Navigation Guide for Organisations Sailing the Edge of Chaos
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Article 4 of Chapter 1: Complexity Management
The Action (EXPERIMENT)
“Self-organising systems may seem risky because you can’t predict what they’ll do. But Mother Nature—and, increasingly, the experiences of successful firms—teaches us that self-organization can be robust and competitive”.
David Ticoll
Much is known about systems at or near equilibrium, yet we are just beginning to discover the basic principles that govern systems far from equilibrium. In the previous article we reviewed some of them and concluded that, instead of trying to consolidate a stable equilibrium, it would be preferable that modern organisations that operate in an environment of high unpredictability and sustained change aspire to position themselves in a region of controlled instability, by edge of chaos. They should embrace disorder and instability as allies for their own benefit and not as foes to fight. The members of an organisation in equilibrium with their environment are trapped in immutable work patterns and attitudes; far from equilibrium, behaviour can be changed more easily. Cooperation between individuals with sufficient autonomy will spontaneously arise new, a priori, unforeseen and unimaginable organisational scenarios, but highly efficient, innovative and adaptable. We cannot control the outcome that will emerge, but we can create the right conditions for emerging self-organisations.
Attempting to fully transform a hierarchical model into a self-organisation is not only an extremely complicated effort, but also reckless. However, the potential of self-organising systems to improve competitiveness and nimbleness to respond to perturbations is resulting as the option of choice for managers of classically structured companies. For example, Amazon, Apple iTunes, and Netflix are hierarchical “liquid” businesses that base much of their success on skillfully facilitating self-organising exchange. Interestingly, there are also forms of this type of hybrid business in the world of “solid” companies, such as W.L. Gore or Toyota’s supplier network.
The challenge for the 21st century leader is to manage the tension and boundaries between centralised control (production efficiency) and distributive self-organisation (innovation and change in an unpredictable environment), creating a common space for the coexistence of both cultures. In this chapter we will give some guidelines as aphorisms for organisations that intend to venture to navigate the frontier of chaos.
- Find the right balance between productivity and adaptability in your business and adopt the most effective operational and organisational systems in each context.
- Define the strange attractors and equilibrate with the stable attractors.
- Generates an excess of free energy and reduce the activation energy.
- Work management is underpinned by the teams, not by the organisation chart.
- More jazz, less symphony.
- More sense & respond, less predict & plan.
- Establish non-linear relationships based on feedback.
- More culture, less strategy. More trust, less expectations.
- Reward behaviours, not only accomplishments.
- Think networks, not pyramids: map and understand your own organisational network.
- Grow talent on soft (conductual) skills as well as hard (technical) skills.
- Imagine new ways of working and interacting which are better aligned with self-organising systems.
In a nutshell, innovative organisations and people teams today must operate on the frontier of chaos, navigating an environment of enormous volatility, uncertainty, complexity and ambiguity. All the navigation rules hereby proposed can be summed up as follows:
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In an unpredictable world that is constantly changing, the key to future success is
Likely, you will share with me that the guidelines suggested here, far from taking us to an unexplored and unknown territory, represent a return to our roots and reconnect with Nature: Be Water, and Nature, My VULCANian Friend”.
In the next installment of the blog we will close the Complexity Management chapter around this idea about .
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In this series of articles on “Complexity Management” we have focused on the new organisational models that prioritise adaptability, leaving more aside the conventional organisational models that seek productivity. As we already said, both systems not only can, but must coexist. In the previous article we pointed out some of the characteristics of these emergent self-organising systems: (1) few and simple rules, (2) non-linear responses, (3) effective communication between individuals, (4) existence of free energy, (5) existence of strange attractors and (6) decentralised and distributive network relationships. We have developed this navigation guide about them.
The stable attractors, typical of production systems, have to do with regulations and their compliance, standardisation, the implementation of “best practices”. But beware: they inexorably create a culture of vigilance and sanction, more or less embedded.
The strange attractors characteristic of complex and emerging organizational systems intend to preserve survival, efficiency and competence in unpredictable environments that require quick and flexible responses. The best strange attractor for an organization of people is having a collective mission. It is about identifying and embracing a common purpose, sharing a dream, an ambition, an aspiration. This creates a culture of trust, which guarantees retention and future sustainability, as well as the attraction of external individuals or organizations.
Transformations only occur if they are thermodynamically and kinetically favourable, that is, if there is free energy to be consumed and if the activation energy is low. The excess of free energy in your system guarantees that transformations will occur spontaneously. Keep people excited, motivated, engaged in the common purpose. Empower individuals and teams. Create the work environment that fosters it. Although there is no one-size-fits-all solution, bear in mind that personal growth is one of the most powerful motivators for people, as well as their sense of making a significant and unique contribution. In short, make individuals feel happy. B y doing so, they will find themselves energised and committed to the collective purpose. The processes consume and transforms free energy, so its renewal is a constant need.
Regardless the potentially high final benefit (favourable thermodynamics), changes that require high activation energy will not occur in practice (unfavorable kinetics). If you want to catalyse and accelerate change, reduce this energy. Analyse the barriers that have to be broken and facilitate the creation of new structures. Identify the cast of characters for change (e.g. champion, agents, sponsor and target) who have to be engaged and influenced, define the roadmap, and establish the rules of the game (NB: “Change Management” is a work methodology in itself).
“The human being dedicates his efforts to work to be able to enjoy and live a rich and rewarding life (…). It is necessary to simultaneously satisfy the pecuniary needs of the workers and their other needs. Above all, the satisfaction of doing a good job. Second, the satisfaction of cooperating with a colleague and receiving the approval of others. Third, the satisfaction of seeing an institution grow and reach maturity”.
Ryoichi Kawai (President of Komatsu)
Teams are the smallest functional unit around which the organisation pivots. Everything must be done with them and for them: teams at the helm. They must be endowed with sufficient autonomy to design and govern by themselves. Each individual must feel empowered enough to accept accountability and make decisions. Do not allow the verticality of the pyramidal organisation to constrain the action of the teams. Think of the horizontal dimension and create matrix teams with space and capacity for action and set their own self-management and hierarchy. This does not mean that the teams work in isolation, but on the contrary, they must be nested and networked. This entanglement and interconnectedness are the key to unlocking the full potential of an organisation. As a credo of the Haida indigenous culture says, “Everything depends on everything else.” Each member of the team must channel their energy to align with the collective mission, the frequencies of each individual must enter into resonance with the rest of the team and this with the rest of the teams.
Koldo Saratxaga stated this metaphor to explain the differences between two types of efficient organisation for the performance of music. In a symphony orchestra the main communication is established between the conductor and the musicians and between the musicians and their respective scores. Musicians must follow the conductor’s directions without hesitation. What if the director fails? The players cannot get out of the script, they follow and obey him or the composer through the score. They always play a score written by a “genius”, not by them. The conductor and the musicians can print nuances and give their personal flavour. Once on stage, everything is precisely fixed: the acoustics, the auditorium, the audience. The orchestra-audience interaction is unidirectional, there is hardly any feedback. The environment is stiff.
In jazz, however, improvisation, initiative and creativity prevail. There is a basic melodic line but always open to modification within a harmonic pattern which acts as the structure sustaining the work. It is a team that innovates and creates without anyone directly leading. All its members communicate with each other. They play their own music. The lead role switches from player to player along the rounds of improvisation. The band communicates with the audience and can respond to the stimuli received. If something unforeseen comes up, they will sort out gracefully, since they resist environmental disturbances, they are flexible.
In self-organizing human teams, let’s think more about Jazz and less about Symphony. Or if you prefer dancing, “more milonga (an event in which several people get together to dance tangos, without a priori knowing what piece you will dance or who your partners will be, since the invitations happen spontaneously) and less ballet“.
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In a volatile, uncertain, complex and ambiguous (VUCA) world in continuous transformation, predictions are short-lived, making plans useless. With the colateral damage of promoting a feeling of failure and frustration. Instead, it is more effective to adopt cultures, organisational structures and ways of working that contemplate setting a comprehensive dashboard as control panel to continuously monitor reality, analyse changing patterns of behaviour and respond by adjusting to the demands of any new or unforeseen stimulus. From the observation and analysis of these patterns or trends, we will be able to develop the necessary knowledge to establish models and perform simulations. Our strategy needs to change from one of trying to predict the future to adapting to it as it unfolds. Developing the ability to “self-reprograming” or what in the automotive industry is called DSR (Dynamic Steering Response). We have to be able to replace the illusion of control and planning of the future, with the conscious sense of a changing reality. Better we anchor ourselves in the present than to be paralysed by analysis and predictions.
“Plans are useless. Planning is indispensable“
Dan Aridor
One of the properties of complex self-organizing systems is the existence of non-linear relationships between their constituent entities. This leads to the propagation and potentiation of behaviour patterns with unpredictable effects (“butterfly effect” reviewed in article 3). These relationships are based on feedback mechanisms in which an effect has a consequence on its cause. These closed signaling loops are more resistant to external perturbations and have the ability to self-correct. In the field of people organisations, it is translated at two levels: the environment and the individuals. As we said in the previous section, the organisation must be in a continuous surveillance and monitoring system of how its actions impact the environment, to sense its stimuli and thus respond to disturbances. In the field of individuals and teams, it is about establishing a culture of interrelations based on effective, honest and constructive communication. Each personal or team action will have an effect not only on the environment, but on other people and teams in the organisation. Constructive critical review is essential to provide feedback to the system and ultimately adapt for the sake of greater efficiency in future action.
Peter Drucker said that “Culture eats Strategy for breakfast.” In the VULCAN world (see article 1 of this series) in which we live, this idea is more relevant than ever. Strategy is the emergent result of culture, not the cause. It is culture that endures as a fundamental part of the collective dream and the one that will give coherence and generate the different strategies that the organisation requires in the search for results. Be more concerned with establishing an adequate culture among the individuals of your organisation and replace precise strategic action plans in the short term with behavioural patterns and the pursuit of efficiency towards long-term objectives. Enforcing the designed plan is a fallacy and being obfuscated by achieving it is an error that can lead to blurring of the final objective. Product specifications should not make us forget the ultimate need to satisfy: “When the wise man points to the moon, the fool looks at the finger” (Confucius). A trust-building culture is more cohesive than creating expectations based on a volatile and fallible strategy. As we said before, self-organizing systems only require simple rules and regulations to create complexity, so simplify behavioural values and expectations.
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Organisations that prioritise productivity and strategy reward deliverable end-products and efficiency of performance. If you want to promote a decentralised, distributive and self-managed culture, how to achieve the accomplishments is as important as themselves. Therefore, reward behaviours as well as productive successes.
It is difficult to mentally escape from the pyramidal scheme of organisations. Human groups in business feel more comfortable with the vertically hierarchical, the gravitational, the Newtonian distributions; it is easier to control something static and distributed unidirectionally, that is, from top to bottom or vice versa. However, even in the most hierarchical organisation, networks of relationships will have naturally emerged among its individuals, which function as a reality parallel to the organisation chart, unknown or latent. These networks constitute a dynamic and self-organising system, that is, complex and largely unpredictable. It is necessary to be aware of these networks and unveil them. To map and know an organisational network, it is not enough to identify its individual entities (nodes), but it is necessary to describe the connections (edges) between them: the typology of the nodes (role and responsibility of people in terms of the generation of knowledge and the decision making) and their relationships (connections), quantify the size of the resource that each node has, the properties of the connections (flow, directionality, distance), the topology of the structure (how the nodes and connections are ordered, centrality, distance, grouping, intermediation). Last but not least, estimate the drivers or attractors that bind the elements of the network together in order to define its necessary degree of robustness, dynamism, productivity and adaptability.
(NB: There are many software applications to create, analyse and visualise social networks, eg Social Network Visualizer, SocNetV, is a free, user-friendly and open-source platform).
In a horizontal network structure, hierarchies also exist, but in this case, they are established by the value and criticality of each of the nodes (individuals) and the connections (relationships) in which they contribute. Leaders will emerge naturally in the network if enough freedom and autonomy are given. Two types of leaders coexist in the organisation: those imposed by mandate (potestas) and those socially recognised without the need to be linked to an established power (autoritas). The latter base their authority on their wisdom and the trust granted by the rest of the individuals. The potestas is imposed, whereas the autoritas is graciously given by those who are to be led, establishing a greater, more effective and lasting degree of commitment. Ultimately, the network organisation fosters the emergence of leaders who are wise masters and mentors rather than commanders, who leverage the authority granted and not the power imposed.
And if even so the pyramidal and vertical culture prevails, foster bottom-up flow and think of working on horizontal matrix teams across vertical lines of the organisational chart.
“The strongest, the richest, the most popular, but the wisest should decide on a ship”
Plato
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Navigation in an unpredictable, changing and almost chaotic environment requires the development of new skills that were not so important in the past and that have more to do with behaviours and attitudes (soft skills) than with technical knowledge (hard skills). It is necessary to develop skills for interpersonal relationships, which nurture a pleasant work atmosphere compatible with open communications and critical review. Not all individuals in the organisation are trained or used to working in an agile, adaptable and self-managed team. Nor do they start from the same background, since these skills are associated with the personality of each individual. However, we can all grow the innate talent that we possess. The first step is self-awareness of our weaknesses and limitations: what mental barriers are precluding us from making decisions under uncertainty, why we are hesitant to change if we assume it as unavoidable and beneficial, what psychological tools can be developed to overcome these obstacles, etc. In this context, the transmission of knowledge and experiences accumulated by individuals in the organization through mentoring by senior individuals is especially valuable. The early-career professionals of the 21st century are nomads of knowledge (“knowmads“, as John Moravec calls them), who will never stop acquiring new skills that are yet to emerge. Talent growth and career development are two of the most powerful drivers for the retention and attraction of people, key factors in the sustainability of a culture and collective project.
(NB: Decision-making and Change Management are themselves methodologies that deserve to be dealt in more detail in separate chapters).
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It is clear that the ways of working must be in accordance with the type of organisation we envisage to implement. The production line scheme suitable for the Industrial Revolution 1.0 is not compatible with an adaptive organisation that moves on the frontiers of chaos. There is vast experience and knowledge on new methodologies for innovation whose review is not the subject of this article (e.g. Agile, Lean Startup, Design Thinking, Six Sigma, etc.). Nevertheless, an example of these new mindsets and ways of understanding professional relationships is Dragon Dreaming. Projects must be understood as an evolution along the following phases:
- Dream: share your dream and pass your enthusiasm on to the team that you build to help you make it come true.
- Plan: (a) define goals, (b) focus, elaborate and filter the alternatives and (c) organise tasks, responsibilities, budget and timelines. People don’t plan to fail, and that is why they fail to plan. The vast majority of projects do not follow the pre-established plan. As we have discussed previously, this generates frustration and blame. We must embed uncertainty into our way of planning by implementing frequent feedback and reprogramming mechanisms.
- Do: once the plan is designed, we believe that success is guaranteed as long as we take care of a correct execution. However, the biggest challenge to achieving the dream is in sustainability. Many projects fail because they have not properly managed discouragement and fatigue and because they do not have a good succession and renewal plan. We must find a way to recharge the energy of individuals and teams. A frequent cause of inefficiency and discomfort in teams is the lack of clarity in the roles and responsibilities of team members. Define the role of your cast of actors in the project (what does who in the RACI matrix: responsible, accountable, consulted, informed) and in the process of change (CAST: champion, agent, sponsor, target).
- Celebrate: it is the way to connect the “Do” with the “Dream” and fueling the team with emotional energy. There are more occasions and reasons for reward and celebration than the mere achievement of ultimate success. As we said in a previous section above, think about behaviours and not just about accomplishments.
“The Sapiens secret to success is large-scale flexible cooperation”.
Yuval Noah Harari
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