Archive for the ‘Organizations’ Category
To freeze or to flee: a water dragon’s perspective on managing change
Over the last few weeks, it has been raining quite a bit in Sydney. Last weekend I took advantage of a break in the rain and went bushwalking in the Lane Cove National Park with a friend. The park lies along the Lane Cove River – a picturesque little waterway that runs through suburban Sydney. The track we walked along was a bit slippery from the rain of the previous weeks but was drying out nicely in the morning sun.
One of the consequences of sunny weather after a long spell of rain is that reptiles tend to seek open spaces to soak in some sun. With dense vegetation on either side, the open, rocky areas on the track were inviting spots for reptiles looking to sunbathe. I thought we might see snake or two but we didn’t. Instead we walked into a number of Eastern Water Dragons, semi-aquatic lizards that are common in eastern Australia (see Figure 1). Incidentally, fully-grown water dragons are a pretty impressive sight, growing up to a metre in length. They are also quite well camouflaged, black stripes over a grey-brown coat that merges nicely with the rock-and-mud colours of the track.
Figure 1 - Eastern water dragon
When a water dragon sunbathes, it stays still, rock-like, for long periods of time. This makes sense from a safety perspective: motion might attract the attention of predators (mainly omnivorous native birds such as Currawongs and Kookaburras). So the reptile remains statue-like, perfectly camouflaged by colours that merge with the ground it lies on…until a blundering bushwalker disturbs its repose, like we did many times (to many lizards) last weekend. At that point the creature has two options: to freeze (maintain the status quo) or to flee (turn tail and scuttle off).
The water dragon senses approaching bushwalkers by the disturbance caused by their footfalls along the trail, further amplified by the crackling of leaves and brush that come underfoot. To the water dragon, the approaching footfalls signify an unknown: it could be benign but could also be a predator on the prowl. It is safest to assume the latter because if the lizard chooses the former wrongly it could end up dead. However, even if it is a predator, it is quite possible that the lizards’s superb camouflage will do its job and render it unnoticeable. (Besides, it is comfortable out there in the sun, so there’s an understandable reluctance to move.) Consequently, the first reaction of the lizard is to continue its statue-like stance, but remain alert to the danger. As the footsteps get closer it reassesses the situation continually, deciding whether to run for it or stay put. At some point, a threshold is reached and the lizard dashes off into the undergrowth (or a stream, if there’s one handy – water dragons are good swimmers).
Now, if there were no blundering bushwalker, the dragon would presumably continue basking in the sun undisturbed. The bushwalker changes the lizard’s environment and the lizard reacts to this change in one of the two ways it knows – it stays put (does nothing) or runs (takes evasive action). Both actions are aimed at self-preservation – we can take it as given that the lizard does not want to be a lizard-eater’s lunch! The first action has the benefit of not expending energy unnecessarily, but could lead to an unpleasant end. The second is a better guarantor of safety but involves some effort. There is a tradeoff: not becoming lunch involves understanding that there is no such thing as a free lunch.
The interesting thing is that the threshold seems to vary from dragon to dragon. When I used the phrase “walking into” earlier in this piece, I meant it quite literally: many times we didn’t notice a recumbent reptile until we were almost upon it. At other times, though, a startled slinker would speed off when we were several metres away. It seems some water dragons scare easily while others don’t. In either case, the lizard makes an assessment of the situation based on the information gleaned through its senses and then decides on a course of action.
These musings got me thinking about workplace change and our reactions to it. Although such changes are rarely life threatening, they can be unsettling. I thought it interesting that the most typical reactions to workplace change are much like those of a water dragon to approaching footsteps. Many (most?) people is to attempt to maintain the status quo and failing that, they quit for (supposedly) greener pastures. This is a perfectly normal reaction considering our evolutionary heritage – most creatures (be they water dragons or humans) prefer the familiar and will do what they can to avoid change. It is no surprise, then, that our first reactions to changes forced upon us is to:
- Pretend they haven’t occurred or
- Run away from them.
The implications for management are the following: since the above is pretty much a guaranteed first reaction from those affected, change management initiatives need to address it upfront. This isn’t the same as the “what’s in it for me” (or WIIFM) factor – it is more basic than that – it is the loss of the familiar world. What is needed is reassurance that the changes are benign – or even better, beneficial – to those affected. On the other hand, if there are going to be negative consequences, then it is best to state – early in the process – that people’s work conditions (or employment) are under threat. In this case folks know exactly what’s coming and can make their own plans to deal with it. Unfortunately, this kind of honesty is rare – organisations seem to prefer to keep their employees stumbling around in a fog of uncertainty.
The implication for employees is much more straightforward. There is a key difference between humans and water dragons: we can think before we act, water dragons can’t. Consequently, we have a third option available to us, one that involves neither freezing nor fleeing – it is to face up to changes and adapt to them.
The Abilene paradox in front-end decision-making on projects
The Abilene paradox refers to a situation in which a group of people make a collective decision that is counter to the preferences or interests of everyone in the group. The paradox was first described by Jerry Harvey, via a story that is summarised nicely in the Wikipedia article on the topic. I reproduce the story verbatim below:
On a hot afternoon in Coleman, Texas, the family is comfortably playing dominoes on a porch, until the father-in-law suggests that they take a trip to Abilene [53 miles north] for dinner. The wife says, “Sounds like a great idea.” The husband, despite having reservations because the drive is long and hot, thinks that his preferences must be out-of-step with the group and says, “Sounds good to me. I just hope your mother wants to go.” The mother-in-law then says, “Of course I want to go. I haven’t been to Abilene in a long time.”
The drive is hot, dusty, and long. When they arrive at the cafeteria, the food is as bad as the drive. They arrive back home four hours later, exhausted.
One of them dishonestly says, “It was a great trip, wasn’t it?” The mother-in-law says that, actually, she would rather have stayed home, but went along since the other three were so enthusiastic. The husband says, “I wasn’t delighted to be doing what we were doing. I only went to satisfy the rest of you.” The wife says, “I just went along to keep you happy. I would have had to be crazy to want to go out in the heat like that.” The father-in-law then says that he only suggested it because he thought the others might be bored.
The group sits back, perplexed that they together decided to take a trip which none of them wanted. They each would have preferred to sit comfortably, but did not admit to it when they still had time to enjoy the afternoon.
Harvey contends that variants of this story play out over and over again in corporate environments. As he states in this paper, organizations frequently take actions in contradiction to what they really want to do and therefore defeat the very purposes they are trying to achieve.
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The Abilene paradox is essentially a consequence of the failure to achieve a shared understanding of a problem before deciding on a solution. A case in point is Nokia’s ill-judged restructuring circa 2003, initiated in response to the rapidly changing mobile phone market.
Prior to the restructure, Nokia was a product-oriented company that focused on developing one or two new phone models per year. Then, as quoted by an employee in an article published in Helsingin Sanomat (A Finnish daily), Nokia management deemed that: “Two new models a year was no longer enough, but there was a perceived need to bring out as many as 40 or 50 models a year… An utterly terrifying number.” Company management knew that it would be impossible to churn out so many models under the old, product-focused structure. So they decided to reorganise the company into different divisions comprising of teams dedicated to creating standard components (such as cameras), the idea being that standard components could be mixed-and-matched into several “new” phone models every year .
The restructuring and its consequences are described in this article as follows:
[The] re-organisation split Nokia’s all-conquering mobile phones division into three units. The architect was Jorma Ollila, Nokia’s most successful ever CEO, and a popular figure – who steered the company from crisis in 1992 to market leadership in mobile phones – and who as chairman oversaw the ousting of Olli-Pekka Kallasvuo this year [i.e 2010].
In Ollila’s reshuffle, Nokia made a transition from an agile, highly reactive product-focused company to one that managed a matrix, or portfolio. The phone division was split into three: Multimedia, Enterprise and Phones, and the divisions were encouraged to compete for staff and resources. The first Nokia made very few products to a very high standard. But after the reshuffle, which took effect on 1 January 2004, the in-fighting became entrenched, and the company being increasingly bureaucratic. The results were pure Dilbert material.
That the Nokia restructure was possibly a “trip to Abilene” is suggested by the following excerpt from an interview with a long-time Nokia employee (see part IV of the Helsingin Salomat article):
…Even CEO Jorma Ollila was less than enthusiastic about the heavy organisational structure, and recognised perfectly well that it was making Nokia stiff and sluggish in its movements. In their time, Ollila’s views made it all the way down to the factory floor.
But was it not Jorma Ollila himself who created the organisation he led?
“Yes”, replies the woman.Ollila’s unwavering line was to allow his subordinates freedom, to trust them without tight controls. In this way the then leaders of the business units like Mobile Phones and Multimedia could recruit whom they wanted. And in so doing the number of managers at all levels mushroomed to enormous proportions and the product development channels became clogged…
Management actions aimed at shoring up and boosting Nokia’s market share ended up achieving just the opposite, and the irony is that the restructure did not even have the whole-hearted support of management.
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Like the Nokia restructuring effort, most projects are initiated in response to a perceived problem. Often times, those responsible for giving the project the go-ahead do not have an adequate appreciation of the problem or the proposed solution. As I have stated in an earlier post:
Many high profile projects fail because they succeed. This paradoxical statement is true because many projects are ill-conceived efforts directed at achieving goals that have little value or relevance to their host organisations. Project management focuses on ensuring that the project goals are achieved in an efficient manner. The goals themselves are often “handed down from above”, so the relevance or appropriateness of these is “out of scope” for the discipline of project management. Yet, the prevalence of projects of dubious value suggests that more attention needs to be paid to “front-end” decision making in projects – that is, decision making in the early stages, in which the initiative is just an idea.
Front-end decisions are difficult because they have to be made on the basis of ambiguous or incomplete information. This makes it all the more important that such decisions incorporate the honest views and opinions of all stakeholders in the organisation (or their nominated representatives). The first step in such a process is to ensure that all stakeholders have a common understanding of the goals of the project – i.e. what needs to be done. The next is to reach a shared understanding of how those goals will be achieved. Such stakeholder alignment can be facilitated through communication-centric, collaborative techniques such as dialogue mapping. Genuine dialogue is the only way to prevent pointless peregrinations to places that an organisation can ill-afford to go to.
Cause and effect in management
Introduction
Management schools and gurus tell us that specific managerial actions will lead to desirable consequences – witness the prescriptions for success in books such as Good to Great or In Search of Excellence. But can one really attribute success (or failure) to specific actions? A cause-effect relationship is often assumed, but in reality the causal connection between strategic management actions and organisational outcomes is tenuous. This post, based on a paper by Glenn Shafer entitled Causality and Responsibility, is an exploration of the causal connection between managerial actions and their (assumed) consequences.
Note that the discussion below applies to strategic – or “big picture” – management decisions, not operational ones. In the latter, cause and effect is generally quite clear cut. For example, the decision to initiate a project sets in motion several processes that have fairly predictable outcomes. However, taking a big picture view, initiating a project (or even the successful completion of one) does not imply that the strategic aims of the project will be met. It is the latter point that is of interest here – the causal connection between a strategic decision and its assumed outcome.
Shafer’s paper deals with causality and responsibility in legal deliberations: specifically, the process by which judges and juries reach their verdict as to whether the accused (person or entity) is actually responsible (in a causal sense) for the outcome they are charged with. In short, did the actions of the accused cause the outcome? The arguments Shafer makes are quite general, and have applicability to any discipline. In the following paragraphs I’ll look at a couple of the key points he makes and outline their implications for cause and effect in management actions.
Deterministic cause-effect relationships
The first point that Shafer makes is that we should infer that a particular action causes a particular outcome only if it is improbable that the outcome could have happened without the action preceding it. In Shafer’s words:
…we are on safe ground in attributing responsibility if we do so based on our knowledge of impossibilities. It is not surprising, therefore, that the classical legal concept of cause – necessary and sufficient cause – is defined in terms of impossibility. According to this concept, an action causes an event if the event must happen (it is impossible for it not to happen) when the action is taken and cannot happen (it is impossible for it to happen) if the action is not taken.
This is, in fact, what legal arguments attempt to do: they attempt to prove, beyond reasonable doubt, that the crime occurred because of the defendants actions.
The reason that impossibilities are a better way of “proving” causal relationships is that such relationships cannot be invalidated as our knowledge of the situation increases providing the knowledge that we already have is valid. In other words, once something is deemed impossible (using valid knowledge) then it remains so even if we get to know more about the situation. In contrast, if something is deemed possible in the light of existing knowledge, it can be rendered false by a single contradictory fact.
The implication of the above for cause and effect in management is clear: a manager can (should!) claim responsibility for a particular outcome only if:
- The outcome must (almost always) happen if the managerial action occurs.
- It is highly unlikely that the outcome could have occurred without the action occurring prior to it.
Seen in this light, many of the prescriptions laid out in management bestsellers are little better than herpetological oleum.
Probabilistic cause-effect relationships
Of course, deterministic cause-effect relationships aren’t the norm in management – only the supremely confident (foolhardy?) would claim that a specific managerial action will always lead to a specific organisational outcome. This begs the question: what about probabilistic relationships? That is, what can we say about claims that a particular action results in a particular effect, but only in a fraction of the instances in which the action occurs?
To address this question, Shafer makes the important point that probabilities not close to zero or one have no meaning in isolation. They have meaning only in a system, and their meaning derives from the impossibility of a successful gambling strategy—the probability close to one that no one can make a substantial amount of money betting at the odds given by the probabilities. The last part of the previous statement is a consequence of how probabilities are validated empirically. In Shafer’s words:
We validate a system of probabilities empirically by performing statistical tests. Each such test checks whether observations have some overall property that the system says they are practically certain to have. It checks, in other words, on whether observations diverge from the probabilistic model in a way that the model says is practically (approximately) impossible. In Probability and Finance: It’s Only a Game, Vovk and I argue that both the applications of probability and the classical limit theorems (the law of large numbers, the central limit theorem, etc.) can be most clearly understood and most elegantly explained if we treat these asserted practical impossibilities as the basic meaning of a probabilistic or statistical model, from which all other mathematical and practical conclusions are to be derived. I cannot go further into the argument of the book here, but I do want to emphasize one of its consequences: because the empirical validity of a system of probabilities involves only the approximate impossibilities it implies, it is only these approximate impossibilities that we should expect to see preserved in a deeper causal structure. Other probabilities, those not close to zero or one, may not be preserved and hence cannot claim the causal status.
An implication of the above is that probabilities not close to zero or one are not fundamental properties of the system/situation; they are subject to change as our knowledge of the situation/system improves. A simple example may serve to explain this point. Consider the following hypothetical claim from a software vendor:
“80% of our customers experience an increase in sales after implementing our software system.”
Presumably, the marketing department responsible for this statement has the data to back it up. Despite that, the increase in sales for a particular customer cannot (should not!) be attributed to the software. Why? Well, for the following reasons:
- The particular customer may differ in important ways from those used in estimating the probability.This is a manifestation of the reference class problem.
- Most statistical studies of the kind used in marketing or management studies are enumerative, not analytical – i.e they can be used to classify data, but not to establish cause-effect relationships. See my post entitled Enumeration or Analysis for more onthe differences between enumerative and analytical studies.
There is an underlying reason for the above which I’ll discuss next.
The root of the problem – too many variables
The points made above – that outcomes cannot be attributed to actions unless the probabilities involved are close to zero or one – is a consequence of the fact that most organisational outcomes are results of several factors. Therefore it is incorrect to attribute the outcome to a single factor (such as farsighted managerial action). Nancy Cartwright makes this point in her paper entitled Causal Laws and Effective Strategies, where she states that a cause ought to increase the frequency of its purported outcome, but this increase can be masked by other causal factors that have not been taken into account. She uses the somewhat dated and therefore incorrect example of the relationship between smoking and heart disease. However, it serves to illustrate the point, so I’ll quote it below:
…a cause ought to increase the frequency of its effect. But this fact may not show up in the probabilities if other causes are at work. Background correlations between the purported cause and other causal factors may conceal the increase in probability which would otherwise appear. A simple example will illustrate. It is generally supposed that smoking causes heart disease. Thus, we may expect that the probability of heart disease on smoking is greater than otherwise (K’s note: i.e. the conditional probability of heart disease given that the person is a smoker, P(H/S), is greater than the probability of heart disease in the general population, P(H)). This expectation is mistaken, however. Even if it is true that smoking causes heart disease, the expected increase in probability will not appear if smoking is correlated with a sufficiently strong preventative, say exercising. To see why this is so, imagine that exercising is more effective at preventing heart disease than smoking at causing it. Then in any population where smoking and exercising are highly enough correlated, it can be true that P(H/S) = P(H), or even P(H/S) < P(H). For the population of smokers also contains a good many exercisers, and when the two are in combination, the exercising tends to dominate….
In the case of strategic outcomes, it is impossible to know all the factors involved. Moreover, the factors are often interdependent and subject to positive feedback (see my previous post for more on this). So the problem is even worse than implied by Cartwright’s example.
Conclusions
The implications of the above can be summarised as follows: the efficacy of most strategic managerial actions is questionable because the probabilities involved in such claims are rarely close to zero or one. This shouldn’t be a surprise: most organisational outcomes are consequences of several factors acting in concert, many of which combine in unpredictable ways. Given this is unreasonable to expect that managerial actions will result in predictable organisational outcomes. That said, it is only natural to claim responsibility for desirable outcomes and shift the blame for undesirable ones, as it is to seek simplistic solutions to difficult organisational problems. Hence the insatiable market for management snake oil.
Eight to Late 