How do you “broadly speaking” organize to meet unexpected events such as those called Black Swan events by Nassem Taleb? An article the 2 February, 2011 Vancouver Sun (page D5) titled ” Looking in the rear-view mirror no way to prepare for future risks”, by Juma Wood explores this question.
Wood raises a number of thoughts about what is happening (re. increasing uncertainty) and what are some reasonable responses. His comments are thought provoking and they helped me clarify some of my perspectives that I have touched on various times in this BLOG. This post will build off what Wood proposes and integrates them into my proposed TM framework.
Wood’s key observations:
- Most contemporary organizations are built on a mechanical concept of command and control.
- The information age has increased and complicated our risk portfolios, globalizing pertains beyond the comfortable reach of command and control approaches.
- Resilience in the 21st century means increasing (decreasing?) response times by building adaptability and dexterity into the organization’s fabric.
- Need to take steps to decrease bureaucracy, transfer responsibility and decision making across the organization.
- Means hiring people who can handle this responsibility
- Means people will need skills to coherently synthesize various streams of information while learning to tolerate ambiguity.
One, gratuitous comment to get out of the way:
I suspect that our world is no less uncertain and complex than it was to those in any other age of humanity. People establish their institutions to deal with the perceived uncertainties in their lives the best they know how.
Does our perceived sense of uncertainty today require different fundamental regarding how we organize our social institutions? I would argue it depends on the organizations purpose (what aspect of uncertainty and risk is it charged with dealing with in our lives).
- I find it hard to perceive how we would organize a chemical process system differently than we do now. These organizational forms are often quite “controlled” in operation and we would not have it any other way as they can become quite dangerous with any significant variance in operational norms.
- We see the military make significant changes to how it deals with perceived changes in warfare and combat situations (although it may seem “after the fact”). We see emergency response units have core reactive flexibility while maintaing coherent technical role clarity.
- We usually see in organizations that are viewed as very “organic” “non-mechanistic” (surgery operations, movie making) with high degrees of rigidity in parts of the organization – typically around key roles where clarity about responsibility is paramount.
As I reviewed Wood’s suggestions, the concern for me centred around the fundamental dilemma – “How do you organize around what you don’t know or foresee?”.
To organize means to achieve at least two outcomes: deal with a purpose/need; deal with it efficiently. By efficiency, I mean with a “minimum of fuss”. So this concept can extend to beyond working capital concerns.
It is the efficiency dimension that makes organizations structurally set (even rigid). Now the irony. In environments where there are high degrees of stress, uncertainty and risk – we need to minimize our energy outlays so we can deal with surprises. This means that some aspects of our lives need to be very ordered, predictable and consistent. I suggest that we achieve this:
- In our “physical” sides of our lives with process like organizations;
- In our “social” sides of our lives with social norms which can range from being extremely loose to being extremely ordered ;
- In our “who we are as a person” sides of our lives with values, frames of references (FOR), etc. which can range from “soups to nuts” (sorry for the deliberate bad pun). These to can range from being very loose to very rigid. What I have observed, is during personal crisis, having clear, explicit even rigid like belief systems can be very important to personal survival.
So, I am left with appreciation, that rigid like organizational forms in our lives is not a predictor of failure under uncertainty.
But what if you wanted to design an organizational form that was capable of dealing with uncertainties in its typical operating environment (i.e., surprises happened frequently). What would the design principles be? I suggest the following attributes may be looked upon favourably:
- Effectiveness is more important than any concept of efficiency (more important to get the job done than at what cost).
- Concept of redundancy/reserves would be entrenched (important to be able to direct resources to surprises without creating internal chaos)
- Role modularity to the extreme. Easily reassembled. Simple use modules vs. multiple use components (easily reconfigure to the new purpose/need).
- Understand how to best see the likelihood of surprises. Means having a clarity around your FOR of how the world works and what the limits of that FOR are (know your competence/incompetence, know how to establish leading indicators).
- Have robust healthy capacity to second guess what you believe and have chosen to do in the past (denial should be a river not a state of mindset)
- Incorporate the skills to effectively “re-theorize” (every organization is a physical embodiment of a theory on how best to operate – if you can’t see this you are in trouble).
- Accept you will never be a single event/sport olympic athlete (specialization adds to your risk).
- Organize so that you are comfortable with walking away (reduce likelihood of loss through over commitment).
- Organize with at least three back doors (have an exit strategy).
- Know the overall purpose is to survive as a person/group of people (understand the difference between bravery and martyrdom).
So although I have arrived at a different place than Juma Wood offered, I am where I am today because of his thoughts. Thank you.