Such challenging situations raise many questions for leaders. What are the implications for management? Which elements can we still control and influence? How do we take decisions and under which conditions? The initial answer to all these questions is surprisingly simple, but certainly not trivial: “It depends.” Find out what exactly this means in the following blog post.
Wide-spread Einstein Insanity
“Insanity is doing the same thing over and over again, but expecting different results.” This statement supposedly made by Albert Einstein describes the common practice in many businesses. Sadly so. Leaders tend to rely on the usual management tools that have worked well in particular situations. Almost all of these methods are based on the assumption that there is a certain degree of predictability and consistency.
The inherent risk of such a management approach is that we tend to simplify things, even when the circumstances have significantly changed. Thus, we base our decisions on completely wrong assumptions. Instead of being in control of a situation, we sooner or later find ourselves slithering into a form of chaos.
Immediate action: a framework for new perspectives
Simply accepting the existence of VUCA can be a helpful first step. Actually, it is the Complexity that produces Volatility, Uncertainty and Ambivalence. It may be useful to draw on a specific frameworkthat provides orientation and helps you to assess the situation and choose the appropriate set of decision and management approaches.
One such framework called Cynefin has been developed by David Snowden and his team of researchers and practitioners. It is based on findings from complexity research. The multiply awarded framework has been applied in various contexts, such as strategy development, Horizon Scanning or terrorism defense. Interestingly, it is still rather uncommon in the leadership domain.
Just like any model, this framework simplifies reality to a certain degree. For practical leadership purposes, this means: Use it as a guidance or navigation system while keeping your eyes on the ball.
5 domains for your challenges
The Cynefin framework categorizes problems in five domains depending on their cause-effect relationship. This helps leaders to better assess situations and act accordingly.
Domain 1: The obvious
This is for situations with a clear and highly stable relationship between cause and effect. The approach follows the logic: sense – categorize – respond. Proven solutions can be applied (Best Practice). Clear process descriptions and checklists are effective tools in this context. A typical example of a Domain 1 situation would be the financial reporting process.
Beware! The obviousness and simplicity of the process might prevent you from being open to new approaches and mindsets. Frequently ask yourself “What would we do differently if we could start all over?” This will make your processes even much more efficient and effective.
Domain 2: It’s complicated
Domain 2 refers to situations with a relatively stable cause-effect relationship that might be difficult to identify at first glance. Ananalysis or some sort of examination along with a considerable amount of expertise may be required to determine the relationship between cause and effect. A sense – analyze – respond process is called for.
Since there may be various ways to solve the issue, a Good Practice approach is taken. Preparing a financial statement or repairing a machine are examples of this domain. Both require expertise and an analytical approach.
There are several pitfalls in this domain: You may suffer from Analysis Paralysis, unnecessarily anticipating and overplanning a situation. Endless expert discussions may simply produce over-complicated solutions.
Managing these two domains with operative excellence has been considered the key to business success for many years. The biggest danger here is to rest on one’s laurels. The assumption that past successes can be transferred directly into the future may prove to be fallacious, particularly if your environment is shifting toward increased complexity..
Domain 3: Complexity is ok
Complex situations make it impossible to predict cause and effect. The relationship can only be deduced in retrospect. The advice is to probe – sense – respond. This requires hypotheses, (well- performed) experiments and iteration as well as an approach based on Emergent Practice. Agile methods come into play here. They allow solving issues step by step while quickly responding to rapid changes. Examples for this domain are the development of new products and services.
Leaders that have learned in business school that every management situation can be planned and predicted often find it difficult to trust in emergent approaches or to recognize and accept complexity at all. There is a strong reflex to fall back to a command- and-control mode, seeking waterproof plans with fixed results. It is impossible to manage complexity in such a way. In fact, this may even cause it to transform to some sort of chaos.
Rather, we need leadership that creates the framework for Emergent Practice and helps to identify patterns. Creative solutions as well as new business models can be successfully developed with this approach.
Domain 4: Times of turbulence and chaos
If no relationship between cause and effect can be identified on a systemic level, we speak of a chaotic situation. Searching for patterns or appropriate solutions is obsolete in this context. With such a high level of instability, you are required to act – sense – respond. This is called Novel Practice . Examples for such chaotic situations are crises (e.g. a liquidity crisis) but also highly innovative processes which intentionally draw on instability.
The first action that leaders should take in such a chaotic context is to create order. Subsequently, the focus is on sensing where there is total, partial or no stability. Based on that follows an attempt to transform the situation from chaotic to complex. Patterns can then be determined in retrospect to identify possible causes for the crisis and to deduce new opportunities.
Paradoxically, managers sometimes assess merely complex situations as chaotic. Such crisis management without an actual crisis may actively promote disruption, particularly if leaders are not used to dealing with complex situations.
Domaine 5: From the dark to the open
Reality shows that causalities are not always easily identified. In such case, it is essential to avoid knee-jerk reactions based on personal problem-solution patterns. In-the-dark situations call for openness and a thorough understanding of context. This is an increasingly important leadership skill in our rapidly changing world.
Put yourself in this fifth domain regularly. Observe your environment. What is changing? Are your chosen problem- solving and management approaches still appropriate? This will help you remain agile in volatile times and keep your business healthy and thriving.
Enjoy the ride and remember to: