May 14. 2012 9:00AM

Living with complexity


By Karen Vernal

I have just returned from digitalNow, an annual executive summit that brings together 250 CEOs and volunteer leaders from some of the most influential professional, nonprofit and trade associations in America, many with a global reach.

Associations represented ranged from: The Project Management Institute (PMI), the Professional Golfers Association (PGA), the American College of Emergency Physicians, and headquartered in our own fair city, the American Society for Quality (ASQ).

The summit, hosted at Disneyworld, was an experience of inspiration and information, with just the right touch of Disney magic!

Building community

Impressed with the number of leaders I met. I was curious about their commitment to return year after year. To a person, when asked, their response was related to their experience of community.

Are you ready?

You might have guessed that one of the overriding messages of the summit was: "The next digital wave is here…How ready is your association (organization) to be digitalNow?

Rita Gunther McGrath, Ph.D, professor at Columbia's Business School in New York, provided the keynote on day two of the summit. Rita is a globally recognized expert on strategy in "highly uncertain environments." In her new book: "Learning to Live with Complexity," Rita examines how the information technology revolutions of the past few decades have created new levels of complexity in business.

She says that: "Complex systems have always existed, of course - and business life has always featured the unpredictable, the surprising and the unexpected. But complexity has gone from something found mainly in large systems such as cities, to something that affects almost every organization we oversee … Systems that used to be separate are now interconnected and interdependent, which means that they are, by definition, more complex.."

Planning for the future: Forecasting

Typically when engaging in a strategic plan, leaders will look to examine indicators of future success. Rita suggests that in addition to reviewing lagging and current indicators, that we focus, as well, on leading indicators.

Lagging indicators: This is a historical view of what has already happened. Examples: Revenues related to a past initiative, outcomes of a system or organizational change, etc.

Current indicators: What do we know about our efforts currently? What does our balanced scorecard tell us?

Both lagging and current indicators are objective. Success can be measured quantitatively. And, the complexity of the future requires more.

Leading indicators: This requires a much more subjective approach to information. This examination requires an ability to anticipate possibilities based on signals rather than concrete data.

An example offered was the Y2K scare in 2000. While some would suggest that it was an exaggerated scare, others believe that the focus on preparation rather than reaction prevented a major crisis.

As complexity increases in our organizations, communities and the world, it becomes increasingly more challenging to plan for the future. What is required is the ability to expand our process to include leading indicators as a part of the process. Consider:

  • Projecting "unintended consequences" in considering alternative plans.
  • Trading off resources for future initiatives.
  • Going after outliers, not averages, as they are often the most important.
  • Examining counterfactuals to expand your range of possibilities (science fiction, political novels, etc.).
  • Looking for unintended consequences.
  • Celebrating intelligent failures

Rita suggested that average organizations take their best people and put them on problems. Exceptional organizations take the best people and charge them with surfacing possibilities.

Tight rules vs. “premise control”

Charles Perrow is credited with creating the notion of premise control whereby complex organizations move from rules of behavior for employees to a model that provides both authority and responsibility for decision making based on certain premises. An example is Nordstrom. Rather than a handbook of rules, new employees are given a guide that includes this message:

"WELCOME TO NORDSTROM. We are glad to have you with our company. Our number one goal is to provide outstanding customer service. Set both your personal and professional goals high. We have great confidence in your ability to achieve them. Nordstrom Rules: Rule #1: Use your good judgment in all situations. There will be no additional rules."

I had a personal experience of "premise control" while at the conference in Disneyworld.

On the day of a breakout session that I was to moderate: "Building a Leadership Organizational Culture," I decided I needed balloons for the opening exercise. I asked the concierge, Javier, where I might find balloons. His response: " I can take care of that for you." He asked, " What size balloons? How many? Helium filled?"

One hour before the session, Javier had a bag of balloons waiting for me. He also gave me a number of Disney postcards "... in case I wanted to use them as handouts in the session." The experience took my breath away!

Reflection questions for leaders

How do you plan for the future recognizing the complexity and unpredictability of your organization?

Where are your best people? What are they focused on? Are you more comfortable with rules or a "premise of control?"

As you reflect on these questions, you might appreciate the wisdom of Albert Einstein: "Make everything as simple as possible … but no simpler."