Managing change in a complex environment - UNSW Business School

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1 RD 0% BI E 1 R LY AV S EA ER F OF Information, research & opinion for todays organisations Nov/DEC 2010 Managing change in a they need to do their jobs; that they understand the strategic alignment complex environment between their jobs and other peoples jobs; and that the organisations culture encourages people to work together. Continued on back page >> To maximise opportunities Leadership today is more complicated, and a great deal depends upon the in todays complex and influencing skills of the leader. Dr Rose Trevelyan competitive business Empowering decisions at a Dr Rose Revelyans research local level environment, leaders must focuses on the leadership, creativity Rosemary Howard, Executive Director and innovation. be able to effectively engage of AGSM Executive Programs, says that In Australia, Rose has worked with with so many things happening at once, various organisations including the hearts and minds of a leaders must recognise that employees Telstra, NRMA, P&O Ports, Rio Tinto, NSW Ministry of Energy & multitude of stakeholders. need to be empowered and equipped to Utilities and the Australian Bureau of make decisions at a far more local level Statistics, running programmes on than ever before. leadership, innovation and creativity, There is no question that organisations are becoming more complex, either While a company may have efficient and change management. She has consulted to Qantas, News Ltd and growing larger or restructuring systems and processes, its their NSW Police on the implementation of themselves in many different ways people that will make the difference, strategic changes. to deal with the escalating change Rosemary says. If those people are Rose is Program Director on Leading and turbulence in their day-to-day connecting well with customers and Change with Impact and presenter operations. other stakeholders, everything will on General Manager program and flow properly. Making Strategy Happen program. The challenge for leaders is understanding and managing the To get this right, you have to start from relationships between the multiple the top. Successful leaders are making stakeholders that they now have to sure that their people have access deal with. to the knowledge and information

2 The Leader | Nov/Dec 2010 Its complicated! Or, is managing complexity simpler than you think? Spare a thought for senior executives, politicians and other optimised for this new world. So, if there is complexity, its because we leaders as they try to fathom solutions to increasingly might be using old mindsets and old mechanisms to deal with a different difficult challenges. Climate change, diversity, the environment. generational divide and an interdependent business world The focus of modern leadership should be around breaking down are facts of life for chief executives. Poverty, terrorism and complexity or making the complex an ageing population are among the many dilemmas facing simpler, Vamos says. This requires a management style that has clarity of governments. purpose and emphasises principles and values around how the business operates and the way its employees In such a climate, it is often simply more information. In some respects, are treated. People are the key. Vamos reported that organisations are therefore, the role of chief executives believes an organisation can break more complex today. What exactly and managers may have actually down complexity if employees within is complexity, however, and is it become easier. Steve Vamos, president the business understand their place manageable? Why is management of the Society for Knowledge Economics within it. It enables them to take the of such problems more of a challenge (SKE) and the former chief executive initiative and innovate because they are these days? And how should leaders of Microsoft Australia, suggests provided with more context for why they respond? some aspects of business are more are there and what is important to the complex in an environment that is more organisation, he says. Staff at all levels Consider the business sector. There connected and subject to rapid change. must understand why they are there. is clearly more regulation and As a result, he says hierarchical competition in todays corporate world, but there are also advantages approaches to management and Generalists to the Fore command-and-control leadership such as the presence of the internet, The broad range of challenges now styles are less relevant. They are not enterprise systems and access to facing business demands leaders with

3 well-rounded competencies, says Fred You have to try new things and let others try Hilmer, president and vice-chancellor of the University of New South Wales new things otherwise the complexity of the (UNSW). He predicts a return to generalist leaders who have great environment becomes one persons problem and problem-solving skills rather than the recent preoccupation with specialists. it will never be solved. Well get a re-emergence of the Steve Vamos, President of the Society for Knowledge Economics (SKE) and the generalist or the person who can take a former Chief Executive of Microsoft Australia multidisciplinary view who understands government and communities and forced to set a short deadline for She says leaders across many sectors regulation and science and psychology finding a palatable solution. He says want new solutions to complex issues. and managing people and markets they may simply have to acknowledge The traditional ways of policymaking and customers. that it is a problem that could take are failing for a range of reasons, Hilmer envisages a number of decades to resolve. There are quite a so people are starting to look at this leadership themes dominating as number of problems that if you have wicked problems concept as a way of organisations confront complexity: more time they are not (so complex) addressing them, she says. conversation, story telling, the anymore. He denies this is a dodging Logue believes the emphasis must 80-20 ruleand time frames. First, of the problem, stating there is a shift from a quest to find impenetrable companies will have to embrace quality trade-off between buying time versus solutions to improving problem- conversations or communication with wrestling with a problem where your solving abilities. She mounts a case for better-educated employees who want solution might actually make it worse. bravery among policymakers, saying to be involved in the solution-making they need to recognise that there are process. So if you want to get the best Taking the Wicked Way Out? multiple solutions available and have from people then you have got to be even Some academics categorise issues the courage to stand up and implement better at communication, Hilmer says. such as poverty, climate change conflicting solutions. There is a trend and saturated markets as wicked towards taming or slicing wicked Second, an inventory of relevant problems, a reference to predicaments problems to break them down into business stories or analogies can that cannot be definitively resolved. smaller, more manageable sub-issues, provide considerable insight for In fact, attempts to fix them often Logue says. You cant solve them but leaders. Third, while the 80-20 principle generate more trouble. The concept you can learn to cope with them [This 80% of outcomes come from 20% of wicked problems is not new. In may help] as long as someone else can of inputs has been a mantra for 1973, Horst Rittel and Melvin Webber, still keep an eye on the larger issues. decades, Hilmer believes it takes professors of design and urban on additional importance in an era planning at the University of California While the study of wicked problems of greater complexity as companies at Berkeley, popularised the term with is invaluable, some commentators grapple with issues such as corporate the release of their seminal article urge caution in jumping too quickly social responsibility, diversity and in the Policy Sciences journal in to categorise problems as wicked. people management. Such a principle which they questioned the tradition of UNSWs Hilmer says some business helps leaders understand what is truly applying a purely scientific and rational leaders or politicians, for example, may important and what is peripheral. approach to ambiguous social policy be guilty of suggesting that a problem When we say the world is more conundrums. Almost four decades is not amenable to analysis when, in complex what we mean is that there later, the theory continues to gain fact, shortcomings on their part as an are more things to consider, Hilmer interest as policymakers seek different analyst may be to blame. If you havent says. But a lot of the things that we ways to address complexity and thought your way through a problem have to consider really dont make a manage fraught issues. properly, its a great cop-out to say its huge amount of difference so maybe we a wicked problem, he says. Its a very dont have to consider them. Danielle Logue, a researcher at Said convenient label. Business School at the University Setting realistic time frames is likely of Oxford, has considered wicked Hilmer also contends that some to be another important factor. Hilmer problems extensively through her leaders grappling with a wicked or cites the conflict in Afghanistan and masters and PhD research into really hard problem may have to suggests it has become a seemingly leadership, governance and global change their mindset and expectations. unfathomable problem because US policy discourse in issues such as US discount retailer Wal-Mart, a presidents, for political reasons, are scientific mobility and brain drain. long-time darling of sharemarkets,

4 The Leader | Nov/Dec 2010 has been the subject of considerable In that sense, slicing may work. An Concepts such as Management 2.0 discussion recently as it contemplates agreement across the major emitters that call for new approaches and how to deal with slowing sales growth. may be more feasible, Pitman says. management practices are appropriate Saturated markets, lower disposable in the highly connected world in which incomes among customers, intense Changing Leadership Culture we live. These practices draw on a competition and negative headlines At the SKE, Vamos is blunt about range of tools through the internet are conspiring against the retail giant. the best means to improve business such as blogs and wikis, and will However, Hilmer suggests that rather performance and safeguard companies replace traditional non-collaborative than being a wicked problem there may against complex problems. A new and hierarchical leadership models, simply come a time when growth ends culture of leadership is required. Vamos believes. Hierarchies can still for a business. Maybe its an issue I believe this is the biggest issue on work so long as they are not about we have to live with, he says. There the planet, he says. For Vamos, the entrenching power but the key to true are problems you can solve and there global financial crisis underlines the power, he says, is around how leaders are problems where you dont like need for change and demonstrates use it. Success is helping others. the solution. how problems can spread. Indeed, he In the quest for superior leadership, Perhaps no issue is more complex than argues the crisis was not financial in some critics suggest that university climate change, particularly following a the true sense of the term, more it was MBA programs and other leadership stalemate at the recent United Nations a failure of culture, of management courses must broaden their scope summit in Copenhagen that failed to practices and a failure of leadership. to embrace social entrepreneurship, strike a binding international agreement Strong leaders who surround design theory and innovation strategy. on carbon emission reductions. themselves with other good managers The aim is to encourage different Professor Andy Pitman, co-director of and ultimately make themselves less ways of thinking and promote new the Climate Change Research Centre needed in a day-to-day context because solutions to the challenges that many at UNSW, says the conundrum is that they are relentless in aligning and organisations are facing. Hilmer a political solution must be found for enabling others are required, Vamos agrees that while MBA courses have an issue that is a biophysical problem. argues. In an era when more complex been invaluable over many decades, Theres no hope for it within my problems are emerging, the norms of they must undergo an evolution comprehension, he says. organisational leadership have to be and give business leaders even questioned. Knowing the answer isnt greater opportunities to engage in Much of the difficulty lies in the fact possible anymore whereas 30 years conversations and reflective time. This that people cannot relate directly to ago the leader could conceivably know will give them an enhanced capacity to the problem. They cant taste it, feel most of the answer, he says. You have meaningfully tackle complex problems. it, see it So we are asking people to to try new things and let others try new And Hilmer cautions against courses act on something that none of their things otherwise the complexity of the in ethics and values that are glibly personal senses or experiences have environment becomes one persons taught. Clearly whats been done ever got any rational examples of. problem and it will never be solved. conventionally has not been working And that makes it really hard. While but, on the other hand, it doesnt the solutions to climate change are For chief executives trying to tackle mean that you give up. A pointer, straightforward, implementing them is big problems, Vamos poses three perhaps, to the most important quality nightmarish, Pitman says. There are questions: Is the leadership dedicated to when confronting complex problems: things that are unsolvable, but climate making effective management of people persistence. change is not one of them. However, the the priority of the organisation? Does will to solve it is clearly problematic. the business measure the performance This an article from [email protected] of its people managers in leading their Australian School of Business Pitman believes a multidisciplinary approach will be required to people, based on feedback from their make any meaningful progress on people? And is senior management climate change. Its the ultimate willing to remove underperforming multidisciplinary problem the people managers who do not respond solutions to global warming are not to feedback and assistance with their scientific theyre political, social, performance? I dont care how good geopolitical, engineering, risk a salesman, marketer, developer management, legal . Rather than or manufacturer you might be as a gaining a political agreement, he says professional, if youre a consistently a more likely way forward is to get poor people manager you are gone, major carbon emitters to strike a deal. Vamos says. Its non-negotiable.

5 The Leader | Nov/Dec 2010 Coaching a key to creative leadership Creativity in managing ever-increasing complexity is being recognised as a high priority in business, government and academic circles. IBMs recent Capitalizing on Complexity based on organisational performance Leaders must learn from survey encompassed face-to-face research, particularly In Search of conversations with 1500 Chief Executive Excellence and From Good to Great. history, from others, from Officers worldwide. These leaders from both business and the public sector Organisations today need to take theory but they must greater control of what works in their shared a number of widely held views, including: own unique environment. Of course also learn to be adaptive leaders must learn from history, from The biggest challenge faced by others, from theory but they must and creative on the fly CEOs today is coping with the also learn to be adaptive and creative Saul Brown, Adjunct Faculty, rapidly increasing complexity of the on the fly. They must be ready to try AGSM Executive Programs environments in which they operate new things; to embed what works and The increase in complexity will discard what doesnt. tap into latent potential. continue to accelerate The need for The program equips executives, Most organisations are not breakthrough thinking managers and team leaders with the adequately equipped to deal with According to the IBM survey report, skills and confidence to lead creative this complexity creativity is more than just the ability processes and proactively respond to, Creativity is the single most to bring into existence something new and indeed generate, new business important leadership competency or different. Creativity was also defined opportunities. for organisations in dealing as the basis for disruptive innovation Remember, in the words of Edward de with complexity and continuous re-invention, which Bono: If you wait for opportunities to Creative leadership requires the ability requires bold, breakthrough thinking. occur, you will be one of the crowd. to let go of long-held beliefs when they Fresh ideas and the willingness to try are obviously no longer relevant. Leaders Saul Brown innovative strategies have become must be willing to adopt new and original critical to achieving competitive strategies to connect with audiences advantage. Saul is a consultant, coach, writer across generations with radically and educator who works with Leaders must be comfortable with and leaders and teams to help them different views of todays world. committed to ongoing experimentation. unlock their creative potential. Old ideas rarely solve Saul has previously held Sales, new problems Unleash individual and Marketing and Management collaborative creativity The belief that what has worked in the positions with multinationals Through exploring different approaches including JB Were, Telecom New past can be relied upon to solve the to creativity and innovation, AGSMs Zealand and Vodafone. problems of the future is long out of date. Creativity and Strategy for Innovation He is Program Director on This was demonstrated extremely well program reveals ways in which to the Creativity and Strategy for by Phil Rosenzweig in his book The Halo identify existing creative strengths and Innovation program. Effect, which debunked previous themes

6 The Leader | Nov/Dec 2010 EARLY BIRD DISCOUNT on 2011 Programs SAVE 10% Number Crunch Google and Apple have been ranked as the worlds most innovative organisations Upcoming programs 4 consecutive for Integrated General Management Foundations of Management and Leadership 21-25 March years* Leadership, Strategy and Change Creativity and Strategy for Innovation 2-4 March 84% of executives say innovation is extremely or very important to their Advanced Negotiation and Influencing 4-5 April companies growth strategy** Leading Change with Impact 4-6 April Managing Self and Others Only 27% of executives say their Managing People for Performance 9-11 March companies are very or extremely effective at making business leaders Leading from Within Module 1 28-29 March formally accountable for innovation** Finance and Operational Excellence Essentials of Finance for Non-Finance Managers 9-11 March Apple has been ranked as the worlds most innovative organisation Master Classes 6 consecutive for Mergers and Acquisitions Effective Presentation of Business Data 4-5 April 28 April years* Find out more or book online: * BCG Report Innovation 2010 - A Return to Prominence and the Emergence of a New World Order ? >> Managing change in a complex ** McKinsey Global Survey results - Innovation environment > continued and commercialization, 2010 Thinking through the consequences Fostering a positive response to change A specialist in managing complex organisations, Rose Trevelyan Adjunct Leading Change with Impact is an Faculty AGSM Executive Program, AGSM Executive Program helping says the first practical step towards leaders to shape and implement Leadership in coping with complexity is to map the organisational change. organisational environment. Learning to develop persuasive If you think of an organisation as one communication strategies enables Australia Quiz big entity with multiple moving parts leaders to more effectively overcome inside it, gaining a sense of what those resistance to change by engaging the Go online to take moving parts are and understanding hearts and minds of key stakeholders. the quiz how they impact on each other can Employees, in particular, are far more give leaders great insight into how to likely to take the initiative and innovate manage complexity. when they understand why they are When were thinking about making a there and what is important to the change, for example, we need to be organisation and cooperative people aware that there is often an unintended are valuable allies in managing a consequence within the organisation, complex environment. as well as the intended outcome. We Marcia Kempe To subscribe to The Leader, visit may be prepared to take a risk, but we need to know what the impact is likely or call Client Services on to be. 1300 692 476.

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