during the stressful period over the last 18 months, I’ve become interested in research that suggests your key strengths as a leader may well have a mirror image that produce major flaws in your style of leadership.

Research by Hogan and others (2007) seeks to uncover leaders’ dark sides by analysing what derails them under pressure. The research, conducted amongst 11,000 leaders in the UK, identified 11 “derailers” - strengths which turned into flaws under pressure.

In reality, each of these derailers is actually a potential leadership strength. The derailment occurs when the strength is overused. This is likely to happen when the leader’s confidence is too high, when they are inexperienced, or when they are under extreme pressure.

It is interesting to note that these strengths exist within many leaders as complete dimensions i.e. they possess the ability to display both the strength and the shadow side. We learn to manage the shadow side as we gain experience and stay grounded. Quite literally, we become skilled at mastering and controlling some of our less effective (and less attractive) impulses.

From Strengths --> Potential Derailers

Enthusiastic --> Volatile. Inconsistent behaviour - from enthusiastic to moody.
Shrewd --> Mistrustful. Others think you are prone to retaliate when you feel you have been wronged.
Careful --> Cautious. Overly cautious, rule-bound, and unwilling to take chances.
Charming --> Manipulative. Hard to advise, or might not evaluate the consequences of your decision.
Vivacious --> Dramatic. Over committed, impulsive and unwilling to listen - especially to negative feedback.
Imaginative --> Eccentric. Although creative, there is a tendency to be impulsive and eccentric.
Independent --> Detached. Self-sufficient, indifferent to feedback. May appear uninterested in other’s problems.
Focused --> Passive Aggressive. Inflexible, stubborn. May appear reluctant to be part of a team.
Confident --> Arrogant. Strong sense of entitlement. Opinionated, self-absorbed, unwilling to learn from mistakes.
Diligent --> Perfectionist. Organised, but your determination to do well every time makes you stubborn.
Dutiful --> Dependent. Careful to please your superiors, yet you find it difficult to make decisions on your own.

So, how can we manage some of the shadow side characteristics of our leadership? Here are some guidelines that might prove useful:

Maintain an awareness of your personal strengths and potential shadow side behaviours.
Remain humble and grounded about your strengths
Be careful of rapidly promoting individuals and simply assuming they will go from strength to strength. They are likely to take this as a cue that their strengths are valuable, and that they should use them more forcefully.

One more time with feeling – are there benefits in setting a vision for your organisation?

Wed, 18 Jan 2012 22:46:00 GMT

Many Australian CEOs are wary of setting grandiose strategic visions for their organisations. They don’t believe there is much value added to the business. And those that do use vision statements, often resort to rather generic statements like “being the best” or “creating shareholder value”. These don’t add much value for the people in the organisation either.

My work in the field of future strategy suggests three key problems in the way we use vision statements - and this may contribute to some of the cynicism that they often attract.

Firstly, vision statements are often somewhat generic and don’t relate to the specific nature of the organisation’s business. Vision statements need to pass an acid test to be useful - ie we should NOT be able to remove the name of our organisation from the top of the statements, replace it with another, and still have it make sense. So, to state that you want to offer the “best service” and be the “leading supplier of..” does not define your core purpose and the way you operate. Vision statements need to reflect the essence of your business - you need to be able to recognise the very DNA of the organisation in the way the vision statement is crafted.

Secondly, the vision statement should have the ability to impact on people’s behaviour - it should offer them guidance on how they should act or make difficult decisions. Vision statements that emphasise financial outcomes serve little purpose other than to motivate the few senior leaders that are rewarded on the profitability of the business. People don’t get out of bed to increase shareholder returns or improve asset utlisation - they are motivated by a desire to serve their customers or make a difference to the community they are part of. In any event, the purpose of a business is NOT to make a profit - this is simply one measure of how effective it has been in meeting its purpose.

Thirdly, if the vision statement includes a section on core values, these have to be carefully selected again to reflect the business of the organisation. Values that emphasise “innovation” and “change readiness” in an organisation where the strategy emphasises accuracy and efficiency is not only misleading - it may actually be counter-productive and result in destructive behaviour. In addition, I am suspicious of the “ten commandments” type values where things like “honesty” and “integrity” are listed. We should be able to take these for granted if we are decent human beings. If we can’t, it makes me wonder what types of behaviour occur normally within those organisations. Furthermore, these generic values offer little support for the particular strategy or way we seek to do business in the organisation.

In his latest book that examines the nature of successful organisations, Jim Collins (Great by Choice) reinforces the contribution made by clear statements of strategic vision and values. These are powerful tools for leaders wishing to improve the performance of their organisations - but they must be done right!

Leading with Loyalty and Betrayal

Thu, 12 Jan 2012 23:21:00 GMT

Many leaders measure their effectiveness by examining the loyalty of their people. They see it as a key ingredient for their success. When they perceive their employees to be disloyal, they feel let down, and even betrayed. Indeed, they might feel as if they have failed in their attempt to be a good leader.

But what if loyalty was not always important for good leadership? What if betrayal could be highly productive? And what if people, who “go against” their leaders in some form, are actually very important ingredients in the leadership of a high performance organisation?

In looking at leadership and organisations in this way, it’s important to keep in mind three key elements:

leadership is about the mobilisation of people rather than simply aligning them behind a plan;
both loyalty and betrayal are needed for high performance; and lastly,
leaders need to distinguish between those who “go against them” for reasons of high performance in the organisation (we can call them “mavericks”) and those who are “rebels” - people who go against the grain of the organisation for reasons of self-interest.

As organisations face increasingly uncertain times, leaders need to fully engage their people in the business of the organisation. Simply focusing on alignment means you potentially lose out on the diverse array of skills and opinions available - and these are vital for an organisation to meet the challenges in uncertain times. In this way, the challenge for leaders is to find a good balance between conformity to organisational purpose and diversity of opinion.

Conformity to organisational purpose - or loyalty - produces a virtuous circle within organisations:

Effective leadership produces loyal staff
Loyal staff deliver value-adding products and services
Value-adding creates loyal customers
Appropriate metrics measure customer loyalty so as to reward staff

However, there is also value in betrayal. In some cases, betrayal by people is motivated by a deep desire to serve the purpose of the organisation.

To be clear, betrayal in this instance refers to cases where a previous agreement has been betrayed because of a belief that this would better serve the overall purpose and values of the organisation. We can call this “virtuous” betrayal, and it may well be an ongoing part of effective leadership. As an example, agreements made at one point in time may not be in the best interests of the organisation at another point where conditions have changed. Therefore, the decision or action to “betray” the original plan may well lead to a better outcome for the organisation.

Loyal soldiers and automatons follow the organisation’s processes and agreed plans, while mavericks actively challenge these with their actions and decisions. While doing so, mavericks are nevertheless still aligned to the purpose and values of the organisation. They simply break the trust of an agreement in order to seek a better outcome.

There seems to be a strong case for increasingly utilising the skills of mavericks for the benefit of organisations in times of change. Mavericks are prepared to challenge the status quo, in order to achieve a better outcome. They become very valuable to organisations, and indeed, the very role played by leaders introducing change is one that encourages their people to “virtuously betray.”

HOW CAN I BE A FUTURE BUILDER?

Wed, 14 Dec 2011 16:28:00 GMT

We spend a lot of time talking about the processes used in Future Building (like scenario planning and environmental scanning), but I was recently asked by a client “what do I have to do (or be) in order to become a Future Builder?”

I have isolated four key characteristics that seem to characterise people who successfully practice Future Building. I’m sure there must be others, but these are the four that I find most significant:

A growth and learning mindset:

They seem to treat each day as a ‘school day’ and look for lessons to be learned. They readily seek new experiences because they know that they can learn new things from these experiences. And they accept the inherent uncertainly and discomfort that is created by being in a new situation, because they recognise that this is how they can broaden their repertoire of skills.

Prefer people over data:

Interestingly, I observed this by working with some really good market researchers! They obviously understand and respect the data they work with, but they also know that they will only truly gain new insights by immersing themselves in the situation they are researching. So, for example, they will go up close and interact with communities and markets so they can experience first-hand the behaviours and psychology of potential markets. Techniques such as ‘ethnographic research’ are becoming increasingly popular to generate breakthrough insights into markets and customers.

Avoid risky bets:

Future Builders do not appear to be high-risk operators. Instead, they adopt a fairly considered approach and seek to understand something before committing to it. Importantly, they are also not perfectionists who need to cover all the bases before acting. As Matt Church has highlighted, this is often a foil for procrastination and not wanting to subject your work to comment and feedback. They know that feedback is important in forming a well-informed view.

Rational optimists:

This seems somewhat contradictory, but Future Builders understand that rational optimism is not simply the opposite of pessimism. Instead, rational optimists have an understanding of the whole system of which they are part. They understand the possible leverage points and what can be achieved. It is a recognition of both strength and weakness; an interest in building the best as well as repairing the worst; and a concern for finding self fulfillment as well as serving the community. Rational optimists are realists, but their defining point of difference is that they don’t give up on themselves.

So, this is where I’ve got up to. What do you think are the key characteristics of Future Builders? I’d be keen to hear your views.

CHALLENGING THE NORM(AN)

Wed, 14 Dec 2011 16:25:00 GMT

Building the Future means Challenging the norm. We know that conditions have really changed in the post GFC environment. Economists refer to this process of continuos change and turbulence as the “new normal”. Adaptation and innovation is required just to stand still, let alone to grow and thrive. Being innovative often means that we have to question - even challenge - conventional and established processes. But to follow this approach blindly (ie always challenging convention) can be as dangerous as refusing to change and always following convention. Its useful to explore this issue a bit more broadly. Scientists and researchers refer to existing approaches as theories or paradigms. These represent short-cuts (the brain refers to these as heuristics) to solving problems or addressing challenges we come across frequently. It means that we don’t have to adopt first-principles analysis and problem solving every time we encounter an situation. This way, we “save” our energy and resources to address unique issues or challenges that really require some original thought. So, existing theories and paradigms are useful in that they allow us to be creative and innovative in areas that really need it. But sometimes, the existing paradigm “blocks out” information and presents us with an incomplete picture of the situation. Usually the blocked information is represented by “outlier” data - ie data that no longer conforms to the “norm” of the theory. In general, conservative people tend to ignore outlier data too long and don’t question the validity of the theory. Similarly, more radical thinkers tend to overplay the value of the outlier data and will question the validity of the theory at the earliest signs of data that doesn’t conform to the theory. Both approaches are dangerous - that’s why I said that being challenging the norm all the time is as limiting as never challenging the norm. So, the key is to judge where your innovation and challenging the norm is best applied.

I’m interested in your take as to when / where to challenge the norm..........

In praise of the Incomplete Leader

Wed, 09 Nov 2011 01:38:00 GMT

“Be a good leader. Be incomplete. Don't be perfect, don't even try............”

There is evidence that the best leaders are distinctly far from perfect and simply incomplete.

When I look at my personal skills, this is the best news I've heard in some time!

An older article in the July 2007 volume of the Harvard Business Review caught my attention recently. In Praise of the Incomplete Leader is the collaborative work of a group of authors that includes Peter Senge (the Learning Organisation) and Deborah Ancona. The article resonated with me from the first read of the summary tag line:

“No leader is perfect. The best ones don’t try to be—they concentrate on honing their strengths and find others who can make up for their limitations”.

The authors state that it is time to stop visualizing the complete leader as a person at the top who has all the answers. They go on to say that leaders shouldn't even try to fill the gap. As they say,

“….the sooner leaders stop trying to be all things to all people, the better off their organizations will be. In today’s world, the executive’s job is no longer to command and control but to cultivate and coordinate the actions of others at all levels of the organization. Only when leaders come to see themselves as incomplete—as having both strengths and weaknesses—will they be able to make up for their missing skills by relying on others”.

A quick summary of the author's findings suggests that a leader should focus on four essential capabilities:

Sensemaking: Trying to understand the contexts in which in which an organization and its people operate. Sensemaking is similar to creating a roadmap that the team can follow.
Relating: Building relationships within and across the organisation. Building a community of confidants who can collaborate to solve problems.
Visioning: Creating a compelling picture of the future. A leader should be able to articulate what the team wants to create.
Inventing: Developing new ways to achieve the vision. Similar to the innovation skills required of entrepreneurs, this is more about execution than creativity.

Furthermore, leaders should diagnose their strengths in each of these capabilities and seek help from others if they believe they are deficient. Some clues about your potential deficiencies can be summarized as follows:

So, give up trying to be perfect. Recognise your incompleteness and seek contributions from others. You’ll be a better leader for it.

Based on some ideas from David Rock, Deborah Ancona and Peter Senge

Coping with an uncertain future

Sun, 06 Nov 2011 06:48:00 GMT

From my research and work with successful organisations, I have isolated four key characteristics to cope successfully with uncertainty:

1. Developing a growth and learning mindset
A growth and learning mindset can set up a virtuous cycle. The key elements of this include:

Treating every day as a school day: A belief that life is a journey of learning and growth
Seeking new experiences to create learning opportunities: One can only learn by being exposed to different experiences
Accepting the uncertainty that accompanies these new experiences: In order to learn something new, the experience has to be different and therefore uncertain
Learning from new experiences to broaden your repertoire: The enhanced repertoire increases capability and effectiveness as a leader.

2. Preferring people over data
We should recognise that the traditional emphasis on “market-focus” can often obscure the real people who make up the customer base. We need to recognise the importance of focusing on people and their experiences rather than simply the data that measures market size and relevant demographics.

So, instead of simply describing the market by way of standard demographics and statistics, focus on identifying target groups who are characterised by particular lifestyles, product usage patterns or needs. Use research approaches where you can study and understand the real life experiences of customers.

Approaches such as these enable us to understand the needs of target customers as real people – thereby promoting value propositions that address these customer needs more closely.

3. Avoiding risky bets
Being successful in uncertain times does not mean taking big risks. Place small bets fairly quickly and then learn from the outcomes. Move on quickly and recognise that any failures from these small experiments are the price for learning and testing propositions. It’s the performance of the overall portfolio of experiments that counts – not the outcome of an individual bet.

As a consequence, you can be fairly conservative and tend to shy away from making large and risky “bet-the-business” decisions.

Allied to this is the fact you should be wary of describing yourslef as a perfectionist. In a way, perfectionism may be interpreted as a fear of having one’s work judged and receiving feedback – hence the need to continually avoid releasing it. In addition, the notion of “completing something to perfection” connotes that there is no more to be achieved or learned. We should favour the view that preparing for the future is an ongoing dynamism – something that keeps moving as you learn and develop your capabilities further.

4. Being a rational optimist
Rational optimists believe that they can and will make progress by pursing a bold, but sensible, approach. While they hold an optimistic view of life, they recognise that optimism is NOT necessarily the opposite of pessimism. It is not the idealistic belief (or hope) that things will get better simply because they want them to.

Instead, rational optimism is a balanced understanding of the whole system of which they are part. It is recognition of both strength and weakness; an interest in building the best as well as repairing the worst; and a concern for finding self fulfilment as well as serving the community. Rational optimists are realists, but their defining point of difference is that they don’t give up on themselves.

So, what does this all mean?

Thinking differently about the future is a key part of dealing effectively with uncertainty, and being able to create a viable future for our organisation. We need to adopt a growth and learning mindset; look behind the data to understand the people in their markets and organisations; avoid the risky “bet-the-business” decisions as they seek competitive advantage; and understand the whole system of which they are part.

By following these practices, we can improve our effectiveness in an uncertain and challenging world.

Go and create your own future!

Is good leadership a feminine thing?

Mon, 24 Oct 2011 07:50:00 GMT

Something different is happening

You’d have to be asleep not to notice that conditions have changed - and times have become far more volatile and uncertain. Some observers have even proclaimed that it is now the “end of business as usual” . These are clearly challenging times for organisations and leaders alike. We are being asked to consider significant changes to the way we design, build and lead our organisations - whether they are large corporates, small startups or not-for-profits.

This has placed enormous stress on managers and leaders at all levels in the organisation. As I work with my clients, I am witnessing signs of anxiety and even depression as they adjust to the new conditions. Many of the tools and practices they mastered on their way “up” just don’t seem to work any longer. Some try harder in the hope that things will turn around, while others just seem resigned to the fact that they may be failing in this these conditions of “new normal”.

Why are we struggling?

My observation is that many organisations are dominated by the so-called “masculine” values (Carl Jung’s definition) that emphasise competition, independence and discipline. Contrast this with the “feminine” values as described by Carl Jung.

For example:A review of the challenges that these organisations face reveals that they are likely to require a better balance of the so-called masculine and feminine values.

the new competitive landscape places an ever greater premium on the ability of organisations to add superior value to their customers. Adding value to our customers becomes more important than focusing on what your competitors are trying to do and trying to “beat” them. As a metaphor for strategy, “love” seems more appropriate than “war” - see my previous blog “ Strategy as Love ”. And the feminine values seem more accepting of this way of thinking.
in a fast changing environment, competitive advantage is generated by the speed of learning and the ability to integrate the various organisational processes. Building bridges and interdependence across the organisation is an important leadership capability - again favouring a more feminine approach.

I’m not suggesting a wholesale shift towards feminine values in our organisations. This would create another set of weaknesses similar to those created by the dominant masculine model. But I do believe that a better balance between the two is required. We need to recognise the strengths and limitations of each, and aim for a more integrated approach.

Some suggestions for moving forward

Many writers have suggested approaches that would produce more integrated and realistic leadership to organisations in the “new normal”, but I have added some from my own research and observations:

Share your visions and principles generously: Leaders should, wherever practical, share what’s on their mind and their overall intentions. This may seem like exposing yourself - particularly if things do not work out! But how else can you expect your colleagues to act in the best interests of the organisation if they do not understand your vision?
Engage your people: This means that you have to do things with your people, and get involved in their work. We are not suggesting that you micro-manage them, but simply that you show an active interest in what they are doing and make yourself available to give them ongoing guidance and encouragement.
Argue strongly with your colleagues: At first, leaders may shy away from the notion of arguing with their colleagues. After all, we don’t want to encourage conflict unnecessarily! However, arguments are an opportunity for leaders to express their opinions, to stand up for what they believe in and to achieve real consensus. The issue is to stimulate conflict and disagreement so that people are compelled to put their assumptions on the table.
Know when to be a follower: The important counterpoint to leadership is followership. Without followers, there can be no leadership. Knowing when to follow is an important attribute of a successful leader. However, one reason why some leaders are reluctant to follow is the notion that they are somehow expected to know everything, or always be right. Clearly, this is not a realistic approach in an organisation dealing with complexity and high rates of change.

Both the masculine and feminine sides of the coin are valid. I am not suggesting that traditional masculine value be swept aside. They have contributed much to the success of our organisations until now. But these values have to be complemented by a feminine approach - one that enables us to deal with a far wider range of uncertainty, complexity and change.

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Strategy is like love – not war

Tue, 18 Oct 2011 04:13:00 GMT

Thinking about Strategy

Most of us have, at one point or another, sat through a strategic planning session that addressed our organisation’s position in the marketplace, our mission and objectives, our strengths, weaknesses, opportunities and threats. Most of this is based on the assumption that we are under some form of attack from competitors and that we have to win in order for the business to be successful. This “military” model reflects much of the traditional thinking about strategy – and makes sense when we recognise that the word strategy comes from the Greek word “strategos”, the art of the general.

On a recent visit to the USA, I had an interesting conversation with MIT Sloan School professor Arnoldo Hax, a well-known strategy expert and one of the authors of the book The Delta Project. We spoke about his approach to strategy, called “The Delta Model” (which is the title of an article he co-authored for MIT Sloan Management Review in 1999).

Customers or Competitors at the Centre?

Most of the major frameworks of strategy start by recognising that the essence of strategy is to achieve competitive advantage. Potentially, this mindset can be extremely limiting, because it puts competitors at the centre of your thinking. And if you do that, then there is a tendency to watch your competitors and try to imitate them.

That imitation can create sameness. Sameness will never bring greatness, and, even worse, its final result is something which could spell disaster for a business - commoditisation. Commoditisation results in a business in which there is little that differentiates your offering. All you can do, therefore, is to fight for price. That leads to a very aggressive rivalry. In order for you to win, you have to beat somebody and sell at the lowest price.

This is strategy as war, and as we know very well, it is not a very effective way to manage a business. Wars just create complete devastation; they are the worst thing that could happen to mankind, yet we use that as a simile for management! Surely it’s not the best metaphor to use.

Now, if competitors are not at the centre of management, who is at the centre? For many, the answer is obvious. The customer is. The customer is the driving force. You have to start by deeply understanding the customer’s requirements and how you can add value to the customer in the most effective way. This changes completely the way you plan on and make decisions. You are now focused on LOVING the customer instead of making WAR on the competition.

Instead of trying to imitate somebody, you try to separate yourself from the rest of the pack. You try to produce a value proposition which is unique, which is differentiated, which adds value to the customer and expresses a great deal of care and concern for the customer. That value proposition should be based on mutual trust, mutual learning, mutual benefits, and transparency. This is strategy as LOVE.

Love can drive out commoditisation

Strategy as LOVE can also provide some useful insights for people who believe they are in a commodity business. In reality, the product you sell may be a commodity, but you are rarely in a commodity business. Take copper for example. The product cannot be differentiated, which makes it a commodity product. It’s hard to day that Australian copper is superior to Chilean copper. But when you think of copper as a business with customers, you see the differences. Siemens uses copper in their power plants, Ford uses copper in their cars, Carrier uses copper in their air conditioning units – the copper is used and adds value differently in each case.

The customers are all different, and if you do not understand that, if you do not seek to understand deeply the needs and ways of the customer, you are commoditising the business. Strategy as LOVE is a way of addressing this issue and recognising that the customer should be at the centre of strategy.

Business planning reduces your learning

Mon, 17 Oct 2011 06:13:00 GMT

I've been reading the usual round of business journals and magazines and am constantly reminded of the need to do business planning. "if you don't know where you're going, how will you know when you get there", "we can't be all things to all people" etc etc etc.

I can't help thinking that much of this advice - ie the need to do business planning - is not entirely helpful in these uncertain and changing times. Certainly, we need good strategy when the environment is turbulent, but strategy is different to planning. And planning can also inhibit learning and adaptation - important attributes when things are changing.

So, what's the difference between planning and strategy? And how does planning limit learning and adaptation.

Planning is an event-driven process where we set an initial objective, and then pursue it via a program of action. The objective is set at the outset, and the action plan is a way of focusing our resources around a priority.

Strategy, on the other hand, is an ongoing, iterative process where the emphasis is on learning and adaptation. While we have a broad intention at the outset, detailed objectives are not set at the beginning - because (by definition) we we don't know what issues will be encountered along the way. Objectives emerge along the way as we learn and adapt. Consequently, strategy is better suited to uncertain and changing conditions where there is a need to learn and adapt to the changing environment.

So, when we undertake planning, we tend to focus almost single-mindedly on the objectives, trying ever harder to achieve them. This single-mindedness often drives out learning and adaptation. And this can be quite disastrous when things keep changing.

See my article for a fuller description of how to craft strategy in uncertain and changing environments.

Norman Chorn

Part 3: Accelerate Performance With Strategic Alignment - Develop The Appropriate Culture

DEVELOP THE APPROPRIATE CULTURE FOR YOUR STRATEGY

DEVELOPING THE APPROPRIATE CULTURE REQUIRES FOCUS AND TRADEOFF

ALIGNMENT IS THE KEY TO BETTER PERFORMANCE

About Norman

Part 2: Accelerate Performance with Strategic Alignment - Define the Logic of your Strategy

FORCES THAT SHAPE YOUR STRATEGY

UNDERSTANDING THE STRATEGY TYPES

A KEY LESSON

About Norman

Part 1: How To Accelerate Performance with Strategic Alignment - Understand the Logic of the Market

Do you know what will help your organisation perform better?

Forces that shape the market and strategy

Understanding Different Market Conditions

What's the overarching logic of the Market?

The next step - Defining the appropriate strategy

About Norman

Why Aligning Culture and Strategy Improves Performance

What drives organisational performance

What is Strategic Fit and How Does it 'Fit In'?

3 Steps Leaders Can Take to Strategically Align Culture With The Business Strategy

1. Clearly Define The Business Strategy With Respect to 'How we Will Win' in The Market

2. Identify The Key Elements of The Culture to Support The Strategy

3. Adopt a Leadership Style That Will Actively Shape The Required Culture

﻿

Creating a Strategically Aligned Culture

About Norman

Get out of the Dark Room to Build a Clear Strategy

The Analogue approach vs Digital approach

Why a Digital approach?

What are the key differences between an analogue approach and the digital approach?

How do we achieve the digital approach/methodology to create a clear strategy?

The 3 Horizons of Strategy - What it Really Means

About Norman

How Successful Leaders See Into The Future

How many times have you expressed frustration at your inability to have a clear view of the future in your organisation? It’s so obvious that things need to be done differently — but we are unable to see what the future holds.

1. Treat uncertainty as your friend

2. Embrace risk in your strategy

3. Use examples from other sectors to build new analogies

4. Separate planning and strategy activities

Seeing into the future

About Norman

How to Integrate the Biology of Risk into your Leadership Practice

Given that uncertainty and risk present a threat to us as leaders, how do we move past the tendency to simply ignore it and hope it will go away?

What is the biology of risk?

How does the biology of risk affect leaders’ risk appetite?

Managing the biology of risk to promote entrepreneurial behaviour

1. Be conscious of the effect of uncertainty on your own risk appetite

2. Avoid continuous volatility and uncertainty within the organisation

3. Introduce planned volatility and novelty through a program of Agile Sprints and / or Scenario Planning

About Norman

Strategy + Innovation - An Unrequited Love

What’s love got to do with it?

Putting customers at the centre

How does innovation fit into this strategy?

Developing an innovative strategy

Stage 1: Develop a future strategy

Stage 2: Overcome constraints and focus the innovation process

Stage 3: Implement an effective innovation process

Bringing it all together to develop an innovative strategy for the future

References:

About Dr Norman Chorn

Build Strategic Resilience by Adapting Organisational Processes and Functions

Resilience is not an evolutionary process ﻿

Why “Exaptation” is the driving force

Why apply Exaptation to Strategic Resilience?

Principle 1: Best practice may no longer suffice

Changing the best practice view of uncertainty

Principle 2: Unlearning and relearning is the new wisdom

Rethinking and relearning strategy

Principle 3: We cannot control or know everything

Adapting the use of control to achieve strategic resilience

Strategic resilience through exaptation

References

About the Author

Agile Organisation — Is it The Silver Bullet or a Hidden Problem?

Agile Methodolgies Offer Much

Agile May be an Antidote to Bureaucracy

Strategy as Part of Agile

Resilience is not an evolutionary process