From cave paintings to moon landing, humankind has achieved amazing progress based on imaginary models, analysis and control of equilibrium-oriented systems broke up into their constituent parts, such as the deterministic celestial orbits, the invisible hand in market economy, the genetic code of life and the probabilistic atomic particles.
Largely due to the computers dissemination in last decades, however, it has been developed a new vision of the real world modelled by complex systems of multiple elements that interact between themselves and their surroundings in an unpredictable and dynamic way, spontaneously regenerating and co-evolving emergent features and adaptive behaviors. In various fields, that has led to breakthroughs in examining phenomena hard to be understood or explained before, such as climate changes, stock market variations, clouds and galaxies distributions, heart and epidemic diseases, natural swarms and shoals, as well as organization and business management.
In order to take better advantage of both the above approachs to knowledge creation, this hack aims to thrive in matching the recognizable and effective PDCA (Plan-Do-Check-Act) Management Cycle with basic concepts related to Complexity Science / Chaos Theory, in special:
- the possibility of great effects brought about by small causes (“butterfly effect management”)
- the finding of universal patterns in the behavior of different systems (“fractal management”)
- the use of simple models for succeeding in competitive environments (“self-organizing management”)
In summary, the dream of reinventing management implies to meet the collective challenge of making our organizations and natural spacecraft most valuable for everyone today and sustainable for the future generations. The number of organizations managed by PDCA-oriented systems and their specific relevant results are some key performance indicators (KPI) that could be used to assess the effectiveness of this hack.
Although emphasizing the moonshots above, this hack is supposed to deal with all of them as described in the following problems and next solutions:
– Lack of appropriate business focus on human expectations and values
The main needs are: companies that feel like movements; stakeholder relationships to be seen as interdependent and positive-sum; transforming the noblest human ideals into the noblest business ideals
The main needs are: enlarging the circle of trust; reinvention of control systems that shape rather than stifle human contribution; releasing everyone’s capacity to create; getting passion as a multiplier of human effort by giving people the chance to work on what they truly care about; fostering organizational adaptability with individuals whose views don’t cluster around the mean; creation of work environments as immersive and involving as the best video games
The main needs are: participation of all stakeholders in setting strategic direction; successive rounds of experimentation to take big opportunities; a resource allocation process that more accurately mimics the selection pressures of a real market; a way of separating critical decisions from personal ‘wins’ and ‘losses; creation of large-scale organizations without losing human scale
The main needs are: management education designed to create a heightened and enlightened consciousness; management beyond the legal boundaries of the enterprise as the distinction between ‘inside’ and ‘outside’ disappears; new management principles more than new management practices
The main needs are: de-coupling authority and influence from hierarchical position; moving beyond the heroic model of leadership; informing people at the front lines at least as well as those in the executive suite; reducing the number of permissions required to start something new; more power to the pro-change than to no-change constituency
The main needs are: new measurement systems that capture the things that really create value; embrace rather than dodge the need to manage paradox; stop trading away long-term goals (like a company’s future) for short-term gains
The proposition is to adopt the well-known and proven-effective PDCA (Plan-Do-Chect-Act) Cycle, which has entailed the fundamental tasks of managerial work for a long time, especially in most post-war management systems. Even though related to Management 1.0 tools and processes, the PDCA has an open and renewal-oriented nature that makes it suitably flexible and adaptable to go on carrying out the work of managing throughout successful and competitive organizations, at present and in the future as well.
The following are the specific suggested actions, which are illustrated in the attached documents and images in Helpful Material below:
1 – Adopt and disseminate a simple and pragmactic concept of management as a social technology actually understood and used by everybody, not only by people in position of “managers” or senior executives
The main MIX Moonshots objectives that could be adressed and/or achieved by the this action are:
• encourage healthy competition between opposing objectives and enable employees at all levels to dynamically manage key trade-offs such as short-term earnings and long-term growth, competition and collaboration, structure and emergence, discipline and freedom
• amplify imagination nurturing innovation in every corner of the organization and engender human creativity, that is to equip people with innovation tools, allow them to set aside time for thinking, de-stigmatize failure, create opportunities for serendipitous learning and encourage the outliers with discomforting or divergent points of view to speak up and ensure that their voices are heard
• develop an authentically homegrown vocabulary for communicating people ambitions with the language of honor, truth, love, justice, and beauty in addition to the focused and efficient goals of traditional management
• implement a control system based on a high-trust and low-fear culture, employee creativity and entrepreneurship levering the power of shared values and aspirations, as well as people motivation and discipline coming from within rather than sanctions as a way of forcing compliance
• focus on a higher purpose of achieving socially significant and noble goals to fully mobilize human energies, compelling to spur renewal and legitimate corporate power beyond wealth maximization
2 – Establish and detail a PDCA-based Management Model aligned to existing management models developed in other forums, such as ISO - International Organization Standardization (e.g. ISO 9001 on Quality Management, ISO 14001 on Environmental Management and ISO 26000 on Social Responsibility) and National/Regional Awards for Excellence (e.g. MBNQA - Malcolm Baldrige National Quality Award in USA, PNQ - National Quality Award in Brazil and EFQM - European Foundation for Quality Management Prize)
The main MIX Moonshots objectives that could be adressed and/or achieved by the this action are:
• develop holistic performance measures that capture the many interrelated variables that drive success, without limitations such as overweighting or under-weighting certain outcomes, insufficient account of critical externalities and inadequate attention to the “creative economy”
• redesign business schools and companies training programs to help people develop new skills (such as reflective or double-loop learning, systems-based thinking, creative problem solving and values-driven thinking) encouraging their application in association of traditionally training focused on a particular portfolio of cognitive skills (such as left-brain thinking, deductive reasoning, analytical problem solving and solutions engineering)
• rebuild the foundations of management thought and practice beyond operationally excellent - no longer enough to adaptable, innovative, inspiring and socially responsible organizations – and assure transparent information systems that give everybody a view of critical performance metrics and key priorities
• embrace and exploit a diversity of experiences, values, and capabilities in order to generate a rich variety of ideas and options, as well as bold and incessant innovations to compete with “everyone from everywhere”
• create an environment with lots of frequent fast-paced and strategic experimentation to evolve more rapidly, with internal markets to make resource allocation more flexible and dynamic in a decentralized and apolitical system where legacy programs and new projects compete on an equal footing for talent and cash
3 – Adjust and implement that Management Model according to the pertinent goals and processes applicable to every level - from strategic to individual operations - of any organization - from worldwide corporations to small/micro businesses, public or private, governmental or not, providing any kind of product or service
The main MIX Moonshots objectives that could be adressed and/or achieved by the this action are:
• replace traditional authoritarian top-down pyramid by a “natural” and flexible/dynamic hierarchy, where status and influence derive from the ability to lead (rather than accumulating positional power) and the power flows rapidly toward those who are adding value
• set direction broadly shared with all organizational members (bottom-up, not any small group of senior executives) and interested external constituencies (outside-in, from complex business environment)
• disaggregate the organization into smaller units and fluid project-based structures, without rigid unit boundaries, functional silos, political fiefdoms and groupthink on a grand scale
• create new decision-making processes that capture a variety of views and variables to be factored into key decisions, minimizing position-related and unstated biases, executive hubris and incomplete data, as well as exploiting the collective wisdom with the advice of rank-and-file employees, who are often best placed to evaluate the issues that will make or break a new strategy
• better align personal interests and professional responsibilities, to take the drudgery out of work and to grant employees more control over what they work on
Some key performance indicators (KPI) that could be built to evaluate the effectiveness of this hack are the amount of organizations managed by PDCA-oriented systems (e.g. more than 50 thousand users of ISO or FNQ-based management models in Brazil) and specific KPIs relevant to value creation at such organizations (e.g. those of the Brazilian hydroelectrical sector showed in the attached file MVHack.ppt below).
In contrast with an ideally predictable and stability-seeking world in classical science, the reality has a long time insisted on instabilities, turbulences, irregularities and other evolutionary arrangements such as natural life, self-consciousness, business organizations and internet communities. Fortunately and surprisingly, a lot of properties and problems emerging from that greater complexity have been tackled by dynamic models where interconnected agents repeatedly perform just simple rules in accordance with their collective integrity and environmental changes.
The following are the most likely practical impacts from the proper implementation of PDCA as a kind of DNA for developing a technology of human accomplishment that fits in with a complex world of accelerating change, hyper-competition, knowledge levelling and heightened accountability (see illustrative Internet Links in Helpful Material below):
1 – The overall empowerment and knowledge share about a feedback and learning tool spread throughout interacting people may create conditions to tiny/local actions evolve into great/global consequences, that constitutes the principle of sensitivity to initial conditions or perhaps the “butterfly effect management”
The main MIX Moonshots objectives that could be adressed and/or achieved by the this impact are:
• organizations ability to adapt, innovate, engage and inspire people to extraordinary accomplishment, giving way to infuse even the most mundane business activities with deeper and soul-stirring ideals, as well as to fully mobilize human energies and offer a case for why what people do matters (“What’s worth my life?”) - an original and persuasive blueprint for where their industry could and should be going
• local experimentation and bottom-up initiatives facilitated by vigorous open and uncensored internal debates (such as tomorrow’s threats and opportunities about strategy and policy), contentious opinions freely expressed, and diversity, disagreement and divergence valued at least as highly as conformance, consensus and cohesion
• resilience and adaptability as information is widely shared and has reduced costs of hoarding, commitment and competence are encouraged by people trusting their own judgment to take risks and innovate, and value is created when first-level employees meet customers with intelligent information and freedom to act quickly and do the right thing at the right moment
2 – The application of the same structural and value-driven process involving high collaboration and diversity of stakeholders, businesses and organizational functions may create conditions to huge flexibility and interdependence in multiple levels or scales, that constitutes the principle of self-similarity or perhaps the “fractal management”
The main MIX Moonshots objectives that could be adressed and/or achieved by the this impact are:
• highly collaborative management systems that more fully reflect the inescapable interdependence of all stakeholder groups designed into organizational operations at every level, such as employees, local communities and the planet, in addition to the interests of some groups such as senior executives and the providers of capital
• substitution of the top-down “one best strategy” for models based on the biological principles of variety (generate lots of options), selection (find low-cost ways to test critical assumptions), and retention (ramp up spending once a strategy has started to gain traction)
• knowledge diversity due to scholars and practitioners alike searching for new principles in fields as distinct as anthropology, biology, design, political science, urban planning and theology, what is essential to strategic renewal and a prerequisite for long-term corporate viability
3 – The alignment and coordination of autonomous and decentralized processes in an open and ever-changing environment may create conditions of increasing adaptability and resilience due to natural hierachy reconfiguration or spontaneous renewal, that constitutes the principle of complex adaptive behavior or perhaps the “self-organizing management”
The main MIX Moonshots objectives that could be adressed and/or achieved by the this impact are:
• transition from “command and control” to “motivate and mentor” leaders to mobilize and coordinate human efforts, energizing and enlarging the community of volunteers or legally independent agents rather than manage it from above, as in the emerging open business environments where value-creating networks and forms of social production increasingly transcend organizational boundaries
• corporate renewal by a participatory process that engender wholehearted and widespread commitment to proactive change, turning the organization more adaptable and able to quickly reconfigure capabilities, infrastructure, and resources aiming to intercept fast opportunities
• communities of passion enabled by structuring work and revising management processes, by converging like-minded individuals around a worthy cause, by connecting employees who share similar passions, and by better aligning the organization’s objectives with the natural interests of its people in order to engage them emotionally into a higher calling at work
Despite not being exactly the proposed management model (mainly in regard to the focus on results) and the inevitable pitfalls in real life, the worldwide knowledge and use of ISO standards may be considered as an opportunity to continuosly regenerate and integrate management technology yielding whole benefits greater than the sum of the various organizations or businesses that evolve together to adapt to environmental changes or pressures.
Other cases of such possible (co-)evolutions refer to (self-)organized efforts in disseminating (self-)similar PDCA management tools in Brazil, for example the Management Excellence Model (MEG®) which see organizations as living entities in interactive and interdependent complex ecosystems. This model has been used and developed as the basis for the Brazilian National Quality Award (PNQ) conferred by the National Quality Foundation (FNQ) - a “butterfly flap” in 1991 that has already trained more than 45 thousand people in world class competitiveness and relies on a dynamic and open community of voluntary work, study, debate and shared knowledge, experience and good management practices.
By the way, the recent and substantial raising of foreign investments in Brazil has not as sole reasons its large consumer market governed by a charismatic ex-metallurgical worker who became president nor the chinese appetite for commodities like iron ore. Moreover and more sustainable, it also counts a “silent revolution” in the search for excellence that has aligned many Brazilian initiatives in the entire socio-economical landscape, such as political leaders who have applied a “management shock” to governmental issues and a network of thousands of organizations (private and state-owned, large to small-sized, over 10 million people) committed to outstanding performances through the FNQ’s Management Excellence Model - e.g. the hydroelectrical sector, responsible for almost 80% of the country’s energetic matrix and with five PNQ laureates in last three years.
Taking into account that “words touch the feelings while examples drag to actions” and also that any organization or business can be seen as a set of projects or programs to be carried out (long-term strategies and plans deployed to daily operations), the first steps recommended are:
– Apply the proposed solutions to the MIX itself, contributing to issues such as the definition of performance indicators and metrics to evaluate the accomplishment of its vision/mission, coordination of rituals to assess the achievement of moonshots or the short/long-term targets of Management 2.0, and methods for taking corrective/preventive actions to solve problems or unexpected results
– Test the usefulness of the proposed solutions by experiments (on the whole or even partially in selected units) at whichever MIX organization, especially from the Renegade Brigade, for example teaching the new concepts and techniques at universities and business school, advising and learning from consulting projects, as well as improving or revising management systems of diverse businesses
– Enlarge the alignment and synergy of MIX community with other organizations also involved in management development or reinvention - such as ISO, National/Regional Awards Coordination Bodies, additional business schools, consulting companies and so on - where there are most likely enough successful stories, hacks and barriers that may promote the spontaneous co-evolution of the proposed solutions
Einstein once said that past and present people, similarly motivated, as well as their acquired knowlegde, are worthy of being treated as friends. On the other hand, the Argentinean writer Jorge Luis Borges compared a book to a lot of sheets with dead symbols, that nevertheless wake up their authors when they are read.
So, the following are some friends of mine who contributed to this hack and deserve to be awakened:
• Freedman, D.H. - Is Management Still a Science?, Harvard Business Review, Nov-Dec 1992
• Okes, D. - Complexity Theory Simplifies Choices, Quality Progress / American Society for Quality, July 2003
• Samdani, G. - The Simple Rules of Complexity, Chemical Engineering, July 1991
• Mandelbrot, B. - The Fractal Geometry of Nature, San Francisco, W. Freeman,1982
• Arthur, W.B. - Positive Feedbacks in the Economy, The McKinsey Quarterly 1994 Number 1
• Gleick, J. - Chaos: Making a New Science, New York, Viking,1987
• Wheatley, M.J. - Leadership and the New Science, Berrett-Koehler Publisher, Inc., 1992
• Brown, S.L. & Eisenhardt, K.M. - Competing on the Edge, Harvard Business School Press, 1998
• Stewart, I. - Does God Play Dice?, Oxford / England, Blackwell, 1989
• Beinhocker, E.D. - The Origin of Wealth, Harvard Business School Press, 2006
• Cohen, J. & Stewart, I. - The Collapse of Chaos: Discovering Simplicity in a Complex World, Penguin Books, New York, 1994
• Waldrop, M.M. - Complexity: The Emerging Science at the Edge of Order and Chaos, Simon and Schuster, New York, 1992
• Maguire, M. - Chaos Theory Offers Insights Into HowTeams Function, Quality Progress / American Society for Quality, June 1999
• Kaufmann, S. - At Home in the Universe: The Search for the Laws of Self-Organization and Complexity, Oxford University Press, New York, 1995
• Kelly,S. & Allison, M.A. - The Complexity Advantage, McGraw-Hill, New York, 1999
Dear Mr. Cotrim Arabe, your interesting essay addresses an interesting subject, the complexity of management. We have common approaches (I was licensed by the European Foundation for Quality Management to present their EQA in company, I introduced ISO 9001 in company and in government programs, and I have taught strategic management at post-graduate level. I consult with senior management on strategic and organizational effectiveness. Margaret Wheatley’s book was inspirational). Of course, there are differences (I did read Gleick, but I do not claim to understand the chaos theory, and I did not get close to the fractal theory). In the following lines, I would like to suggest some points where my Platform of Management-Innovation may complement your approach. For details, allow me to refer you to my latest book “Innovate out of Crisis - Second (and revised) Edition” Create Space 04/2010.
I suppose that we can agree that management-innovation requires a good reason to change, a clear method to follow, and a critical mass of people pushing for change. Hereafter, I will focus on the method that should show the way to attain management-innovation.
In order for people to understand how business-value is created/destroyed in their organization, they must look at the interactions between 3 business value-drivers, namely the 5 strategic resources, the 2 rings of management processes, and the 5 significant-stakeholders. You may remember that Total Quality Management taught us to look at the interactions between processes to find areas for improvement. Here we are dealing with the complexity of the management-system, and things are a bit more complicated.
The first layer of managing complexity looks at the interactions between the 3 business value-drivers for a high-level view of the gap between the envisioned desired state and the current status. This enables the leadership to formulate the needs of management-innovation. The second layer provides a detailed breakdown of the 3 business value-drivers in order to get into the details of the interactions inside/out and outside/in. This is where value-innovation projects are planned. The third layer involves the interactions between strategy and operations, between the future and the present.
Business-value is created on the 5 strategic resources. The Organizational Capital – one of the 5 strategic resources - is the cornerstone of my subject model. Inspired by McKinsey’s The 7 of the organization, it encompasses the strategy fundamentals, the style of the leadership, the structures of the organization, the systems of the management, the shared knowledge. As you see, complexity starts here, and failure to deal with it systemically will impair programs of management-innovation. For brevity’s sake, I will only touch hereafter on the systems of management, and on the structures of the organization. (See Chapter Three in my book).
The systems of management feature the 2 rings of management processes, namely the 4 steering or strategic processes entrusted to the business-leaders, and the 4 business-processes delegated to the operations management. Deming focused his P-D-C-A on the business-processes. Today, the big, big problem is to connect the steering and the business-processes, the planners and the doers. (See also my article “Connect the Planners and the Doers”, Quality Progress 2001) Obviously we need the planners and we need the doers, and most importantly we need to connect the two. “The Model of the Two Rings” (M2R) presents my solution to this problem, and it responds to the European Quality Award’s call for a fitting process of policy deployment. M2R expands on the Japanese Hoshin Kanri.
M2R provides transparency over the entire roll-out of the management processes and the strategic resources therein employed. Thusly, everybody can see the distribution of the roles, the responsibilities, the resources. Everybody can see where they stand and where the others are going. Motivation is a group thing. I remember that, when I was rowing at the university regatta, seeing where we stood and where the other outriggers were moving, I can tell you, that was a powerful motivation. (I refer you to my Chapter Three).
M2R also includes the reviews/evaluations, and the rewards. The reviews and the rewards are tangible levers of motivation. As concerns the evaluation, I cannot stress enough that it must consider the performances on total resources that encompass both the tangible as well as the intangible assets. (I refer you to my Chapter Six where you will find the method that I advocate to measure the return on all the resources invested, the tangible as well as the intangible assets).
Let me point out that M2R and the other best-practices that are featured in the Platform of Management-Innovation - provide the self-referential that - according to Margaret Wheatley - are a prerequisite of efficient self-managed structures. I do not believe in organizational effectiveness without some form of hierarchy. Leadership implies some form of hierarchy, be it a formal or an informal one. We competed in the university regatta on an out-rigger four with helmsman. There is also an out-rigger four without a helmsman, but that requires a highly skilled team, and the first oar acts as the helmsman. However, when you take a larger group, such as the out-rigger eight, there are just too many oarsmen to keep the course without a helmsman. There has got to be someone that sets the objectives, the pace, and that allocates the resources. There has got to be someone to whom the objectives are assigned and that leads the team to elaborate and to implement the strategies. And so, the issue – in my opinion - is not hierarchy as a concept, but rather establishing the kind of hierarchy that suits the organization and the situation the organization is in. Moreover, the hierarchy must trust the people and be trusted by them so as to foster rather than to stymie commitment-cooperation-collective creativity. (In my Chapter Three you will see how the targets/means are deployed though 2-3 levels in the company. Corporations that encompass several companies have to add an additional level of deployment).
Modern management is carried out mainly on a project-by-project basis. The teams that work on projects need a team leader, possibly a primus inter pares, who coordinates, motivates, and gets the necessary resources inside/outside the organization. On top of the projects, there has to be a person or a group that sets the priorities in terms of objectives, timing, and resources. Increasingly, we deal with pluri-disciplinary teams, large teams, occasionally teams with changing membership, and these teams require a coordinator.
All that matters – in my opinion - is that the distribution of the 5
If interested, you can find my aforementioned book on amazon (under US$ 30 at amazon.com). I will be pleased to receive your questions/comments after you consulted my work.
Kind regards, Willy A. Sussland, Ph.D.
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Dear Mr. Sussland (or Willy, if you don't mind)
Thank you for your interesting and detailed comments. I am going to learn more from your book, but considering what I have already read at amazon.com and in your six hacks, I totally agree with you that we have common approaches such as the business processes based on the PDCA, the strategy deployment and necessary integration along the different organizational levels, the performance evaluation system, the significance of the various stakeholders and so on.
Nevertheless, it may be just a question of words, I would like to emphasize some points of my hack:
- one essential message is a management based on the four PDCA building-blocks; despite guessing that the suggested model would be easier and clearer (hack's second image, which I already sucessfully experienced throughout a large company - a story I hadn't enough time to MIX up) I know that good results may as well be obtained by other management models following PDCA basics such as EFQM/Europe, FNQ/Brazil, MBNQA/USA, ISO/Worldwide and additional (even more complicated) ones
- in relation to the M2R distinction between the planners and doers in the steering and business processes, I would argue instead that management is everyone's job in all organizations levels or processes - in short, integrated PDCA cycles (hack's third image, where few and similar simple rules work recurrently in multiple scales); taking a restaurant as an example, the owner plans (P), makes (D) and controls (C/A) the business strategies (e.g. long-term investments on new equipments and stores) whereas the cook plans (P), makes (D) and controls (C/A) the clients ordered meals (e.g. short-term oven temperature and time), and so might behave everybody in a systemic way according to their respective functions - marketing, supplying, catering, cleaning, etc. - in order to create value and expected Return on Total Resources to the stakeholders
- last but not least, it seems to me unique the opportunity to grasp the inevitable complexity of our increasingly interconnected and changing world applying concepts (which I have tried to introduce by short videos in the hack) that can simplify and reinvent management processes, such as fractal self-similarity (e.g. organizations in general like restaurants, global corporations, public institutions) and innovations not subject to predictable standards, but exponentially developed from individual ideas or self-organized around crowd common interests (e.g. Facebook, Internet, MIX)
Thank you again for your attention
Best Regards
Marcus
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