Predictability and Organisations

Yesterday, I was struck by an article in the Business Section of the Sunday Times with this heading: Directors told to predict future under new code. That I should be struck by such a heading is, of course, hardly surprising since I have been publishing books and papers for the last 24 years arguing that it is impossible to predict the outcomes of the actions  people undertake in organisations. Indeed, the paradox of predictable unpredictability of human actions is central to the theory of complex responsive processes. The fundamental reason for this paradox is that that we are interdependent individuals, not autonomous individuals. This means that every choice any one of us makes, any intention any one of us forms and every action any one of us undertakes cannot produce some direct outcome all on its own because everyone around us, indeed many at some distance from us, are also choosing, intending and acting so that what happens is the consequence of the interplay of all our choices, intentions and actions. The models of the complexity sciences also display the unpredictability of outcomes because nonlinear relationship can escalate tiny changes to produce completely unpredictable long term outcomes. Indeed, some of the models, for example, those of far-from-equilibrium thermodynamics, lead to the conclusion that the universe is fundamentally unpredictable. And, in fact, our own experience confirms these conclusions about unpredictability.

 

In view of all of this it is amazing how prominent leaders in the organisational world carry any giving out predictions which, of course, are never realised. Take for example the Governor of the Bank of England. A year ago now, Mark Carney took up his post as Governor of the Bank of England after some years as Governor of the Bank of Canada. The first really headline-grabbing action he took was to provide what he called ‘forward guidance’ to the financial markets. He would only raise interest rates if the unemployment rate fell below 7% and he said that this would not happen before 2016. The market did not believe him and began to price in an interest rate increase in 2015. Only a few months later it became clear that unemployment was falling much faster than expected and would probably reach that target by the end of 2013. So the Governor hastily abandoned this target and proposed to use a number of indicators of economic ‘slack’. Just as well because the unemployment rate in May this year fell to 6.6%. What is interesting is how, after it became crystal clear that neither he nor anyone else could predict any economic indicator, he rushed from one failed prediction to others just as likely to fail. He does not seem to have reached the sensible conclusion, which is to abandon all of these useless attempts to predict. Then in his most recent speech he let slip that the interest rate rise could well come in a few months’ time. Why do senior people keep making claims for the future which experience would tell them are futile?

 

Now back to the newspaper article which tells a similar story. The Financial Reporting Council (FRC) commissioned the Liberal Democrat peer and former chairman of the insurer Aviva, Lord Sharman, to lead an expert panel to revamp the going concern test for organisations since the current test had failed to pick up the vulnerability of the banks in 2008. After months of deliberation and a number of rounds of consultation they produced their recommendation of a new corporate governance code for one last round of consultation. They will recommend that Directors be required to tell investors how long they think their company will remain viable: they must declare that their companies are viable for the foreseeable future and the foreseeable future has to exceed 12 months. So a group of eminent people spend months, and no doubt a lot of money, to come up with a recommendation which simplistically assumes that the future is predictable when in our experience it clearly is not. Even more interesting is the response of investors and trade bodies. For example, John Moulton, the veteran venture capitalist who runs Better Capital, said: ‘It is madness. No company will be able to come up with the right answer’. The panel says they will consider this point. So the great and the good continue to formulate policies on the basis of some very dodgy assumptions, which they never reflect upon, while those they are trying to protect make clear their knowledge that such protection is impossible. It looks like some who make a great deal of money do not operate on outdated assumptions.

 

Why are we so caught in a way of thinking that denies our experience? I think it is because the great and the good constitute a ‘thought collective’ in the terms of Ludwik Flek. In a previous blog I talked about Flek’s conclusion that we all belong to some thought collective and each of these collectives is characterised by a thought style. To question such a thought style is to risk exclusion from the thought collective. And it is not just policy makers and leaders of large organisations who are trapped in a ‘thought collective’. Some of the most effectively policed thought collectives are to found in academia where journals control what can be published and business schools continue to teach students all kinds of misleading ideas about predictability and the use of tools and techniques.

Reflexive OD

Previous blogs have outlined key features of the theory of complex responsive processes of relating between members of organisations as a way of making more sense of what we actually do in our everyday lives in those organisations. This theory makes a number of claims.

The first is that change across whole organisations is not caused by grand designs rolled down a hierarchy. Rather changes in the patterns of relationship between a whole population of people, which is what an organisation is, emerge across that population in the interplay of many, many local interactions.

A further claim is that all local interactions in all organisations and economies in all countries reflect the same fundamental processes. First, local interactions are always conversational in nature – societies and organizations are ongoing conversation which is always reflecting the generalized other, the habitus, the game, the social background, the culture. Organisational change then means change in the patterning of conversation arising in local interaction. Secondly this social activity of gesture and response always reflects power figuration which, together with ideologies, are the basis of the inevitable dynamic of inclusion and exclusion. In other words, organisational life is processes of ordinary everyday politics in which we are always making ideologically based choices and decisions. Taking all of these processes together we can see how organisational life is both competitive and cooperative, both conflictual and consensual. The inevitable conflict will always be a reflection of the fact that as agents in organisational life we are always different to each other and at the same time we are the same as each other.

No matter what our role in an organisations is, whether leader, manager or staff member, we are all participating in all the process described above.  This must also apply to the role of OD consultant. As OD consultants we enter into the conversational life of an organisation and we take up power positions which may well threaten the pattern of power relations for some, or we may find ourselves reinforcing current power relations, leading us to sustain stability while proclaiming that we are change agents. We inevitably find ourselves included in some groupings and excluded from others and our ways of participating are inevitably reflections of the particular ideologies we believe in. The invitation from the theory of complex responsive processes to OD practitioners is to refocus attention from an exclusive concern with tools and techniques to a focus which pays much more attention to the actual processes that people, including OD practitioners, are engaged in.

Since the theory of complex responsive processes is offering an explanation of what we are already doing it is not prescriptive and so does not yield much in the way of tools and techniques of OD practice. It does not deal with what we should be doing as OD practitioners but offers instead a refocusing of attention in reflecting upon and thinking about what we are actually doing together now rather than focusing attention on idealised futures and so called tools and techniques, the success of which is assumed rather than supported by evidence.  Instead, I am assuming, also without anything like scientific evidence, that this refocusing of attention will yield greater understanding of what is going on and that this greater understanding will be expressed in changes of practice. Such changes cannot be predicted in advance nor is there any guarantee that the changes will yield any improvement. I believe, however, that on the whole it must be better to approach organisational life in a more rather than a less thoughtful way. So the ‘prescription’ that emerges from the theory of complex responsive processes is the invitation to take a more reflexive position in thinking about what we are doing and the practical judgment we must rely on in conditions of uncertainty.

By reflexivity I mean processes that amount to more than reflection. We may think of this reflexivity-in-action as the principle ‘technique’ for developing practical judgement.

To reflect means to think deeply about a subject and some synonyms are to ponder, ruminate, contemplate, or speculate. Reflection is the intellectual and emotional exercise of the mind to reason, give careful consideration to something, make inferences, decisions, and find solutions. Reflection can be directed at one’s own experience, as in introspection, which is the activity of reflecting on one’s own thoughts and feelings and forming beliefs about one’s own mental states. What, then, does it mean to practice reflexivity? A reflexive pronoun is the object in a sentence indicating that the object is the same as the subject in that sentence. The subject and the object are then not separate but are simultaneously present. For example I might say that ‘I was washing myself’ so that the reflexive pronoun ‘myself’ bends back to the ‘I’. This reflexivity should not be understood as introspection since reflexivity involves much more than introspection and the form of reflexivity that I want to point to in this chapter needs to be distinguished from both reflection and from introspection. Reflexivity points to the impossibility of standing outside of our experience and observing it, simply because it is we who are participating in and creating the experience, always with others. Reflexivity is the activity of noticing and thinking about the nature of our involvement in our participation with each other as we do something together. So, I am using a notion of reflexivity which can only be social. Since we are interdependent individuals, reflexivity must involve thinking about how we and others involved with us are interacting and this will involve noticing and thinking about our history together and more widely about the history of the wider communities we are part of.

The ability to take a reflexive stance is the basis of practical judgment, which is an understanding of group interaction – the expert manager is one who has developed the ability to notice more aspects of group dynamics than others do and a greater ability to make sense of those aspects. What is called for, then, is the practice of narrative forms of inquiry because it is in the detail of the narrative that we find ourselves participating in that we can express the themes emerging in our experience, as well as the details of context, that enable us to form judgments on what is going on and what we might do as the next step. The ‘technique’ of narrative inquiry involves leaders, managers and members of an organization exploring together the history of the situation they find themselves in, trying to identify how they have together created this situation.  Here ‘technique’ requires self-discipline on the part of all in engaging in a mode of inquiry that cannot be ‘controlled’. The ‘technique’ involves scrapping the bullet points and turning instead to narratives that provoke further reflection. What I am proposing, therefore, is that the capacity for practical judgment in organisations can be sustained and developed by the ‘technique’ of reflexive inquiry into the narrative of what we are doing together in ambiguous and uncertain situations. For leaders and managers, in practical terms, this means consciously creating opportunities for groups of colleagues and others to engage in the kind of inquiry that I have been describing. I would call this reflexive OD practice.

An OD practitioner who is an expert at working in reflexive ways may assist clients to greater awareness of their roles in the organization. Consultants who work in a reflexive way with groups of leaders and managers may help to widen and deepen communication in a group and so produce greater meaning. This activity cannot be reduced to rules and procedures. The work in the development of more fluid and complex conversation involves curbing the widespread pattern in organizations where leaders and managers focus on the future and move immediately to planning and solving problems.  This can be done by exploring narratives of what those in the group have done in the past in order to develop some insight into what they have been doing and why they have been doing it in a particular way. Such conversation grounds group members in the present as they make sense of the past in the present and opens up more varied and grounded ways of taking account of the future in the present. A reflexive form focuses on narrative. It is very helpful for leaders and managers to write short narratives of troubling events they are currently experiencing and then inquire into these narratives in the group. Such activities develop thinking and lead to greater insight into what is going on.

 

 

 

Leadership and the ‘vision thing’

Roberto Martinez, manager of Everton football club which did very well in the Premier League in the UK this season, says that he always had a vision that the team would play in the European Champions League, for which his team has now qualified. Meanwhile political pundits, and sometimes members of his own party, are critical of the fact that the leader of Her Majesty’s Opposition, Ed Miliband, doesn’t have a sufficiently clear vision. In contrast, President George Bush (père) once said that he didn’t do ‘the vision thang’.

If you search on the terms ‘leadership vision’ in any search engine it will turn up thousands of hits, consultancies, business schools, books, which claim that having leadership vision is probably the most important quality a leader can have. There are any number of proprietary tools, techniques, grids and frameworks for generating such a vision. The idea is now virtually unchallengeable.

How would I square the idea that vision is something an individual leader ‘has’ with some previous posts where I argued that leadership is an improvisational and ensemble performance? If vision really is the exceptional and innate characteristic of an individual leader, then maybe the leaders of banks and corporations really do deserve the fantastic salaries that they command. Is it really the case that some are born with visions, and the rest of us are born to be led by them. Continue reading

Complexity and Management Conference, 6-8th June 2014

Only one week to go before the close of the early bird rate for this year’s Complexity and Management Conference on organisational culture.

Book here.

Key note speaker: Prof Ralph Stacey

Good conversation, good food, great venue.

Can leaders change organisational culture? – alternatives from a complexity perspective. Complexity and Management Conference June 6-8th, Roffey Park. 

Early bird rate ends April 30th 2014.

Orthodox management literature contains many of the same assumptions about organisational culture: that changes in culture can be linked to organisational success and improvement; that culture is a mixture of the tangible (rules, behaviour, rewards) and the intangible (symbols); that culture can exist in an organisation and in sub-units within an organisation; that it can be ‘diagnosed’ and changed, perhaps with an ‘n’ step programme moving from existing to preferred cultures; that it is often precipitated by a leader having an inspiring vision.

For a discussion of alternatives from a complexity perspective come to the Complexity and Management Conference.

The key note speaker is Professor Ralph Stacey, one of the world’s leading scholars on complexity and management.

There will be lots of opportunity for lively discussion throughout the weekend.

Conference fees include all board and accommodation from 7pm Friday 6th to lunchtime Sunday 8th June. Book here.

 

Now booking! Complexity and Management Conference June 6-8th 2014

Can leaders change organisational culture? – alternatives from a complexity perspectiveImage

What do we mean when we talk about the ‘need to change organisational culture’? This is a way of speaking about culture which is now taken for granted, whether in relation to banking, the UK’s National Health Service or sometimes whole societies. What is organisational culture anyway, and to what extent can even the most powerful leaders and managers (or politicians) change it in ways that they decide? And if we were to conclude that it’s not possible to change culture, at least not in predictable ways, then why has this way of speaking and thinking become so widespread? What else might be going on, and what purpose does the culture-change narrative serve?

This year’s Complexity and Management Conference will follow on from last year’s discussion of leadership and will encourage the exploration of a term which is widely used but poorly understood. Participants will be encouraged to share their own experiences of organisational change, particularly when it is framed in terms of changes in culture. We will explore together the implications of the discourse of culture change for leaders and managers.

The key note speaker this year is Prof Ralph Staceyco-founder of the Doctor of Management programme at UH and a groundbreaking scholar with his work on the complexity sciences and their relevance to leading and managing organisations.

The conference will be informal and highly participative, as in previous years. The conference fee will include all accommodation and food. The conference will be held at Roffey Park Institute in the UK: http://www.roffeypark.com as usual.

The booking page can be found here. There is a discount for early-bird bookings before May 1st 2014. A more detailed agenda will follow but the conference begins with a drinks reception @7pm on Friday 6th June and ends after lunch Sunday 8th June.

Participants wishing to set up a particular themed discussion in a working group during the conference should contact Chris Mowles: c.mowles@herts.ac.uk

Complexity and Management Conference June 2014

This is just a reminder about the Complexity and Management Conference (June 6-8th, Roffey Park, UK) with the title:

Can leaders change organisational culture?

alternatives from a complexity perspective.

Prof Ralph Stacey is the key note speaker.

We will be setting up a payment page on the university website in early February. As usual there will be discounts for early bird bookers. Fees for the conference will include all meals and board, and the conference is residential.