Leading Systems

Martin Fischer Martin@FischerAssociates.org.uk

It’s not what you don’t know that’s the problem, it’s what you know that ain’t so.

—Anonymous (American)

The real voyage of discovery is not to travel to distant lands, but to see with new eyes.

—Proust

Social Construction of Leadership

2020 leader as: Systems “regulator/storyteller”? Keeper of the rules of engagement? Network “manager”? Ecologist? __________________

Leader as designer of system (2000)

Leader as source of power (1910)

Origins of Ideas

Courtesy of The General Libraries, The University of Texas at Austin.

Social Construction of Organizational Structure

Solution Structure Managerial Framework

Right people (nepotism) Court Mentoring

Bureaucracy Hierarchy Procedure

Expertise Profession Supervision

Incentives Corporation Pay/promotion

Compliance Regulation Training/framework

Most Organizations Fail

Average life of S&P firms has fallen from 65 years (1920 to 1930) to 12 years (2000).

In the last 55 years only 17 firms survived the period, but all but 1 had a return on investment less than the overall market gain.

It seems that companies either fail rapidly or, if successful, create an identity and lock into it.

Usually, after some time as a successful company, performance weakens, the company is acquired or it simply ceases operation.

Average Time in S&P List (Years)

S&P = Standard & Poor’s.Source: Cranfield University School of Management.

Graphic courtesy of Prof Peter M Allen, Complex Systems Research Centre, School of Management, Cranfield University.

60

50

40

30

20

10

1920 1940 1960 1980 2000

Leading Systems

Tame (Complicated) Wicked (Complex)

Environment Stable Adaptive

Success Unambiguous Multiple perspectives

Process Predictable Iterative innovation

Model of the NHS as a system

A model of the healthcare system

NHS Institute for Innovation and Improvement

NHS = National Health Service (UK).

Leaders Historically Focus on Structure

We trained hard, but it seemed that every time we were beginning to form into teams we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganisation; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralization.

—Caius Petronius*, AD 66

*Ordered by Nero to commit suicide for being a troublemaker

Complex Adaptive Social Systems

Complex Adaptive Social System Nonlinear

relationships Emergent

properties

Coevolves over time

Survival of the fit

Conditional cooperators and altruistic punisher

Live in language

Many semi-autonomous agents interacting

Systems: Relationship Determines Outcome

1 + 1 = 2

Explanation of Financial Performance

The financial performance of the different plants is strongly correlated with the human and organisational factors related to the ability to operate the manufacturing capacity successfully.

The actual manufacturing capabilities themselves are much less correlated with financial performance.

Source: Cranfield University School of Management.

Graphic courtesy of Prof Peter M Allen, Complex Systems Research Centre, School of Management, Cranfield University.

Correlation MC, H+O and FP2.01.81.61.41.21.00.80.60.40.20.0

1 2 3 4 5 6 7 8 9

Man Cap

Human + Org

Financial Performance

Systems: Implications for Leadership

Your system works perfectly. If you don’t like the outcome,

understand how it really works (from multiple perspectives).

Be ruthless about relationships.

Complexity: Chaos Game

1,2

5,63,4

Rules

1. Put a point anywhere within the triangle.

2. Roll the die.

3. Move to a point halfway between where you are and the number you rolled.

Complexity: Order From Simple Rules

Complexity: Emergence Brings Order, Not Control

Complexity of boids arises from the interaction of individual agents (boids) adhering to a set of 3 simple rules:

1. A boid tries to maintain a minimum distance from other objects in the environment, including other boids.

2. It tries to match velocities with boids in its neighborhood.

3. It tries to move toward the perceived center of mass of boids in its neighborhood.

There are no rules about forming a flock. The rules are entirely local, referring

only to what an individual boid can see and do in its own vicinity.

If a flock forms, it does so from the bottom up, as an emergent phenomenon.

Source: wikipedia.org.

Complexity: Implications for Leadership

Do not intervene at the level where the issue manifests itself.

Uncover “rules of thumb” that guide behaviour (stories).

FBI-Foto

Adaptive

Paul Ormerond modelled the life expectancy of firms under different hypotheses about their capacity to learn. He found that the model that fits best corresponds to random extinction and very little learning.

Intelligence lies at the periphery; the role of hierarchy is different.

Example: Infosys

Adaptive: Information and Conflict as a Source of Energy

All organizations are hungry. Information and conflict are

great sources of energy. Therefore leaders ensure:

Open access to information Conflicts get polarized,

not negotiated Marks and Spencer

Multiple and diverse perspectives are heard

Adaptive: Diversity Is the Solution, Not the Problem

This fictional account of the day-to-day life of an English gamekeeper is of considerable interest as it contains many passages on pheasant-raising, the apprehending of poachers, ways to control vermin, and other chores and duties of the professional gamekeeper. Unfortunately one is obliged to wade through many pages of extraneous material.

—Review of Lady Chatterley's Lover by Ed Zern inField and Stream, November 1959

Social

Leadership task: Possibility, not problem

solving Affective and rational Receiver-based

communication

Questions

Asking the proper questions is the central act of transformation.

—Clarissa Pinkola Estes, Women Who Run With the Wolves

A vital question, a creative question, rivets our attention…. Knowledge emerges in response to these compelling questions.

—William Stafford, The Darkness Around Us Is Deep:Selected Poems

—Verne Allee, The Knowledge Evolution:Expanding Organizational Intelligence

Answers are just echoes, they say, but a question travels before it comes back, and that’s what counts.

Lead the Whole, Not Parts

The greatest shock to scientist in the 20th century was the realisation that you can understand nothing, absolutely nothing, about the whole by understanding the parts.

—Fritjof Capra, The Web of Life

Mayonnaise

The Heart: Cardiologist’s (Reductionist) View

LifeART image copyright © 2001 Lippincott Williams & Wilkins. All rights reserved.

The Heart: More Systemic (Networked) View

Coupled feedback networks operating over wide range of temporal/spatial scales

LifeART image copyright © 2001 Lippincott Williams & Wilkins. All rights reserved.

Vasoconstriction

Aldosterone

Angiotensin

Corticoids

Epinephrine

Baro-/Chemo-afferentsADH

ACTH

Limbic System

Sympathetic Nervous System

Renin

SA

Treating the Whole vs Treating the Part

Treatment of Chronic Heart Failure Mechanistic (target) approach: increase heart’s pumping

strengthMilrinoneVesnarinone

Complexity approach: interrupt vicious neurohormonal cycleBeta blockers Enhanced survival

Source: Ary Goldberger, Harvard Medical School.

Excess mortality

Leaders Bring Forth the Future ThroughStrategy

We have no evidence that any of the strategic planning systems—no matter how elaborate or how famous—have succeeded in capturing (let alone improving on) the messy informal process by which strategies really do get developed.

—Henry Mintzberg,The Rise and Fall of Strategic Planning

Strategy in Systems

Strategy as Conversations

We must invent an entirely new approach to the conduct of strategy. Our most valuable insights will come from beyond traditional strategy disciplines…at the juncture of emergence, self-organization, cognition and learning.

The emergence of strategy depends not only on a diversity of voices, but on the connections between those voices as well.

Strategizing depends on creating a rich and complex web of conversations that cuts across previously isolated knowledge sets and creates new and unexpected combinations of insights.

—Gary Hamel, The Search for Strategy

Strategy Is About Necessary Conditions

Beliefs Guiding principles (rules of thumb, not rules) Action (autonomy and accountability)

National Health Service (unchanged in 50 years) Can do should do Doing means providing treatment. I’m responsible for the treatment. Treatment will fix it.

Leadership in ambiguity: relationships, perspectives, attribution

£0

£200

£400

£600

£800

£1,000

£1,200

1994–1995 1994–1995 1996–1996 1996–1997 1997–1998 1999–2000

Marks & Spencer

British Airways

Leaders Know What Counts:Metrics—You Get What You Measure

Pretax Profits: 1995–2000£ millions

Which Heart Rate Pattern Is Healthy*?

*Assume comparable activity.Courtesy of Ary Goldberger, Harvard Medical School.

Some Hallmarks of Healthy, Adaptive Complexity

Healthy Heart Rate Dynamics Nonstationarity

Statistics change with time.

Nonlinearity Components interact in unexpected ways (“cross-talk”).

Multiscale organization Fluctuations/structures may have fractal organization.

Courtesy of Ary Goldberger, Harvard Medical School.Time (min)

Hea

rt R

ate

(bp

m)

Transformed Leadership for a Transformed Health System

Process leader: “[Process] is a precise technology for the manipulation of human wisdom and energy.”

—Maledome Some

Leaders hold boundaries.

Author Benny Gool.

France, Ministère des Affaires étrangères - Service photographique.

Solution StructureManagerial Framework

Right People (Nepotism)

Court Mentoring

Bureaucracy Hierarchy Procedure

Expertise Profession Supervision

Incentives Corporation Pay/Promotion

Compliance Regulation Training/Framework

Belonging Together (Exchange)

Network Interactive Conversation