Archive for the ‘Organizations’ Category
Risk management and organizational anxiety
In practice risk management is a rational, means-end based process: risks are identified, analysed and then “solved” (or mitigated). Although these steps seem to be objective, each of them involves human perceptions, biases and interests. Where Jill sees an opportunity, Jack may see only risks.
Indeed, the problem of differences in stakeholder perceptions is broader than risk analysis. The recognition that such differences in world-views may be irreconcilable is what led Horst Rittel to coin the now well-known term, wicked problem. These problems tend to be made up of complex interconnected and interdependent issues which makes them difficult to tackle using standard rational- analytical methods of problem solving.
Most high-stakes risks that organisations face have elements of wickedness – indeed any significant organisational change is fraught with risk. Murphy rules; things can go wrong, and they often do. The current paradigm of risk management, which focuses on analyzing and quantifying risks using rational methods, is not broad enough to account for the wicked aspects of risk.
I had been thinking about this for a while when I stumbled on a fascinating paper by Robin Holt entitled, Risk Management: The Talking Cure, which outlines a possible approach to analysing interconnected risks. In brief, Holt draws a parallel between psychoanalysis (as a means to tackle individual anxiety) and risk management (as a means to tackle organizational anxiety). In this post, I present an extensive discussion and interpretation of Holt’s paper. Although more about the philosophy of risk management than its practice, I found the paper interesting, relevant and thought provoking. My hope is that some readers might find it so too.
Background
Holt begins by noting that modern life is characterized by uncertainty. Paradoxically, technological progress which should have increased our sense of control over our surroundings and lives has actually heightened our personal feelings of uncertainty. Moreover, this sense of uncertainty is not allayed by rational analysis. On the contrary, it may have even increased it by, for example, drawing our attention to risks that we may otherwise have remained unaware of. Risk thus becomes a lens through which we perceive the world. The danger is that this can paralyze. As Holt puts it,
…risk becomes the only backdrop to perceiving the world and perception collapses into self-inhibition, thereby compounding uncertainty through inertia.
Most individuals know this through experience: most of us have at one time or another been frozen into inaction because of perceived risks. We also “know” at a deep personal level that the standard responses to risk are inadequate because many of our worries tend to be inchoate and therefore can neither be coherently articulated nor analysed. In Holt’s words:
..People do not recognize [risk] from the perspective of a breakdown in their rational calculations alone, but because of threats to their forms of life – to the non-calculative way they see themselves and the world. [Mainstream risk analysis] remains caught in the thrall of its own ‘expert’ presumptions, denigrating the very lay knowledge and perceptions on the grounds that they cannot be codified and institutionally expressed.
Holt suggests that risk management should account for the “codified, uncodified and uncodifiable aspects of uncertainty from an organizational perspective.” This entails a mode of analysis that takes into account different, even conflicting, perspectives in a non-judgemental way. In essence, he suggests “talking it over” as a means to increase awareness of the contingent nature of risks rather than a means of definitively resolving them.
Shortcomings of risk analysis
The basic aim of risk analysis (as it is practiced) is to contain uncertainty within set bounds that are determined by an organisation’s risk appetite. As mentioned earlier, this process begins by identifying and classifying risks. Once this is done, one determines the probability and impact of each risk. Then, based on priorities and resources available (again determined by the organisation’s risk appetite) one develops strategies to mitigate the risks that are significant from the organisation’s perspective.
However, the messiness of organizational life makes it difficult to see risk in such a clear-cut way. We may pretend to be rational about it, but in reality we perceive it through the lens of our background, interests , experiences. Based on these perceptions we rationalize our action (or inaction!) and simply get on with life. As Holt writes:
The concept [of risk] refers to…the mélange of experience, where managers accept contingencies without being overwhelmed to a point of complete passivity or confusion, Managers learn to recognize the differences between things, to acknowledge their and our limits. Only in this way can managers be said to make judgements, to be seen as being involved in something called the future.
Then, in a memorable line, he goes on to say:
The future, however, lasts a long time, so much so as to make its containment and prediction an often futile exercise.
Although one may well argue that this is not the case for many organizational risks, it is undeniable that certain mitigation strategies (for example, accepting risks that turn out to be significant later) may have significant consequences in the not-so-near future.
Advice from a politician-scholar
So how can one address the slippery aspects of risk – the things people sense intuitively, but find difficult to articulate?
Taking inspiration from Machiavelli, Holt suggests reframing risk management as a means to determine wise actions in the face of the contradictory forces of fortune and necessity. As Holt puts it:
Necessity describes forces that are unbreachable but manageable by acceptance and containment—acts of God, tendencies of the species, and so on. In recognizing inevitability, [one can retain one’s] position, enhancing it only to the extent that others fail to recognize necessity. Far more influential, and often confused with necessity, is fortune. Fortune is elusive but approachable. Fortune is never to be relied upon: ‘The greatest good fortune is always least to be trusted’; the good is often kept underfoot and the ridiculous elevated, but it provides [one] with opportunity.
Wise actions involve resolve and cunning (which I interpret as political nous). This entails understanding that we do not have complete (or even partial) control over events that may occur in the future. The future is largely unknowable as are people’s true drives and motivations. Yet, despite this, managers must act. This requires personal determination together with a deep understanding of the social and political aspects of one’s environment.
And a little later,
…risk management is not the clear conception of a problem coupled to modes of rankable resolutions, or a limited process, but a judgemental analysis limited by the vicissitudes of budgets, programmes, personalities and contested priorities.
In short: risk management in practice tends to be a far way off from how it is portrayed in textbooks and the professional literature.
The wickedness of risk management
Most managers and those who work under their supervision have been schooled in the rational-scientific approach of problem solving. It is no surprise, therefore, that they use it to manage risks: they gather and analyse information about potential risks, formulate potential solutions (or mitigation strategies) and then implement the best one (according to predetermined criteria). However, this method works only for problems that are straightforward or tame, rather than wicked.
Many of the issues that risk managers are confronted with are wicked, messy or both. Often though, such problems are treated as being tame. Reducing a wicked or messy problem to one amenable to rational analysis invariably entails overlooking the views of certain stakeholder groups or, worse, ignoring key aspects of the problem. This may work in the short term, but will only exacerbate the problem in the longer run. Holt illustrates this point as follows:
A primary danger in mistaking a mess for a tame problem is that it becomes even more difficult to deal with the mess. Blaming ‘operator error’ for a mishap on the production line and introducing added surveillance is an illustration of a mess being mistaken for a tame problem. An operator is easily isolated and identifiable, whereas a technological system or process is embedded, unwieldy and, initially, far more costly to alter. Blaming operators is politically expedient. It might also be because managers and administrators do not know how to think in terms of messes; they have not learned how to sort through complex socio-technical systems.
It is important to note that although many risk management practitioners recognize the essential wickedness of the issues they deal with, the practice of risk management is not quite up to the task of dealing with such matters. One step towards doing this is to develop a shared (enterprise-wide) understanding of risks by soliciting input from diverse stakeholders groups, some of who may hold opposing views.
The skills required to do this are very different from the analytical techniques that are the focus of problem solving and decision making techniques that are taught in colleges and business schools. Analysis is replaced by sensemaking – a collaborative process that harnesses the wisdom of a group to arrive at a collective understanding of a problem and thence a common commitment to a course of action. This necessarily involves skills that do not appear in the lexicon of rational problem solving: negotiation, facilitation, rhetoric and those of the same ilk that are dismissed as being of no relevance by the scientifically oriented analyst.
In the end though, even this may not be enough: different stakeholders may perceive a given “risk” in have wildly different ways, so much so that no consensus can be reached. The problem is that the current framework of risk management requires the analyst to perform an objective analysis of situation/problem, even in situations where this is not possible.
To get around this Holt suggests that it may be more useful to see risk management as a way to encounter problems rather than analyse or solve them.
What does this mean?
He sees this as a forum in which people can talk about the risks openly:
To enable organizational members to encounter problems, risk management’s repertoire of activity needs to engage their all too human components: belief, perception, enthusiasm and fear.
This gets to the root of the problem: risk matters because it increases anxiety and generally affects peoples’ sense of wellbeing. Given this, it is no surprise that Holt’s proposed solution draws on psychoanalysis.
The analogy between psychoanalysis and risk management
Any discussion of psychoanalysis –especially one that is intended for an audience that is largely schooled in rational/scientific methods of analysis – must begin with the acknowledgement that the claims of psychoanalysis cannot be tested. That is, since psychoanalysis speaks of unobservable “objects” such as the ego and the unconscious, any claims it makes about these concepts cannot be proven or falsified.
However as Holt suggests, this is exactly what makes it a good fit for encountering (as opposed to analyzing) risks. In his words:
It is precisely because psychoanalysis avoids an overarching claim to produce testable, watertight, universal theories that it is of relevance for risk management. By so avoiding universal theories and formulas, risk management can afford to deviate from pronouncements using mathematical formulas to cover the ‘immanent indeterminables’ manifest in human perception and awareness and systems integration.
His point is that there is a clear parallel between psychoanalysis and the individual, and risk management and the organisation:
We understand ourselves not according to a template but according to our own peculiar, beguiling histories. Metaphorically, risk management can make explicit a similar realization within and between organizations. The revealing of an unconscious world and its being in a constant state of tension between excess and stricture, between knowledge and ignorance, is emblematic of how organizational members encountering messes, wicked problems and wicked messes can be forced to think.
In brief, Holt suggests that what psychoanalysis does for the individual, risk management ought to do for the organisation.
Talking it over – the importance of conversations
A key element of psychoanalysis is the conversation between the analyst and patient. Through this process, the analyst attempts to get the patient to become aware of hidden fears and motivations. As Holt puts it,
Psychoanalysis occupies the point of rupture between conscious intention and unconscious desire — revealing repressed or overdetermined aspects of self-organization manifest in various expressions of anxiety, humour, and so on
And then, a little later, he makes the connection to organisations:
The fact that organizations emerge from contingent, complex interdependencies between specific narrative histories suggests that risk management would be able to use similar conversations to psychoanalysis to investigate hidden motives, to examine…the possible reception of initiatives or strategies from the perspective of inherently divergent stakeholders, or to analyse the motives for and expectations of risk management itself. This fundamentally reorients the perspective of risk management from facing apparent uncertainties using technical assessment tools, to using conversations devoid of fixed formulas to encounter questioned identities, indeterminate destinies, multiple and conflicting aims and myriad anxieties.
Through conversations involving groups of stakeholders who have different risk perceptions, one might be able to get a better understanding of a particular risk and hence, may be, design a more effective mitigation strategy. More importantly, one may even realise that certain risks are not risks at all or others that seem straightforward have implications that would have remained hidden were it not for the conversation.
These collective conversations would take place in workshops…
…that tackle problems as wicked messes, avoid lowest-denominator consensus in favour of continued discovery of alternatives through conversation, and are instructed by metaphor rather than technical taxonomy, risk management is better able to appreciate the everyday ambivalence that fundamentally influences late-modern organizational activity. As such, risk management would be not merely a rationalization of uncertain experience but a structured and contested activity involving multiple stakeholders engaged in perpetual translation from within environments of operation and complexes of aims.
As a facilitator of such workshops, the risk analyst provokes stakeholders to think about their feelings and motivations that may be “out of bounds” in a standard risk analysis workshop. Such a paradigm goes well beyond mainstream risk management because it addresses the risk-related anxieties and fears of individuals who are affected by it.
Conclusion
This brings me to the end of my not-so-short summary of Holt’s paper. Given the length of this post, I reckon I should keep my closing remarks short. So I’ll leave it here paraphrasing the last line of the paper, which summarises its main message: risk management ought to be about developing an organizational capacity for overcoming risks, freed from the presumption of absolute control.
The two tributaries of time
How time flies. Ten years ago this month, I wrote my first post on Eight to Late. The anniversary gives me an excuse to post something a little different. When rummaging around in my drafts folder for something suitable, I came across this piece that I wrote some years ago (2013) but didn’t publish. It’s about our strange relationship with time, which I thought makes it a perfect piece to mark the occasion.
Introduction
The metaphor of time as a river resonates well with our subjective experiences of time. Everyday phrases that evoke this metaphor include the flow of time and time going by, or the somewhat more poetic currents of time. As Heraclitus said, no [person] can step into the same river twice – and so it is that a particular instant in time …like right now…is ephemeral, receding into the past as we become aware of it.
On the other hand, organisations have to capture and quantify time because things have to get done within fixed periods, the financial year being a common example. Hence, key organisational activities such as projects, strategies and budgets are invariably time-bound affairs. This can be problematic because there is a mismatch between the ways in which organisations view time and individuals experience it.
Organisational time
The idea that time is an objective entity is most clearly embodied in the notion of a timeline: a graphical representation of a time period, punctuated by events. The best known of these is perhaps the ubiquitous Gantt Chart, loved (and perhaps equally, reviled) by managers the world over.
Timelines are interesting because, as Elaine Yakura states in this paper, “they seem to render time, the ultimate abstraction, visible and concrete.” As a result, they can serve as boundary objects that make it possible to negotiate and communicate what is to be accomplished in the specified time period. They make this possible because they tell a story with a clear beginning, middle and end, a narrative of what is to come and when.
For the reasons mentioned in the previous paragraph, timelines are often used to manage time-bound organisational initiatives. Through their use in scheduling and allocation, timelines serve to objectify time in such a way that it becomes a resource that can be measured and rationed, much like other resources such as money, labour etc.
At our workplaces we are governed by many overlapping timelines – workdays, budgeting cycles and project schedules being examples. From an individual perspective, each of these timelines are different representations of how one’s time is to be utilised, when an activity should be started and when it must be finished. Moreover, since we are generally committed to multiple timelines, we often find ourselves switching between them. They serve to remind us what we should be doing and when.
But there’s more: one of the key aims of developing a timeline is to enable all stakeholders to have a shared understanding of time as it pertains to the initiative. In this view, a timeline is a consensus representation of how a particular aspect of the future will unfold. Timelines thus serve as coordinating mechanisms.
In terms of the metaphor, a timeline is akin to a map of the river of time. Along the map we can measure out and apportion it; we can even agree about way-stops at various points in time. However, we should always be aware that it remains a representation of time, for although we might treat a timeline as real, the fact is no one actually experiences time as it is depicted in a timeline. Mistaking one for the other is akin to confusing the map with the territory.
This may sound a little strange so I’ll try to clarify. I’ll start with the observation that we experience time through events and processes – for example the successive chimes of a clock, the movement of the second hand of a watch (or the oscillations of a crystal), the passing of seasons or even the greying of one’s hair. Moreover, since these events and processes can be objectively agreed on by different observers, they can also be marked out on a timeline. Yet the actual experience of living these events is unique to each individual.
Individual perception of time
As we have seen, organisations treat time as an objective commodity that can be represented, allocated and used much like any tangible resource. On the other hand our experience of time is intensely personal. For example, I’m sitting in a cafe as I write these lines. My perception of the flow of time depends rather crucially on my level of engagement in writing: slow when I’m struggling for words but zipping by when I’m deeply involved. This is familiar to us all: when we are deeply engaged in an activity, we lose all sense of time but when our involvement is superficial we are acutely aware of the clock.
This is true at work as well. When I’m engaged in any kind of activity at work, be it a group activity such as a meeting, or even an individual one such as developing a business case, my perception of time has little to do with the actual passage of seconds, minutes and hours on a clock. Sure, there are things that I will do habitually at a particular time – going to lunch, for example – but my perception of how fast the day goes is governed not by the clock but by the degree of engagement with my work.
I can only speak for myself, but I suspect that this is the case with most people. Though our work lives are supposedly governed by “objective” timelines, the way we actually live out our workdays depends on a host of things that have more to do with our inner lives than visible outer ones. Specifically, they depend on things such as feelings, emotions, moods and motivations.
Flow and engagement
OK, so you may be wondering where I’m going with this. Surely, my subjective perception of my workday should not matter as long as I do what I’m required to do and meet my deadlines, right?
As a matter of fact, I think the answer to the above question is a qualified, “No”. The quality of the work we do depends on our level of commitment and engagement. Moreover, since a person’s perception of the passage of time depends rather sensitively on the degree of their involvement in a task, their subjective sense of time is a good indicator of their engagement in work.
In his book, Finding Flow, Mihalyi Csikszentmihalyi describes such engagement as an optimal experience in which a person is completely focused on the task at hand. Most people would have experienced flow when engaged in activities that they really enjoy. As Anthony Reading states in his book, Hope and Despair: How Perceptions of the Future Shape Human Behaviour, “…most of what troubles us resides in our concerns about the past and our apprehensions about the future.” People in flow are entirely focused on the present and are thus (temporarily) free from troubling thoughts. As Csikszentmihalyi puts it, for such people, “the sense of time is distorted; hours seem to pass by in minutes.”
All this may seem far removed from organisational concerns, but it is easy to see that it isn’t: a Google search on the phrase “increase employee engagement” will throw up many articles along the lines of “N ways to increase employee engagement.” The sense in which the term is used in these articles is essentially the same as the one Csikszentmihalyi talks about: deep involvement in work.
So, the advice of management gurus and business school professors notwithstanding, the issue is less about employee engagement or motivation than about creating conditions that are conducive to flow. All that is needed for the latter is a deep understanding how the particular organisation functions, the task at hand and (most importantly) the people who will be doing it. The best managers I’ve worked with have grokked this, and were able to create the right conditions in a seemingly effortless and unobtrusive way. It is a skill that cannot be taught, but can be learnt by observing how such managers do what they do.
Time regained
Organisations tend to treat their employees’ time as though it were a commodity or resource that can be apportioned and allocated for various tasks. This view of time is epitomised by the timeline as depicted in a Gantt Chart or a resource-loaded project schedule.
In contrast, at an individual level, the perception of time depends rather critically on the level of engagement that a person feels with the task he or she is performing. Ideally organisations would (or ought to!) want their employees to be in that optimal zone of engagement that Csikszentmihalyi calls flow, at least when they are involved in creative work. However, like spontaneity, flow is a state that cannot be achieved by corporate decree; the best an organisation can do is to create the conditions that encourage it.
The organisational focus on timelines ought to be balanced by actions that are aimed at creating the conditions that are conducive to employee engagement and flow. It may then be possible for those who work in organisation-land to experience, if only fleetingly, that Blakean state in which eternity is held in an hour.
The improbability of success
Anyone who has tidied up after a toddler intuitively understands that making a mess is far easier than creating order. The fundamental reason for this is that the number of messy states in the universe (or a toddler’s room) far outnumbers the ordered ones. As this point might not be obvious, I’ll demonstrate it via a simple thought experiment involving marbles:
Throw three marbles onto a flat surface. When the marbles come to rest, you are most likely to end up with a random configuration as in Figure 1.
Figure 1: A random configuration of 3 marbles
Indeed, you’d be extremely surprised if the three ended up being collinear as in Figure 2. Note that Figure 2 is just one example of many collinear possibilities, but the point I’m making is that if the marbles are thrown randomly, they are more likely to end up in a random state than a lined-up one.
Figure 2: an unlikely (ordered) configuration
This raises a couple of questions:
Question: On what basis can one claim that the collinear configuration is tidier or more ordered than the non-collinear one?
Naive answer: It looks more ordered. Yes, tidiness is in the eye of the beholder so it is necessarily subjective. However, I’ll wager that if one took a poll, an overwhelming number of people would say that the configuration in Figure 2 is more ordered than the one in Figure 1.
More sophisticated answer : The “state” of collinear marbles can be described using 2 parameters, the slope and intercept of the straight line that three marbles lie on (in any coordinate system) whereas the description of the nonlinear state requires 3 parameters. The first state is tidier because it requires fewer parameters. Another way to think about is that the line can be described by two marbles; the third one is redundant as far as the description of the state is concerned.
Question: Why is a tidier configuration less likely than a messy one?
Answer: May be you see this intuitively and need no proof, but here’s one just in case. Imagine rolling the three marbles one after the other. The first two, regardless of where they end up, will necessarily lie along a line (two points lie on the straight line joining them). Now, I think it is easy to see that if we throw the third marble randomly, it is highly unlikely end up on that line. Indeed, for the third marble to end up exactly on the same straight line requires a coincidence of near cosmic proportions.
I know, I know, this is not a proof, but I trust it makes the point.
Now, although it is near impossible to get to a collinear end state via random throws, it is possible to approximate it by changing the way we throw the marbles. Here’s how:
- Throw the marbles consecutively rather than in one go.
- When throwing the third marble, adjust its initial speed and direction in a way that takes into account the positions of the two marbles that are already on the surface. Remember these two already define a straight line.
The third throw is no longer random because it is designed to maximise the chance that the last marble will get as close as possible to the straight line defined by the first two. Done right, you’ll end up with something closer to the configuration in Figure 3 rather than the one in Figure 2.
Figure 3: an “approximately ordered” state
Now you’re probably wondering what this has to do with success. I’ll make the connection via an example that will be familiar to many readers of this blog: an organisation’s strategy. However, as I will reiterate later, the arguments I present are very general and can be applied to just about any initiative or situation.
Typically, a strategy sets out goals for an organisation and a plan to achieve them in a specified timeframe. The goals define a number of desirable outcomes, or states which, by design, are constrained to belong to a (very) small subset of all possible states the organisation can end up in. In direct analogy with the simple model discussed above it is clear that, left to its own devices, the organisation is more likely to end up in one of the much overwhelmingly larger number of “failed states” than one of the successful ones. Notwithstanding the popular quote about there being many roads to success, in reality there are a great many more roads to failure.
Of course, that’s precisely why organisations are never “left to their own devices.” Indeed, a strategic plan specifies actions that are intended to make a successful state more likely than an unsuccessful one. However, no plan can guarantee success; it can, at best, make it more likely. As in the marble game, success is ultimately a matter of chance, even when we take actions to make it more likely.
If we accept this, the key question becomes: how can one design a strategy that improves the odds of success? The marble analogy suggests a way to do this is to:
- Define success in terms of an end state that is a natural extension of your current state.
- Devise a plan to (approximately) achieve that end state. Such a plan will necessarily build on the current state rather than change it wholesale. Successful change is an evolutionary process rather than a revolutionary one.
My contention is that these points are often ignored by management strategists. More often than not, they will define an end state based on a textbook idealisation, consulting model or (horror!) best practice. The marble analogy shows why copying others is unlikely to succeed.
Figure 4 shows a variant of the marble game in which we have two sets of marbles (or organisations!), one blue, as before, and the other red.
Figure 4: Two distinct configurations of marbles (or organisations)
Now, it is considerably harder to align an additional marble with both sets of marbles than the blue one alone. Here’s why…
To align with both sets, the new marble has to end up close to the point that lies at the intersection of the blue and red lines in Figure 5. In contrast, to align with the blue set alone, all that’s needed is for it to get close to any point on the blue line.
QED!
Figure 5: Why copying others is not a good idea (see text for explanation)
Finally, on a broader note, it should be clear that the arguments made above go beyond organisational strategies. They apply to pretty much any planned action, whether at work or in one’s personal life.
So, to sum up: when developing an organisational (or personal) strategy, the first step is to understand where you are and then identify the minimal actions you need to take in order to get to an “improved” state that is consistent with your current one. Yes, this is akin to the incremental and evolutionary approach that Agilistas and Leaners have been banging on about for years. However, their prescriptions focus on specific areas: software development and process improvement. My point is that the basic principles are way broader because they are a direct consequence of a fundamental fact regarding the relative likelihood of order and disorder in a toddler’s room, an organisation, or even the universe at large.
Eight to Late 