Smart Simplicity by Un

The Complicatedness Trap

"Fewer value-adding activities, more useless work on work"

Quote: Beyond the Organisational Chart

"Performance increasingly depends on the cooperation between the boxes". No matter how you arrange the boxes (function, geography, matrix, etc) there will always be performance requirements that fall between them requiring cooperation.

Definition of STRATEGY

"The very essence of strategy is PROTECTING and increasing FREEDOM for ACTION. The organisation is not just in the service of executing the strategy; rather, it is what determines the very possibility of a strategy" - French military strategist General Andre Beaufre

Customer-centric integrator role should be...

"To achieve customer-centricity, make the organisation listen to those who listen to customers." Or pick the relevant role for the target performance lever. Changing interaction patterns among functions is much more powerful than creating a dedicated customer-centricity function.

Two causes of increased complexity

1. An abundance of choice for customers (due to shifting trade barriers and advances in technology) 2. Increase in the number of relevant stakeholders (must answer to customers, shareholder, employees, political, regulatory, compliance authorities, social groups, etc)

Self-sufficiency vs. Autonomy

1. Autonomy is about fully mobilising our intelligence and energy to influence outcomes (including those we don't control) 2. Self-sufficiency is about limiting our efforts only to those outcomes we control completely (without dependency) 3. Autonomy is essential for coping with complexity. Self-sufficiency hinders cooperation needed to make autonomy effective.

Weaknesses of rules (x3) Counter-intuitive effect of rules

1. Beyond a certain threshold, adding new rules decreases management control over the people to whom the rules apply (i.e. "work to rule" strike action). Managers increasingly depend upon their teams, and teams depend less and less on their managers 2. No matter how carefully a rule is devised, it will always require some judgement and interpretation in execution 3 As rules pile up, managers have less power to change the rules.

3 Components of RICH OBJECTIVES

1. Collective output objectives (COO). *Measurable* 2. Individual input objectives (what contribute personally to COO) 3. Overlap objectives (what do that increases effectiveness of others involved in COO)

3 elements of "Work Context"

1. Goals... people are seeking to attain (or problems they are trying to solve. 2. Resources... available that help them 3. Constraints... that hinder them (including 'adjustment cost' born when they cooperate with others)

Integrator vs. Coordinator (x3)

1. Integrator is not a dedicated job. It is part of any normal role. 2. Integrators do not intervene after the fact, they are directly involved in the cooperation where the action takes place 3. Integrators cannot be ignored, as they are a resource and a constraint.

3 Characteristics of "New Bases of Power" (STAKE)

1. It matters to the company 2. It mattered to the target individuals being empowered (pertaining to an uncertainty they deal with) 3. It was controlled by the target individual

How break a monopoly (x2)

1. Make it contestable (i.e. every function) 2. Find a partial substitute

3 myths about power

1. Power is an attribute of POSITION 2. AUTHORITY is equivalent to power 3. Power is an attribute of individuals and their LEADERSHIP style

Definition of power (2x parts)

1. Power is the possibility for one person to make a difference on issues (or STAKES) that matter to someone else. 2. Power comes from having control over UNCERTAINTIES that are relevant to others and to the organisation (achieving stake) Both mean the same thing (said differently).

Transforming managers into integrators (x3)

1. Remove managerial positions... where do not have sufficient power to influence the work context. Limit manager roles (i.e. project managers) 2. Minimise rules (process def, KPI, template, workflows, SLA, etc) 3. Rely on judgement over metrics

Adjustment Cost - Clues x3

1. Stress or dissatisfaction (bearing adjustment cost) 2. Resentment (bearing adjustment cost) 3. Indifference (offloads adjustment cost)

3 Misconceptions about "Roles and Objectives"

1. The more clarity the better. Detailed and well-defined. (This allows avoidance of recognising interdependencies) 2. Cooperation dilutes personal responsibilities "If everybody is responsible, nobody is responsible" (All involved are responsible) 3. Interdependencies destroys accountability "How can I be responsible if depend on..." (Person can be accountable without having exclusive control)

Six simple rules of Smart Simplicity by Yves Morieux

1. Understand what your people do 2. Reinforce integrators 3. Increase the total quantity of power 4. Increase reciprocity 5. Extend the shadow of the future 6. Reward those who cooperate

Work Context: 5 Questions to ask

1. What are the most INTERESTING ASPECTS of you work? Why? 2 What are the most DIFFICULT (frustrating or annoying) aspects? Why? 3. What are the KEY PROBLEMS you have to deal with? (How do you go about solving them?) 4. Who do you have to INTERACT WITH to do you job? (Which are the most important and why? Which are the most difficult and why?) 5. Who do you DEPEND ON? Why?

Two questions to determine if need manager

1. What is this manager supposed to make teams do that the teams would not do spontaneously on their own? 2. Are you sure there is no other manager (above or below) who may be better placed to play the integrator role?

3 Questions to Assess Managers on

1. What levers are at their disposal (what powers do they have) 2. What would happen to managers if they used these levers? 3. Does the right context exists for effective use of levers? (goals)

Stats to support Smart Simplicity - Performance Imperatives

1955 companies typically commit to between 4 to 7 performance imperatives 2010 companies typically commit to between 25 to 40 imperatives Between 15-50% of those imperatives are contradictory

Rule #1 - Understand what your people do

About getting a true UNDERSTANDING of PERFORMANCE - what people actually do and why they do it. "Walk in their shoes"

Aim of balancing power

Aim in NOT to balance power. It is critical to avoid an OVER-CONCENTRATION of power that causes others to withdraw from cooperation. Beyond a threshold people are better off avoiding cooperation as they would bear most of the ADJUSTMENT COST.

Issue: Hard and Soft Approaches

Almost all management thinking and best practices today are based on one of two approaches or a combination of the two. Hard: Belief that structures, metrics, processes, systems have a predictable effect on performance Soft: Belief organisation is a set of interpersonal relationships and a set of sentiments to govern them (i.e. culture) Both seek to **control** the individual

Collective Output Objectives

Are those that depend on the involvement of **multiple individuals and units**. These objectives define the ultimate value the **groups involved** want to deliver. This output is MEASURABLE.

Measures of cooperation

Can measure overall group output and some individual inputs. Can't accurately measure the contribution of one individual or unit to the effectiveness of others. Therefore: Don't measure behaviour, MEASURE RESULTS and use judgement to assess cooperation

Rule #6 - Reward those who cooperate

Change the managerial dialogue in a way that makes transparency, innovation, and ambitious aspirations become the best choice for individuals and teams

Key to managing complexity is...

Combination of AUTONOMY and COOPERATION People put their autonomy in the service of the group. Provide a context in which cooperation becomes the best choice for each individual. A way that makes cooperation an individually useful behaviour for people.

Definition of COMPETITIVE ADVANTAGE

Competitive advantage is a matter of AGILITY and ADAPTATION, requiring the organisation to NURTURE MORE OPTIONS. (Market leadership volatility has multiplied by a factor of 22 since the 1950's)

The opportunity of increased complexity

Complexity is not the problem to focus on. Winners in today's business environment will be those companies that know how to LEVERAGE COMPLEXITY and exploit it to create competitive advantage Complicatedness destroys companies ability to leverage complexity for competitive advantage. Apply smart simplicity to dominate.

Complicatedness vs. Complexity

Complicatedness relates to the proliferation of cumbersome organisational mechanisms (structures, procedures, rules, roles) that companies put in place to deal with complexity. Complexity is having many dimensions to manage.

Dilemma: Autonomy - Cooperation

Coping with complexity requires higher levels of both autonomy and cooperation. But when people cooperate, they are no longer self-sufficient; they BECOME DEPENDENT on others.

Rule #3 - Increase the total quantity of power

Create new power - not just shift existing power - so that the organisation is able to effectively mobilize people to satisfy the multiple performance requirements of complexity

Definition of ORGANISATIONAL DESIGN

Don't think of organisational design in terms of structures, processes, and systems. Instead, think of organisational design in terms of POWER BASES and the resulting CAPABILITIES. Capabilities are **concrete behaviours**, embedded in people with power and interest to do something.

Complicatedness vs. Disengagement vs. Productivity

Employee disengagement and stagnant productivity are triggered by a common factor: organisational COMPLICATENESS

Rule #2 - Reinforce integrators

Giving to units and individuals the power and interest to foster cooperation. Allow each one to benefit from the cooperation of the others.

Rule #5 - Extend the shadow of the future

Harness the natural power of time - rather than the use of supervision, metrics and incentives - to create feedback loops that impel people to do their own work today in a way that also contributes to the satisfaction of performance requirements that matter in the future

Good / Bad - Power imbalance

If an instance of a power imbalance deviates from the company's goals, the power balance will not be beneficial (BAD)

Integrator vs. Manager Role

In an environment of complexity, being an integrator is (or at least ought to be) at the VERY HEART of the managerial role. Must give up hard and soft approaches though. People only cooperate when the context of work makes it individually useful for them to cooperate.

Pass on costs of non-cooperation

Internalizing the cost of insufficient cooperation ONTO those who generate them is a very effective way to promote cooperation.

Analogy... "not real power"

It's a bit like the soldier facing ten enemies with only one bullet in his gun. In such a situation, the gun isn't a resource; it's a constraint. Using the gun exposes the soldier to more problems than it solves. (Much like using performance appraisals on bad performers)

How increase "Total Quantity of Power"

Managers must ADD NEW STAKES that matter to someone and upon which the achievement depends on others in the organisation.

Essence of managerial role

Managers need to be present to observe and gather, through conversation and interactions, the non-measurable data that reveals the content and result of cooperation.

Stats to support Smart Simplicity - Wasted efforts

Managers spend 40% time writing reports and 30% - 60% in coordination meetings. Overall time at work has increased, but productivity dropping!

Monopolies and bureaucracy

Monopolies tend to become bureaucratic. They stress the importance of rules and create many of their own. Rules add LEGITIMACY to the internal constraints the monopoly forces others to adjust to.

What do Executive Teams compete on

Not on their firm's products or services (the companies outputs). They compete on the quality of their insights about their their own organisation.

3 Reinforcing mechanisms to increase odds of Rich Objectives

Objectives are only an expression of intent. Must also... 1. Eliminate internal monopolies 2. Reduce some resources 3. Create adequate networks for interactions

Stats to support Smart Simplicity - Compounding Complexity

Over last 55 years an index on complexity has increased annually by 6.7% resulting in a 35-fold increase!

Why set "Rich Objectives"

People in whatever their role can make the everyday trade-offs that arise when dealing with multiple performance requirements.

Performance is Behaviour 5x Ways to trace performance to behaviour

Performance is the result of what people do - their actions, interactions, and decisions. 1. Describe what people do, not what they don't do 2. Identify their goals, resources and constraints 3. Understand how existing context shapes these goals 4. Don't use black-box explanations (i.e. personality) 5. How do 'adjustments' shape behaviour

Doom loop of management

Pic

Power imbalance

Power exists only in the relations between people; it is an imbalanced exchange of BEHAVIOURS (not information, a common belief) in aggregate. "A" can make a greater difference to stakes that matter to "B" (this is the uncertainty), and vice versa

Rule #4 - Increase reciprocity

Provide rich objectives, eliminate internal monopolies, and remove resources. Fosters the need to work together.

Pressure to clarity (There will be pressure!)

Resist the pressure to clarify - Roles - Decision rights - Processes Try to keep appropriate fuzziness and overlaps between roles

6 rules in terms of AUTONOMY

Rules 1 to 3 are about using the group to LEVERAGE people;s autonomy and enhance the potential of the individual's JUDGEMENT and ENERGY. Rules 4 to 6 focus on IMPELLING people to DEAL WITH complexity and channel people's judgement and energy so they actually DO (decisions and actions)

Root cause for complicatedness

The fundamental root cause of the *problem* is outdated, ineffectual, and irrelevant management thinking and practices (the Hard and Soft approaches)

Influence to overcome Autonomy/Cooperation Dilemma

The more influence you have over the behaviours of others, the more you can take the risk of becoming dependent on what they do. Power determines the capacity to enter into the kind of cooperative interactions and reciprocity of action that are essential for addressing business complexity.

Stats to support Smart Simplicity - Big vs. Small

The size of the company does not matter. A big company is just as likely to be relatively uncomplicated as a small company is to be very complicated. What matters is how the resulting complexity is MANAGED

Purpose of first 3 rules

To give people an advantage in the way they mobilise their intelligence and energy at work by providing them wiht relevant knowledge, room to maneuver, power, and the resource of cooperation.

Purpose of second 3 rules

To impel people to confront complexity and to use their autonomy to cooperate with others, by embedding feedback loops that expose them as directly as possible to the consequences of their actions, without the need for extra supervision and structure of the bureaucracy of compliance metrics and incentives.

Why increase "Total Quantity of Power"

When power is used to mobilize COLLECTIVE ACTION that furthers the goals of an organisation, it is a good thing... resulting in more cooperation (and more effective cooperation)

"Smell" to look for (power)

Withdrawal from cooperation (it is a sign of over-concentration of power that needs a new stake added to better balance out)