a successful business simply manages its vulnerabilities well
“ … you have a portrait of the organization as a quivering mass of vulnerabilities.”
Leigh Buchanan HBR
Goodhart’s curse: Every metric that can be tracked gets incentivized and ultimately gamed
Conway’s curse: Every decision-making dysfunction in your team reflects itself in your product
Hofstadter’s curse: Every project takes longer than planned, no matter how great the plan
“Learn to be miserable, fight & win anyway.”
General Mark Milley
Well. A business can know everything a customer wants, can have a desire to meet customer needs/wants, but if you don’t have an organization set to meet all of that – day in & day out, attitudinally & decision by decision — it is all for naught.
The truth is that Businesses are not always happy, not always efficient, certainly not always effective and not always the greatest place to work – even if they are a great business with a positive culture, good process and a great place to work.
In fact. They are more often, well, big blobs of vulnerabilities.
Most often the vulnerabilities reside in one of 3 places:
(a) rigidity: lack of ability to adapt to meet an opportunity or resolve a crisis
(b) people in wrong places at wrong time: lack of ability to align people strength/skills at the appropriate time/place
(c) organizational blindness: inability to see an opportunity or a crisis before it actually happens let alone when it is unfolding
Therefore, managing an effective business is more about managing your vulnerabilities against the quirks of everyday business. actually … what a business that wants to adapt and not die needs is called “the Marangoni Effect.” This is the event that takes place where a soap film stabilizes the surface tension of the bubble allowing it to self-heal after the water drop passes through.
Uh oh. Business, in general, tends to hunker down when feeling vulnerable rather than being imaginative.
That said. Let’s take a look under the hood of some vulnerabilities.
– shift of power away from corner office (the democratization of knowledge)
– agility & disciplined disobedience
– right place right time decisions
– discipline & disobedience.
– changing how decisions are made
– managing the Patterns not the People
– managing to customer rather than to business strengths
– the positive power of disciplined autonomy
- shift of power away from corner office (the democratization of knowledge)
It used to be the corner office knew more than any cubicle, desk or office. Now, about the only real skill in the corner office, is the decision of what to do with the information. This creates some tension in that the farthest reaches of an organization SHOULD be able to make the best decision but the best decision maker doesn’t necessarily reside at the outer fringes of the organization.
This is what happens when thinking capabilities overcome doing capabilities in an organization <not replace, but possibilities>.
I would remind everyone that it was Toffler who said back in 1990 that the business world was evolving into the idea & knowledge business not the creation business. okay. Maybe what he meant was that if you weren’t thinking about what you were going to create next, or what next iteration of what you are already creating will be, you will be left behind.
A business can never accurately predict “what’s next” but they can certainly build an organization that can survive, if not thrive, to maneuver through whatever does come next.
Therein lies the big vulnerability.
Most organizations today are a hybrid of the old more rigid ‘hierarchal model’ updated thru accommodating technology. This is a Frankenstein <let’s insert new thinking & new technology within existing company model> rather than a concept built from scratch <and having a plan of how we ‘get from here to there’>.
This hybrid model holds much of the decision-making, with ragged claws, in authority positions.
And, yet, the extension of knowledge, or extensive information, into the farthest corners of an organization naturally disseminate the typical decision-making responsibilities, potentially, to the farthest reaches of an organization.
The truth is the farther a decision moves away from your best decision makers the more vulnerable an organization is. That is a fact. And, yet, the power of business agility resides in decision-making closest to the point of contact.
The future resides in:
- Maximizing each person’s decision making skills <either by increasing the # of “good decision makers” or enabling a system in which every decisionmaker has ‘quick 7 easy” support mechanism
- Maximizing knowledge, ideas & thinking wherever it has a point of contact where it can positively influence the arc of an organization or its customers.
- Agility & disciplined disobedience
Surprisingly, the commoditization of information/knowledge distribution actually taps into another vulnerability – uncertainty. Suffice it to say that if an organization is strewn with uncertainty, it will not be agile and even ‘obedient’ behavior will be flawed.
In order to be successful the organization needs to address uncertainty where, critically, uncertainty resides in the decision moment as well as “what next” repercussions.
“To be in a state of self-control, a person must know: what he/she is supposed to do, what he [or she] is actually doing, what choices he/she has to improve results wherever necessary. If any of these three conditions are not met, a person cannot be held responsible.”
This leads me to Kairos. It is the ability to adapt to and take advantage of changing circumstances. In other words kairos suggests you can manage what fate has in store for you if you manage the circumstances as they arise. It seems like an organization should seek Kairos. But his also means the organization needs to embrace the fact they are vulnerable to uncertainty as business seems to have become even more complicated than it has in the past.
Most businesses think about this and want to streamline streamline streamline <and simplify simplify simplify>. In doing so they often strip away the “discontinuous” portions of the company with the intent to keep things moving smoothly and focus on the ongoing “continuous” activity <efficiency seems to translate to ‘speed to market’ for some reason and certainly translates into ‘creating higher margins’>.
Well. That can be a problem because it’s that discontinuous part that feeds innovation, space for agility and some autonomy and friction/conflict to spur growth and responsiveness and the type of stuff that makes customers <and employees for that matter> happy <and you have just stripped it away in the interest of ‘maximizing efficiencies>.
In order to continue to maintain excellence and remain competitive companies really must embrace some dynamic strategies of discontinuity. I call this disciplined disobedience.
While disciplined disobedience sounds horrible it actually offers heightened agility and adaptability.
“Disciplined disobedience” is an Army term and refers to the fact that engagement may demand an exception to a rule. But because they are aligned, and disciplined, the disobedient behavior falls within acceptable behavior and insures effectiveness at the moment of contact.
Autonomy in any organization is a combination of control <as in guidelines and behavior culture> and trust <in that people are intrinsically interested in making a contribution and learning to do & be better>. This discipline limits what I would call the biggest danger in customer centric modeling – blurring.
Nowadays there is often a blurring of boundaries between all departments, all functions, all customer experiences and all employee experiences. The blurring carries an intrinsic conflict between individualism & the collective. But if the discipline centers on making he best decision possible at each touchpoint than blurring exists but clarity occurs at touchpoint.
If an organization offers that as “certainty” it creates a discipline from which any organizational disobedience actually benefits the organization in some way. I say ‘some way’ because it doesn’t guarantee optimal but it does guarantee that the touchpoint decision stays somewhere on the 5 lane highway.
Optimal business agility will always demand a disciplined disobedience aspect. Always. And once you accept that you have accepted an inherent vulnerability.
“Stagnation is self-abdication.”
- Right place right time decisions
We often talk about wanting to get as close to the customer as possible, the same applies to ‘the decision.’ Much of the art of decision making under uncertainty is getting the timing right. If you delay too much, opportunity costs may rise, investment costs may escalate, and losses can accumulate. However, making critical decisions too early can lead to bad choices or excessive risks. And making hasty decisions under time pressure or economic duress allows little room to undertake detailed staff work or to engage in careful debate. Here are a few suggestions for companies trying to create competitive advantage from their ability to manage the passage of time decisively.
In a sense I am talking about some business agility: the ability of a business to adapt rapidly and cost efficiently in response to changes in the business environment (and customer/market needs). Business agility can be maintained by maintaining and adapting goods and services to meet customer demands or adjusting to the changes in a business environment.
Controlled ‘agility’ <an aspect of autonomy> is a concept that incorporates the ideas of flexibility, balance, adaptability, and coordination all within some construct.
This agility permits the organization, through its people closest to the point of decision/contact, to address critical issues at the point of contact. That, in & of itself, is the customer centric nirvana.
While most companies are accustomed to identifying major internal issues, they are less accustomed to effectively identifying surfacing opportunities as well as threats arising out of external events such as dramatic shifts in demand, competitive behavior, industry structure, regulation, or the macroeconomic environment.
Most businesses use managers to sweep through organizational activity and use them to identify critical issues they see emerging. The vulnerability in this technique is that it is impossible for them to see all touchpoints and patterns from all touchpoints.
A better-designed system actually empowers the touch point decision makers to access patterns which permits them to identify a decision that fits within the pattern, one that is ‘anti-pattern’ or reflects some randomness which needs to be scrutinized by someone with a larger view.
That is right time, right pace decision making, or, disciplined disobedience.
- Discipline & disobedience.
Business leaders need to mentally get a grip on the fact that decisions are very rarely a one lane highway but rather should be viewed as being made on a 5 lane highway.
What that means is that strategy & skills & resources need to be aligned on a 5 lane highway.
This is important because while we talk ad nausea about vision/direction misalignment of strategy & organization tend to only be recognized in hindsight.
Most vision/strategy proclamations fall flat because they simply do not have the skills, attitudes and organizational structures required to deliver upon a broad-based organizational strategy.
I could offer a number of solutions to this vulnerability, but instead I will point to the military. It is within the military in which strategy and organizational construct/change/resource allocation/skills are designed in parallel and actually are permitted to influence each other. Therefore, skills/resources actually shape parts of the strategy.
That last sentence will drive most older business leaders though the roof <their head will explode>.
To them I would simply suggest that strategy, badly done, simply increases systemic risk. It creates a tension between an organization’s desire for some risk behavior <empowering decisions at touchpoints> and decision success. Or, this is where Ackoff suggested doing the wrong things well is actually worse than doing the right things poorly.
If the goal of an organization is to make decisions with greater speed and confidence then it needs to minimize risk to maximize company agility, flexibility.
Strategy and organizational should evolve in parallel and influence each other.
Strategy should not dictate structure <unless you are an entrepreneur and your world is your oyster>. The world is not sequential nor is it linear, therefore, strategies need to have dimensions and organizations need to have the dimensions to meet the strategies.
By doing so it permits touchpoint decision makers to be disobedient to any specific ‘rule of organizational law’, but remain disciplined to remain true to the vision of the company and the intent of ‘the law.’
I would suggest to business people, military has this prioritization down pat. Think of it as “survival in the moment” decision making. Survival trumps some plan created in some strategic office which envisioned a touchpoint engagement, but missed the nuances of the engagement itself.
- Changing how decisions are made
Complexity of business and driving the business closer and closer to actual customers, and their decisions, demand that decisions need to be made differently.
Few companies are organized to get just-in-time decisions right for the larger organization itself for even a few decisions throughout a year.
Even fewer are set up to get the hundreds, if not thousands, of just-in-time decisions necessary at the millions of a touchpoints an organization typically faces.
Not all decisions are pivotal and, yet, all decisions are pivotal.
No one has time to coalesce around a specific decision on all touchpoint decisions let alone even the truly pivotal ones <assuming you can even discern between the truly pivotal and non-pivotal>.
I would argue the line between your best decision maker and the touch point decision maker is less important than the criteria the best decision maker may utilize and the touch point decision maker.
In a commoditized knowledge/information world it becomes imperative to highlight the criteria & ‘points to ponder’ which actually decommoditize a decision for a touch point decision maker.
Information should be driven down in an organization to insure a touchpoint decision maker is in a position to notice ways in which their company could help customers improve efficiency, increase quality, and reduce the costs. When that happens you have optimized customer centricity <and, more importantly, your business value to a customer, employee & results>
Suffice it to say that when closer-to-point-of-contact employees have greater autonomy they are able to act on opportunities.
I would be remiss if I didn’t point out that a centralized hierarchy hinders touchpoint decision makers from making decisions let alone even accessing information necessary to making good decisions. I mention that because while changing how decision are made certainly increases a type of vulnerability maintaining the status quo offers one of the most critical vulnerabilities – an inability to adapt and execute well against opportunity.
- Managing the Patterns not the People
Managers manage what they can see and touchpoint decision makers on what they can see.
Better information, and data, certainly gives a business a chance to leverage touchpoint interactions. However, ‘seeing’, in good decision making, needs to expand beyond the moment itself and incorporate some larger patterns.
Unfortunately to do his effectively is more difficult than simply mapping out an organizational chart. Knowledge is rarely static and not everyone knows how to see, or use, patterns.
Yes. That is changing.
Most organizations understand the cloud of data that surrounds every transaction and value of speed at which one can react to that data.
Most organizations understand there is no 6 degrees of separation because, now, it is all within easy grasp.
Well. Let’s say information & knowledge is within easy grasp, but enabled decision making may not be. This happens because many managers are hesitant to accept how little information/knowledge is needed before someone can actually make a useful decision in the moment.
** note: this is a reflection that early decision making experiences errs toward seeking too much certainty but experience drives decisionmakers to lean in on probabilities rather than certainty (I call this optimal certainty).
“The maintenance of organization in nature is not-and cannot be-achieved by central management; order can only be maintained by self-organization. Self organizing systems allow adaptation to the prevailing environment, i.e., they react to changes in the environment with a thermodynamic response which makes the systems extraordinarily flexible and robust against perturbations from outside conditions.”
Biebracher, Nicolis and Schuster in their address to the European Communities (1995)
Pattern recognition offers a couple of key benefits:
Faster Reflexes: As a more agile organization culture (of which is exactly what I am talking about with a controlled autonomy) the company has an ability to blend into the marketplace (versus rigid institutions unable to flex). Technology has changed the way organizations should act because it has changed how the world interacts – the way we shop and consume. It creates new opportunities and destroys businesses that are unable to adapt to a sudden discontinuity with our past.
Decision maker confidence. Face the fact that while everyone says they want to make decisions, a decision, in & of itself, can create some anxiety to a less practiced decision maker. Patterns offer some certainty, more so than a specific data point or ‘rule’, to a touchpoint decision maker.
“The Internet aggregates the actual brand experience, it discloses and amplifies the mismatch between companies and their customers, which can be seriously disrupted.”
Susan Baker, Cranfield School of Management
We should treat data, and patterns, like mirrors, in which a touch point decision maker gets not just information they need when they need it but rather the pattern in order to assign the best decision to the touchpoint need.
What this permits is not a causal problem-solution response, but instead a grander futuristic response.
In what Toffler called “knowledge management,” it’s becoming clear that viewing a company’s knowledge as something separate from its employees is impossible. Our growing understanding of social networks may
I would argue that establishing a pattern recognition system maximizes the social data network as a living breathing thing altered by its use. In addition not only does it maximize individual opportunities, but it also helps leverage real employee/people’s interactions to spot larger trends AND also helps identify internal experts throughout an organization so that you can better merge skills/strengths against future needs.
Some permission of diversity in on the ground decision making increases vulnerabilities <and management discomfort>.
I would argue that some autonomy in an organization helps address the truth that is there is a difference between ‘intended’ strategy at the corporate level and ‘realized’ strategy on the business level, i.e., what management wishes to occur, and what is in fact carried out. That is also part of life in an organization.
“The weather-cock on the church spire, though made of iron, would soon be broken by the storm-wind if it did not understand the noble art of turning to every wind.”
I would also argue that this disciplined disobedient decision making is the dynamic portion of businesses that permits change to meet changing markets as well as adapt to emerging patterns.
** note: if an industry, or a business, is reliant upon standard re-occurring patterns the organization should seek to exploit those most effectively while seeking the random pattern and be prepared with people/resources to exploit it.
I would lastly argue that ‘patterns’ is as much about risk management as it is about enabling people. Simplistically, it reinforces and understand that a decision, and a touch point decision maker, does not reside on an island.
- Managing to customer rather than to business strengths
“Customer is #1.”
“We are customer-centric.”
“The customer is our focus.”
In some form or fashion these are all versions of chasing after customer wants rather than selling business (product/service) strengths that meet needs.
Let me say this. Customers will always exploit a business vulnerability to their own benefit.
Let me say this. if a business permits a vulnerability to be exploited, they will inevitably over invest in the wrong things. I am not suggesting ignoring the customer, in fact, I am suggesting insuring a business offers value, proactively, to a customer day in and day out.
I will also suggest that every business cares about customers and every business, or enough of them at least, are prioritizing customer service and satisfying customers that this simply becomes a race to a commodity position in which you have created high expectations. That formula is a value disaster. I would also suggest passionate pursuit of customer service to its highest levels (which is actually fluid because it is a subjective view held only by the customer and not the business) is often a distraction from a company vulnerability – an inability to not only articulate value but distinctly create product/service value. Yeah. I just said that. A business either forgets its real value proposition (meeting a need) or just doesn’t believe it has one, therefore, it shifts from selling, or offering, real value to be purchased it shifts to “creating experiences” to mask that inability.
I will say this again. I am not suggesting ignoring the customer and offering a product/service which doesn’t actually meet a need (only a want) is only a path to inevitable ruin. What I am suggesting is Value sold, or offered, is often a vulnerability and a sneaky one because there are so many ways to do things which can be called valuable & actually be valued in some way by a customer, but do not represent an enduring value.
- The positive power of disciplined autonomy
Positive power? This isn’t happy management or any of that positive psychology bullshit. This is simply about amplifying loyalty, resilience in pursuit of quality, humility & integrity within the organization.
If you do that you create a positive, principled workplace <and a happier workplace>.
Organizational psychologists have a tendency to focus on problems however I believe if you focus on creating an aligned, strategy to ‘doing/thinking’, organization you actually create a more inspiring organization to work at.
The idea here is giving people a good degree of autonomy surrounding a clear vision creating coherent decisionmaking & behavior.
Sure. There are risks. But huge benefits (if you have the right leadership):
– Everyone can see and manage their work as part of a whole not a bunch of manufacturing “Borg-like” parts and pieces.
– Employees <and often outside partners/alliances> are trusted and treated as responsible, caring, and committed decision makers (often creating behavior not unlike “part owners” of the business). Ultimately the sense of ownership, commitment, energy, and passion levels are much higher.
– It is a fact that small self-contained teams or business units are more flexible and responsive at meeting threats and capitalizing on opportunities.
– Everyone focuses on meeting customer/partner, not internal bureaucracy/process needs WHILE doing so within a strong sense of organizational culture/strategy.
– People have more control over what they are doing replacing the helplessness of working within an inflexible construct (this also has the added benefit of eliminating, or limiting, the transference of anxiety up toward leadership).
– Feedback and response mechanisms are much shorter and closer to the customer and markets.
To be clear.
I am not a customer centric implementer <a consultant who builds organizational methodology to implement a customer centric model>, but I do know in order to effectively implement any version of disciplined disobedience, controlled autonomy or business agility you will struggle against enablers and blockers within the organization. Therefore the leadership must factor in internal organization limitations <and possibilities> when judging the best plan of action. Any consultant who suggests business agility/customer centric modeling will be seamless because “it empowers people & they like that” is lying. What makes things even worse is how senior managers in many dysfunctional organizations (of which I have been in several) proclaim empowerment, participation, collaboration, teams, leadership, trust, and all that stuff. But they ‘dip their toes’ into self-organization/autonomy and often take partial measures while expecting total success. They liberate parts of their organizations (or some individuals and not others) while limiting other parts. They liberate some decisions and limit others. They push hard with one foot on the accelerator while also pushing hard with their other one on the brake.
Let me sum that up. Empowering, or enabling, someone means taking power away from someone else.
If you don’t understand that, you shouldn’t be in management.
But what that really means is that no matter how you slice it organizations are ‘tense anxiety-driven’ structures in which there will always be some ‘decision power/decision making’ conflict.
In the end.
As long as you establish discipline, more decision-making autonomy enables better strategic tactics and more fluid responses to customer input and market input without compromising the culture of the business.
I would argue this is an emergent-focused business model. And, yes, emergent means it has vulnerabilities. But each of these vulnerabilities offers possible benefits: free thinking, adaptable <constantly shifting resources toward opportunities and away from non-opportunities>, emergent, diverse & interpretive based; where the organizational actions rhythm is created by external stimuli … not internally <but the center holds true>.
Conversely, a Construction Business Model <traditional, not emergent based> is all about the system. It doesn’t eliminate all the benefits I just offered in the last paragraph it just limits or constricts, rather than constrain, them.
Look. Everything I have written can actually be done. And maybe that is the most important point to make <and it permits me to remind everyone of one of my opening quotes>:
“Learn to be miserable, fight & win anyway.”
Business used to be less messy in a hierarchal structured business model when the majority of systems and outputs were standardized. Today’s business world, and one that encourages some agility & autonomy, is messier. As Toffler noted in 1985: “in the future the company who knows how to destandardize may be the victor.” Management needs to learn to be more miserable on occasion, fight & win anyway. That is a leadership mindset that, well, sounds slightly miserable.
The benefits are overwhelming obvious and great businesses lead in any environment and enable their people to do the best they can be and be the best they can be.
It isn’t difficult if you trust your people <the employees> and to embrace some disciplined disobedience.
“When I talk of this company, I am not thinking just of a legal or business entity. I am using the word in the older sense, as in a company of scholars, as a company of adventurers, or a company of voyagers. I think our companionship partakes of all these things. We are a permanently dissatisfied company and so far as I can see, we shall not run out of things to be dissatisfied about. I think our work, in most instances, is the best of its kind in the world – and yet not good enough. Not as good as it is going to be. There has not been and there should never be a year when it is not better than the year before. We must be dynamic for purposes bigger than ourselves.”
CEO of JWT