Well, here we are again with a tangent on a tangent. I had meant to followup the Edison/Archimedes (last seen in Blog 11) dialogs with a more theoretical examination of the continuum represented by those two distinct archetypes, but I got distracted: by metrics, evolution, and now… mountaineering. This blog ain’t so unlike my actual life as you might think.
Way back there in Blog 1, I had mentioned that the focus would be toward an audience of innovation leadership and not necessarily toward the innovators themselves (though you ARE the ones that make this all happen). The topic at hand will likely have something for everyone. Experimenters navigate rugged landscapes and strategists as well.
A great many problems are conceptualized as axes or parameters of design coupled with a final axis of response. If we find ourselves in the Alps, we can mark the parameters of longitude and latitude with a result of altitude. A great many problems collapse to the question, “what are the values of longitude and latitude that result in the greatest altitude.” Oh, it’s true, the axes are rarely limited to three dimensions and they have obscure units of measurement but the problems are mathematically equivalent and we can handle 27-dimensional mountain ranges with almost the same ease that we handle three-dimensional mountains.
Some years back, a small group of us sat down with Stuart Kaufmann for his views on this topic. You can see his work in the several citations in this blog and to which I might add just one more. That evening he offered some rules for navigating rugged landscapes — for looking for higher and higher peaks when the terrain was hardly predictable. As he spoke, it occurred to me that in many cases the EXACT OPPOSITE of what he recommended could be easily packaged to sound like a pretty good idea and I could imagine almost any of them surfacing as organizational objectives.
Being given to sarcasm (usually more self-amusing than career-enhancing I must admit), I have reconstructed some of those navigation thoughts as rules to avoid the unpleasantness of adaptation and organizational change. When taken all at once, the sarcasm is obvious and the leaders I know wouldn’t fall for it… but one at a time, these rules might just have a chance.
Lest I leave any ambiguity, I will slip into a mythbuster voice (noted in red) at the end of each rule and its justification. There I am being more true to the thoughts shared by Stuart and the intent for navigating these landscapes.
(Any license I have taken that leads to errors or misrepresentations is entirely my own fault.)
Seven Rules to Avoid the Unpleasantness of Organizational Change
1. Each subset (division) of an organization should work for the good of the whole.
2. Make deliberate course corrections insuring that each step is upward.
3. Maximize productivity by focusing on value extraction.
4. Streamline environmental analysis by assuming no coevolution.
5. Simplify complex decisions (in NK landscapes by setting K=0) so the problem becomes tractable, communicable and theoretically solvable with straightforward tools understood by all users.
6. Insist that lessons from the past be thoroughly learned, established as best practices, and applied in all similar future tasks.
7. Maximize order through deterministic solutions that can be effectively planned and executed according to plan.
1. Each subset (division) of an organization work for the good of the whole: All successful organizations presently exist on a peak which represents — at least — a local maximum. By working for the good of the whole, it is expected that subunits will move the organization along (because landscapes evolve) this existing peak. However, even though the peak represents the “good of the whole,” it is entirely possible that single units would selfishly benefit from moving ‘downward’ or away from this preferred geography. Rigorous application of this rule will prevent organizational subunits from taking steps that might move the organization to entirely new locations on the performance landscape, new locations which would offer the risk of moving from their current peak to a new one, a new one that while it may be higher (an act of adaptation), would be sufficiently distant as to redefine the organization and thus demand change.
This point argues in favor of thoughtful de-centralization. purposely providing some groups “latitude for increased altitude” is imperative in a dynamic landscape/market and should be part of the deliberate design of an adaptive organization.
2. Make deliberate course corrections insuring that each step is upward: By carefully examining the local terrain it is often possible to distinguish upward steps from downward ones. Thus, by using small steps, the organization can move with the comfort that each agreed-upon move is an actual improvement (more fit, better results). As one nears the peak in the present locale of the landscape, it is true that upward change becomes more challenging as more directions (choices) point downward. However, such difficulty is offset by the confidence that one is nearing the top and thus has reached the pinnacle of success. Larger corrections serve only to risk “leaping” to surrounding peaks and the real possibility exists that one would move to a peak that is even shorter than the current residence.
Fundamentally we are talking about embracing risk – “risk” being defined as “beta.” Allowing for local variation (occassionally moving down to move up even higher) is not currently part of most formal corporate proclamations of ”take more risks.” I could see an adaptive organization spending meaningful time training its leaders on risk: what is it, how to recognize, when/how to manage it, how to distribute it, etc. At present, most risk managment exercises are either fault tree analysis or contingency measures. The busted myth would tell leaders to occasionally ‘leap’ with the deliberate intent of getting OFF the present peak.
3. Maximize productivity by focusing on value extraction: The case for “exploitation” is the case for value extraction; the case for exploration is the case for adaptation and change. Exploration flies in the face of productivity. How can one justify efforts that MAY or MAY NOT produce better results? The peak in the hand is better than two in the bush. We know what direction ‘up’ is. We can exploit that knowledge in a incremental way to insure continued improvements in productivity and better fitness. When we reach the very top of the peak, we certainly can’t be criticized for failing to improve on what is already optimal.
As we have been stating for some time now, the balance between exploration and exploitation is a “magical” balance in adaptive organizations. It is “magical” in the sense that it defies a precise, reductionistic definition, but provides spectacular results when achieved. Leaders have a role here in choosing which groups are going to focus on explore vs. exploit. Also, they must decide on when and how to mix the two. Stories I heard told by David Stark at Santa Fe Institute re: the Naskapi tribes and Nova Scotian fishing villages gave me some real grounding in these notions.
4. Assume no coevolution: Coevolution is a nasty situation. In essence, it means that due to the actions of others, the peak I am standing on may change in height or shift along the axes. Most reaonable people would agree that none of us should be held accountable for the consequences of other’s actions, only our own. Thus, the most logical and desirable course is to disregard these aberrations produced by the actions of others. The secret is to stay focused only on the consequences of our actions, the ones we can control and be held directly accountable for.
A truly adaptive organization would clearly have an “external focus,” actively watching other groups in the ecosystem. However, their external focus would not be to merely “benchmark” internal activities with taller or shorter local peaks. Rather, they will look externally to discern the dynamics of the environment – surveying attractive non-local peaks as well as nearby players who may have similar aspirations (opportunity for collaboration) or those who might block our ascent.
5. Simplify complex decisions (in NK landscapes by setting K=0) so the problem becomes tractable, communicable and theoretically solvable with straightforward tools: This sounds so mathematical, it probably ought to be rejected on that basis alone. After all, a corporation engages in the serious business of management, selling, research, product development, manufacturing, etc. It isn’t some esoteric thought experiment for modelers. Complex landscapes represent confusion and ambiguity in decision making. And, the complexity of the landscape is related to the coupling between various elements of the organizational design and choices. However, it can be easily shown that by setting the coupling factor to zero, i.e., assuming that individual elements in a portfolio are distinctly separate or by focusing on each organizational design element one at a time, we get what is known as the Fujiyama landscape. There is one peak. It is both the local and the global maximum and by examining surrounding terrain and always moving upward we are guaranteed of reaching it. The analytic tools used for describing this situation are often familiar and well-understood. The use of such tools and the description of the goals in unambiguous terms are exemplary of the kind of clear leadership thinking that all people will respond to.
Adaptive organizations build in time (they evolve) to reflect and set up the problem – understanding the variables and their weight prior to execution. When they are totally befuddled, they may jump into execution, but they consciously observe themselves so as to “learn by doing” (this may involve some course correction which need not always be seen as non-adaptive — see point #2)
6. Insist that lessons from the past be thoroughly learned and applied in all similar future tasks: One way of assuring constant upward progress on our peak of choice is to avoid the unsavory possibility that an already learned repsonse would be mutated by the uninformed in some future application. Thus, we should carefully and rigorously study each action in response to some circumstance, identify the best course and insist that it be followed without fail in all future circumstances. This won’t always work as the environment may have shifted but inasmuch as we are not responsible for those shifts, refer to rule number 4 and hold all deviants accountable for violating best practices.
Of all the rules, this seems the most related to our recent foray into Lamarckian evolution. Adaptive organizations avoid creating overlapping groups watching other groups to ensure that they are doing things the precise way we have always done them. Information content is greatest when the signal varies. A monotonous repetition can be compressed into very little space. Why? Becasue there isn’t much there to begin with. If you want to learn new stuff, repetition isn’t the path.
7. Maximize order through deterministic solutions that can be completely planned and executed according to plan: Single-minded execution makes no sense without a plan. A plan is the very guide one needs when confronted with the unexpected. A planless team may improvise in those situations. If tolerant of such improvisational behaviors, how can we set bonus targets well in advance, how can we evaluate performance, how can we know that the failure to meet Wall Street expectations wasn’t our own fault instead of the fault of “an unforeseen downturn in economic indicators.”
Adaptive organizations still set clear goals, because it is important to have something to shoot for. However, true to their name, they adapt when the environment calls for them to. This requires excellent skills in diagnosis — in “why” a system/target/environment has changed and the humility and courage to admit it. As is often the case… back to leadership. There you have it. Seven solid rules for organizational design and behavior. While these alone may not insure the ability of an organization to behave in a perfectly consistent manner, they will go a long way to guaranteeing that ‘ruthless incrementalism’ isn’t compromised by unexpected jumping to new peaks in the fitness landscape.