Navigating strategic complexity Part II

Posted on Posted in Uncategorized

Last month I suggested that organisations should continue to draw on their existing planning, budgeting and strategy processes for insights. This is because these provide an array of data that is both valuable and actionable. For example, organisations with sales and marketing teams collect real time and forecast data from their customers that is helpful in short to medium-term planning – both in guiding decisions and as an adjunct to support change, especially timing implementations.

I also suggested that in times of high volatility, uncertainty, and complexity when coupled with ambiguity of the meaning behind data (VUCA), organisations need to establish, enhance and expand their foresight capability too. This suggestion was made for multiple reasons, namely to:

  1. Help loosen the grip of current ‘comfortable’ patterns of strategic thinking,
  2. Engage a larger population of the organisation in data collection and interpretation, and
  3. Develop useful frameworks to help make sense from VUCA information.

In other words, in order to deal with the world as we find it we need a range of ways of ‘seeing’ that are helpful rather than restrictive.

Roger Martin and Tony Golsby-Smith have a thoughtful article in this month’s HBR 1. Some of you who follow my blog may think that they have plagiarised my ideas (yes, I am being facetious). They ask the question that many have been asking for some time2, what is the best way for management to ‘see’ the world? They propose a simple “can/cannot” test for evaluating the ‘changeability’ (my word) of the phenomena being studied. In applying this test, the authors are essentially asking whether the subject being investigated is governed by rules that make the control of the subject beyond that of any human. If the subject is not governed by immutable ‘natural’ laws it can be changed by human intervention. Martin and Golsby-Smith go on to suggest that “Executives need to deconstruct every decision-making situation into cannot and can parts and then test their logic.” The reason? Well, because much disruption occurs in the “can” space that is most often evaluated as “cannot” space.

In the context of this article, strategizing with the aid of lookback data fits into the empirical world of ‘natural science’. It is quantifiable and retrospectively explains cause and effect. The risk is, as with investing by assuming past performance will predict future performance, that we are basing a strategy on the assumption that the world will behave in a similar way to what it did previously. In other words, our data, and many of the mental models that employ it, are about the past but our decisions relate to the future.

The key point of the two blog articles in this series accords with the views expressed by Martin and Golsby-Smith 1, namely that management needs to engage with paradigms in addition to that of natural science empiricism and include social science and even social justice research and methods. This because the world ‘sees’ diversely and acts in ways that do not always follow generalised expectations. And if strategy is to be effective in dealing with this diverse world then it will need to learn to resonate with it, rather than expect it to yield to the expectations of one group of managers.

If you buy my argument to this point you may be wondering how to go about embedding foresight approaches into your strategy formation activities in a way that sets the organisation up for the best possible outcomes.

My experience suggests that the shift has to be undertaken both with sensitivity to the culture, arrangements and skills of the organisation, and to the nature of the challenge it faces externally. Internally, the job is not just to acquire skills in qualitative research methodologies but in interweaving skill with processes, structure and culture that build capability with an action orientation.

My suggestion is to be patient with this change. The shifts in mental models required to gain value from alternate paradigms is not insignificant. Much of western culture, its education and conceptions of organisation are founded on the scientific paradigm. So, whilst teams might intellectually understand the value in changing, ingrained patterns will prove challenging. The conflict that can arise from discorded perspectives will require considerable attention. Accordingly, set a pace that is a bit of a stretch but not one that will tear at the fabric of current organisational performance.

Externally, a case for change will revolve around urgency and opportunity. For example, in attractive sectors where competitive advantage is maintained due to “can” structures, disruption is going to be more likely. Much can be learned by studying successful disruption and looking at structures, beyond the hype of technology, that have given way to create new competitive fields.

Whether or not you make the decision to include foresight into your strategy formulation capability will be determined by the diagnosis you make of your current situation. Therefore, my final recommendation is to be mindful of the insidious nature of human cognitive biases. It can be easier to justify not changing than to genuinely grapple with the possibility of a need to change. Here I suggest not only considering additional external points of view, but to begin to explore and understand notions that you would normally consider to be irrelevant to your organisation. One way this can be done is by reading much more broadly than you would do normally, and to deeply reflect from both the author’s perspective as well as your own.

This last point about reflection is especially valuable should you find yourself in disagreement with the author. Writing a journal entry on what it is you disagree with, and on what basis, can help open access to assumptions that may have been previously missed. It is these assumptions that are a major contributor to the camouflage of “can” with “cannot”.

  1. Management is much more than science https://hbr.org/2017/09/management-is-much-more-than-a-science
  2. See for example Reframing resistance to organizational change by Robyn Thomas and Cynthia Hardy http://econpapers.repec.org/article/eeescaman/v_3a27_3ay_3a2011_3ai_3a3_3ap_3a322-331.htm and the more radical Against Management: Organization in the age of Managerialism by Martin Parker http://au.wiley.com/WileyCDA/WileyTitle/productCd-0745629253.html

Photo by Joshua K. Jackson on Unsplash