Leaders are judged on delivering success. The traditional playbook has been to make the organisation run like a well-oiled, efficient machine — producing ever-greater outputs with ever-minimal inputs. To make the machine efficient a monster, feeding on an insatiable diet of measurement and control, is unleashed. Yet all this time a greater spectre has been lurking over the horizon — an adversary even this monster is no match for — radical uncertainty.
Uncertainty mutates when the information we rely on to make sense of what’s happening is: missing (because it hasn’t been received or can’t be located when needed); unreliable (because the credibility of the source is perceived to be low, even if the information itself might be accurate); ambiguous (as there’s more than one way to interpret information); or complex (meaning it’s too difficult to integrate different pieces of data).
Humans recoil from uncertainty. In a University College experiment participants were given a “mildly painful electric shock” when their predictions in a game turned out to be wrong. What surprised researchers was that participants who were told they had a 100% chance of getting shocked were less stressed that those who were told they only had a 50% chance. But stress is an evolutionary mechanism — it increases our awareness of the situation as we look for appropriate responses to the dangers we face. For example, the researchers found that the more stressed participants became in their game the better their judgment was.
Yet leaders of organisations are loathe to embrace uncertainty and channel their stress. Instead, uncertainty avoidance kicks in. Unleashing monstrous efficiency over what they still have under control they cut staff and close projects in an often futile attempt to bring a semblance of certainty to a world that suddenly feels chaotic. But leaders have a choice: they can continue to pretend the world is the way they wished it was (predictable and controllable through plans, budgets and forward guidance) or they can embrace uncertainty and use it to discover their next moves. The question is, do you dare to give up control?
Those paying attention will have noticed that Chinese companies have risen from being low-cost manufacturers to high-tech innovators in just 30 years. What’s less well-known is how the Chinese are now “reinventing the role of management”. Haier, for example, is no longer run by a senior management atop a hierarchical pyramid but “by 4,500 intrapreneurs who have a laser-sharp focus on their specific projects”. This is a Chinese revolution in management based on the simple idea that local people know best what works locally.
Leaders increase their chances of success by not trying to pick winners themselves. Instead they cultivate a system that elicits and supports a variety of ideas coming from those who know customers best — people who work closest with them. If anyone believes they’ve spotted a new opportunity they advertise it on the organisation’s digital platform to solicit bids from any qualified people (from within or outside the organisation) who want to form a team to exploit it. If they can’t convince others to pursue the opportunity this is the ‘wisdom of crowds’ sorting the wheat from the chaff — senior managers don’t get involved.
People whose ideas do find traction become intrapreneurs (entrepreneurs operating within an organisation). Forming small customer-facing teams, or micro-enterprises, (often 12 people or less) they focus on meeting a clear mission they’ve identified themselves. Key resources they need (shared services, critical databases, production facilities etc) can be accessed directly through digital platforms run by the organisation. These replace middle-managers — department heads who have traditionally coordinated the activities of others. Information from front-end interfaces, (built by customer-facing teams to engage with end users) flows into senior management without delay or distortion, as does information from digital platforms about the long-term assets being consumed. Senior management now no longer needs to focus on measurement and control for instead it has real-time awareness.
Chinese Organisational Structure — Reinventing the Role of Management
By working with the messinesses of complex human systems (organisations, markets etc) Chinese companies are not fighting uncertainty but embracing it. For making successful moves does not require one to know the future with certainty — it only requires that one is less uncertain about the current situation than rivals are. Flowers in your garden grow if your soil is rich, you sow seeds in the right places (and at the right time) and you adapt to the conditions when they change (watering flowers in a drought, protecting them in a storm).
Continuing to run your organisation like a 20th century machine is a path to destruction. Many organisations will continue as before as inertia — resistance to change — is strong. Past success produces deeply ingrained ways of doing things that are hard to change. While convincing people of the need to act differently when their bonuses are unlocked by doing things in the same old way (agreed during the annual budget) is often impossible.
Some though have started on this path — recognising the future is digital and launching transformation programs. Yet here the focus is too often on the digital — “what technology should we adopt?” to upgrade the systems they’ve spent years investing in to become a more efficient, better-oiled machine — rather than transformation to the next stage of management. Some will adapt — evolution will deal with those that don’t.
In a world of radical uncertainty we must accept that we can not know for certain — but neither do we need to. We can find better moves forward not in spite of uncertainty, but because of it. The way we do this is step-by-step. First is to stop your organisation harming itself with outdated thinking and practices. You can find out more on this at powermaps.net.
1 Nora Bateson