This is the third in a series of articles in which I am sharing my thoughts about a framework for organizational effectiveness. I’m trying to keep each installment short, so hopefully each will be a manageable read. Please share your thoughts, and let’s learn together. To read the previous article, click here: https://www.linkedin.com/pulse/organizational-effectiveness-getting-started-mike-hoffmann

We’re Only Human

Standard economic theory is based on the idea that people make economic choices that are in their rational best interest. In a world where this is true, human behavior is predictable based a set of causes and effects, demand and supply, equilibriums, limits, alternatives, and choices, as we constantly seek to maximize our economic utility.

However…

When the Powerball lottery jackpot was over $1 billion in mid-July, I spent $20 to buy ten chances to win that jackpot. My odds of winning were one in 300 million. My $20 investment yielded a $4 payoff. Not great. Then, just this morning, I happily spent $4.75 for a cup of black coffee that I could have made myself at home for less than a dollar. In a world where I’m supposed to be seeking economic utility, how does this make sense?

Turns out, people can’t be trusted to act rationally. Behavioral Economics, which is a relatively new field in Economics, combines Psychology and Economics to try and make sense of how we make decisions. We make a lot of decisions based on emotion, and we are all beset with cognitive biases. Cognitive biases are heuristics – shortcuts – that we use to make quick judgments. These are based on our experience or intuition, and they help us in innumerable ways. Unfortunately, they are often wrong. This is explained in beautiful detail in Daniel Kahneman’s wonderful book, “Thinking, Fast and Slow,” which I cannot recommend highly enough.

So we as people are unpredictable and adaptive, and the cause of our actions isn’t always clear. In short, we’re complex.

People, Meet Process

The Cynefin model of systems theory tells us there are four different types of systems: Simple, Complicated, Complex, and Chaotic. Simple and complex systems are ordered systems where cause and effect are understandable. But in complex and chaotic systems, causality usually isn’t clear. And if we understand what type of system we’re working in, it helps us understand how best to navigate within that system. I’ve been a fan of this model for years and have included it in many of the talks I’ve given on process improvement and product development.

However…

I was recently having a conversation about systems thinking, Cynefin, and complexity, and I started to see that all this time I might have been wrong. Well, not exactly WRONG, but I was missing a few things. Don’t you love that feeling when you find that your perspective of reality isn’t quite right? If you do, congratulations. I hate it. Yeah, ok, growth mindset. Yada, yada, yada. It’s still difficult for me to let it go. But I have let it go. And now I feel better. And I think I understand complexity better because of it. And interestingly, it’s all much simpler than I thought. 

What I came to see is that whatever type of organizational system we’re working in, whether it appears to be simple, complicated, or complex, it involves people. People are complex, and you can’t have a simple system that’s made up of complex components. People act in unpredictable, adaptive, non-linear ways. So we already know what type of system we’re in. If there are people involved, the system is complex.

How does this help? Because now, instead of agonizing over which type of system we’re dealing with and what that means for how we act within that system, we can just realize that we’re working in a complex system, and we can focus on making the best of that situation. So what does that look like?

Working In Complexity

Complex systems behave in unpredictable, adaptive, non-linear ways, and if we make a change in one area we usually can’t predict with great accuracy what’s going to happen in other areas. For example, a change initiative to implement agile practices is a process change that will almost certainly affect your culture and your people, and maybe even your strategy. But in what ways? Which teams will need the most help? Who on those teams will embrace the change, who will be neutral, who will actively fight the change, and who will silently try to sabotage it? And how will you know if it’s on track, or if there are areas where you need to provide more training, or if you need to bring in outside help? Or if you just need to back up and re-evaluate?

What you need is information. You need to build systems that deliver fast feedback and you need to embrace processes that allow you to easily pivot based on the feedback you’re receiving. These are the keys to your success. Rather than fight change, you need to expect change and embrace it. This is not the comfort zone of many executives. Even after two decades of Agile, roadmap predictability, adherence to scope and schedule, and managing to the plan remain the definitions of success, and many organizations have not escaped their gravity. But in a complex system, certainty is an illusion. The sooner you free yourself of that expectation, the sooner you can embrace what you’re learning, stop fighting reality, and start delivering better outcomes for your customers.

There are just some things you can’t know until you get there. When I go to my favorite Mexican restaurant, I’m probably going to get fish tacos. That’s my thing. But sometimes, they have a seafood enchilada special, which I didn’t expect. And sometimes I’ll walk in the door just as someone is getting a huge plate of sizzling fajitas and that looks amazing. And sometimes I just feel like having soup, so it’s time for albondigas! 

In the same way, we can’t predict how change will affect our teams or our customers, and we would be foolish to pretend we can. The best course of action is to build feedback loops that help us embrace learning and leverage fast feedback. At its core, I think that’s what agility is all about – eschewing the illusion of certainty, embracing feedback and iteration, and leveraging that to deliver the best outcomes for our customers.

And this is what Organizational Effectiveness is all about. Building strategy, culture, people, and processes that ultimately combine to deliver the best outcomes for our customers. In my next article I will talk more about strategy, how strategy creates clarity in the context of complexity, and how organizations can leverage this clarity to unleash their people to get their best work done.