Complexity Theory: More tools for identifying the sources of good strategy

Understand the implications of strategy formation within complex environment

• Strategy is intuitive and entrepreneurial, and occurs irregularly and unexpectedly.
• Strategies are not "scientific" or necessarily empirical.
• There isn't "one best plan". There are many.

Consider the concept of minimum specifications

• Establish the fewest requirements and rules that allow you to get to the outcome
• Be wary of the tendency to over-specify
• Quickly get to the short list, the crucial few
• Don't attempt to define the outcome or behavior of the system in detail
• Provide local rules that can be applied by individual participants

Create a "good enough" plan and a "good enough" vision

• Place less emphasis and time on the semantics of higher order language (vision, mission)
• Place more emphasis on getting to work through multiple actions at many different levels
• Let direction arise rather than believing that you must be sure before you proceed with anything

Create a balance between:

• data and intuition
• planning and action
• safety and risk

A useful French word: "Bricolage"

• The ability to create what is needed at the moment out of the materials at hand.

The concept of "Discontinuities"

• Those many things out there that we simply can't know about at this point in time are much more powerful than we usually acknowledge.
• But then, how do you plan for what you don't know? The most important capacity is to be always observing and noticing. When things becomes known, your system notices.

Conflict Theorists: Conceptual tools to resolve conflict

Disentangle impact and intent

The Intent:	What did the other person actually say or do?
The Impact:	What was the impact on me?
Assumptions:	Based on the impact, what assumptions am I making about what the other person intended?

1. Hold your assumptions as hypotheses
2. Share the impact with them, inquire about their intentions
   • Abandon blame: Map how people contributed to the problem
   • Distinguish blame from contribution
   • Blame is about judging, and looks backward
   • Contribution is about understanding, and looks forward

Christine Letts: Capacity building and infrastructure in Non-Profits

Adaptive capacity in nonprofit organizations focuses attention and energy on strong management systems, knowledge of performance, and measurement of programs and services.

However, there is now a persistent perception that dollars allocated to general capacity building - and particularly personnel and other administrative costs - are essentially "lost" when compared to direct service investments. Nonprofit leaders often go through Herculean efforts to reflect that their organizations spend the least amount possible on administrative costs.

Disincentives for creating adaptive capacity include the following

• The mindset and mission commitment that bring staff and board members to the organization in the first place
• The increasing interest funders have in seeing their dollars allocated to direct service and program

An organization with adaptive capacity is one with the ability and tools to measure its performance and adjust its behaviors, programs and services accordingly.

Specifically, the capacity to adapt in high performance nonprofits is demonstrated in an organization's sustained ability to rigorously:

• Assess its strengths, weaknesses, opportunities and threats
• Collect stakeholder data and feedback regularly
• Act on the knowledge it acquires by strategically seizing new opportunities or adapting specific behaviors and activities needed to improve performance
• Measure both its organizational and programmatic performance and results to further the mission

Adaptive capacity links mission to outcomes and pushes nonprofits to ask and seek the answers to questions such as:

• How are we performing?
• Are we delivering on our mission?
• How can we improve our performance?
• How can we measure quality?

Content quoted and adapted entirely from the Association for Volunteer Administration Newsletter: http://www.avaintl.org/profession/christineletts.html

Christine Letts is the Associate Director and Rita E. Hauser Lecturer in the Practice of Philanthropy and Nonprofit Leadership at the Hauser Center for Nonprofit Organizations at Harvard University. She is also one of the co-authors of High Performance Nonprofit Organizations: Managing Upstream for Greater Impact.

Henry Mintzberg: Subtleties about the nature of strategy

What is "strategic thinking?" A sequence of underlying issues.

Complexity issue: How complex should a good strategy be?

• We want to insure that a system contains sufficient variety to meet the challenges it faces.
• But, we must keep in mind the equally plausible "keep it simple stupid".

Kenneth Boulding's dilemma or the "specificity" issue

"Somewhere between the specific that has no meaning and general that has no content there must be for each purpose an optimal degree of specificity/generality."

How much change issue

• How to reconcile conflicting forces balancing change and stability?
• Despite the impression conveyed in most of the literature, strategy is a concept rooted in stability, not change.
• Organizations pursue strategies for purposes of consistency.

Pattern or pace of change issue

• Is revolutionary change vs. incremental change sought? The situation will dictate.

Source of change issue

• Where do strategies come from? Organizations learn by doing, by thinking, by programming, by calculating, by arguing.
• From whom or what do strategies emerge? The leader? The group? Rationalized techniques that suggest the "right" strategy?
• To put this all in another way, is strategy formation fundamentally a personal process, a technical process, or a collective process?

Integration issue

• Is strategy an integration of components, or simply a loosely coupled collection of directions?

Control vs. learning issue

• How (a) deliberate and centralized or (b) emergent should an effective strategy formation process be?
• To what extent is there a need for control as opposed to handing authority and discretion to others to participate in incremental learning?
• Indeed, the more emergent the strategy, the more central management must treat the content as resulting from the process itself.

Choice issue

• How much choice is there, really? The question is not whether there exists strategic choice for the organization, but how much?
• The power of an organization is somewhat in relation to its dependency on the environment for resources.

Thinking issue

• How much strategic thinking do we want anyway? Can organizations that are obsessed with the strategy formation process lose resilience?
• We cannot become conscious at the expense of our ability to act. Perhaps Karl Weick strikes the right balance here with his point that we need to act but then we need to make sense of our actions.

All ideas quoted or modified based on the work of Henry Mintzberg, The Rise and Fall of Strategic Planning, Free Press (January 31, 1994)

Karl Weick: Complexity and the Unexpected

Examine how your organization treats feedback

• Track down bad news.
• Keep asking people: Have you noticed anything out of the ordinary?
• Try to see what your expectations keep you from seeing.
• Create an error-friendly learning culture.

Appreciate the traps of short-term success.

• Success narrows perceptions and feeds confidence in a single way of doing business.

Plans can do the opposite of what is intended.

• Since plans are built from assumptions and beliefs about the world, they embody expectations.
• Strong expectations influence what people see, what they choose to take for granted, what they choose to ignore, and the length of time it takes to recognize small problems that are growing.
• Plans influence perceptions by reducing the number of things people notice. People encode their work largely into the categories activated by the plan.
• Plans presume that consistent high-quality outcomes will be produced time after time if people repeat patterns of activity that have worked well in the past.

The problem with this logic is that routines can't handle novel events.

Plans can nurture mindlessness

• Those who invest heavily in plans, standard operating procedures, protocols, recipes, and routines tend to invest more heavily in mindlessness than in mindfulness.
• Sensing becomes restricted to expectations built into the plans.
• The result is a system less able to sense discrepancies, less able to update understanding and learning, and less able to recombine actions into new ways to handle the unexpected.

Two ways of dealing with the unexpected

• By means of anticipation: Sinking resources into specific defenses against particular anticipated risks
• By means of resilience: Retaining resources in a form sufficiently flexible - storable, convertible, malleable - to cope with whatever unanticipated harms might emerge

Quoted with the Weick book: Aaron Wildavsky, Searching for Safety, page 220, 1981

All ideas quoted or modified based on the work of Karl Weick, Managing the Unexpected: Assuring High Performance in an Age of Complexity Jossey-Bass (July 3, 2001)

McKinsey Framework for Capacity Building: Conceptualizing capacity into seven dimensions (With a postscript from Paul Light...)

The McKinsey Company has created a useful framework for thinking about the important domains of non profit organization performance.

1. Aspirations: An organization's mission, vision, and overarching goals, which collectively articulate its common sense of purpose and direction.
2. Strategy: The coherent set of actions and programs aimed at fulfilling the organization's overarching goals.
3. Organizational Skills: The sum of the organization's capabilities, including such things (among others) as performance measurement, planning, resource management, and external relationship building.
4. Human Resources: The collective capabilities, experiences, potential, and commitment of the organization's board, management team, staff, and volunteers.
5. Systems and Infrastructure: The organization's planning, decision making, knowledge management, and administrative systems, as well as the physical and technological assets that support the organization.
6. Organizational Structure: The combination of governance, organizational design, inter-functional coordination, and individual job descriptions that shape the organization's legal and management structure.
7. Culture: The connective tissue that binds together the organization, including shared values and practices, behavior norms, and most important, the organization's orientation towards performance.

However......

"There is no single pathway to excellence," observes Paul Light. Furthermore, he suggests, there is little evidence of what works and why it works in the achievement of high performing nonprofits.

McKinsey & Company. (2001) Effective Capacity Building in Nonprofit Organizations, Venture Philanthropy Partners

Paul C. Light. (2002) Pathways to Nonprofit Excellence, Brookings Institution Press, Washington, D.C., p. 37.

Richard Bandler: Some complex psychological thought

1. Given our unique personal histories and models of the world, we are always making the best choices available to us.
2. Every behavior is/was/has been useful in some context
3. All behavior is positively intended.
   • Separate the positive intention from the behavior itself
   • Separate the person from the behavior, holding the value of the person constant
   • Acknowledge the intention underlying the behavior and address the behavior itself
4. There is no such thing as a resistive person. Resistance is instead a comment about the relative inflexibility and inability of the communicator to communicate within a particular situation and context.
   • The meaning of the communication is in the response. If the response one receives is other than expected, vary the communication until the intended response is obtained.
5. All communication has report and command aspects. The report is contained within the words themselves; the command is conveyed in the accompanying non-verbal behavior. One cannot not communicate.
6. Within any particular system, the one who exercises the most flexibility of response will exercise the most influence.
7. Context determines meaning.

All ideas quoted or modified based on the work of Richard Bandler, Frogs into Princes, Real People Press (June 1, 1979)

Ron Heifetz: Leadership without easy answers

There are two basic kinds of problems that groups encounter.

1.	Type of Problem:	Technical vs. Adaptive
2.	Who does work:	Expert vs. Group
3.	Definition of Problem:	Clear vs. Unclear
4.	Solution:	Clear vs. Requires Learning

Most of Heifetz's writing focuses on the tendency of people to not confront the adaptive nature of many important issues and problems. Pressure is always towards characterizing problems and issues as technical in nature. We all hope that experts and research will tell us what to do.

However, movement forward on adaptive problems happens within messy processes of learning. Experts will contribute little.

Leaders should take the following stances as they think about their role in adaptive situations.

• Exercising leadership from a position of authority in adaptive situations means going against the grain.
• Rather than fulfilling the expectations for answers, one provides questions.
• Rather than protecting people from outside threat, one lets people feel the threat in order to stimulate adaptation.
• Instead of orienting people to their current roles, one disorients people so that new role relationships develop.
• Rather than quelling conflicts, one generates them.
• Instead of maintaining norms, one challenges them.

All ideas quoted or modified based on the work of Ron Heifetz: Leadership without easy answers, Belknap Press (September 1, 1994)