Blog

Disrupting Disruption Theory [Part III]: Transforming Human Organizations

Posted on July 8, 2014 by David

This is the third in my series of blogs triggered by Harvard history professor Jill Lepore’s criticism of HBS professor Clayton Christensen’s theory of disruptive innovation. Although her curiously jumbled assessment was wide of the mark, it presented an opportunity for me to outline an ecological interpretation of disruption, rather than the mechanical readings that are so common and seem to be favoured by Christensen himself.

Last week I translated disruption into ecological concepts, using Canadian ecologist C.S. “Buzz” Holling’s adaptive cycle and the larger concept of panarchy, which looks at the interaction of these cycles at different systems levels. This week I add the cognitive dimension, which turns the adaptive cycle into the ecocycle, allowing one to use ecological analogies to understand the transformation of human organizations. In Crisis & Renewal I used Berkeley professor Jeffrey Pfeffer’s triad of perspectives on action: emergent, rational and constrained to supply this cognitive dimension and to suggest that they might represent three stages rather than three static categories.

Continue reading →

Posted in Change, General, Leadership | Tagged capitalism, casino capitalism, Clayton Christensen, complex systems, conscious capitalism, creative capitalism, Crisis & Renewal, destruction, disruption theory, ecocycle, ecological perspective, entrepreneurship, Holling, innovation, Jeffrey Pfeffer, Jill Lepore, panarchy, Peter Drucker, success trap | Comments Off

Disrupting Disruption Theory (Part II) – Ecological Transformation

Posted on July 1, 2014 by David

The Spruce Budworm: Disruptor of Forests

This blog is a continuation of last week’s in which I discussed Jill Lepore’s mostly off-target criticisms of HBS professor Clayton Christensen’s theory of disruptive innovation. There I said that my concern with Christensen’s work was his tendency to rely on machine analogies when talking about the economy and the complex system that is capitalism. Mechanical analogies tend to suggest engineering solutions and imply that we understand cause-and-effect rather better than we really do. When applied to complex systems, with their “wicked” problems, engineering solutions can result in unintended consequences. At the level of the firm mechanical analogies lead to people being seen as instruments of the firm, rather than as ends-in-themselves.

In The New Ecology of Leadership I argued that ecological analogies do a much better job of capturing practitioner experience. In this blog I want to outline how an ecological perspective on change and disruption provides a much more generative context than mechanical models. I am going into the ecological model in some detail to make it clear that this is not an idle comparison but an analogy that can be disciplined by reference to ecological science and systems theory. Only when one gets into the detail can one see how it might be used to frame disruption theory. In this week’s blog I will outline the ecological model. In next week’s blog I will use my adaptation of it to understand change and disruptive innovation in human systems.

Continue reading →

Posted in Change, General | Tagged adaptive cycle, Clayton Christensen, context, creativity, destruction, disruption, ecological perspective, ecology, Gunderson, Holling, Jill Lepore, machine, New Brunswick, panarchy, spruce budworm | Comments Off

Disrupting Disruption Theory [Part I]: Storm in a Modernist Teacup

Posted on June 24, 2014 by David

Harvard University Professor Jill Lepore

A recent article in the New Yorker by Harvard history professor, Jill Lepore is creating quite a storm in management circles. In it she takes Harvard Business School’s Clayton M. Christensen to task for sloppy methods in the derivation and application of his theory of disruptive innovation. The article has provoked a number of responses, some siding with Lepore and others with Christensen. In an interview on Friday the HBS professor of management reacted to Lepore’s charges with some annoyance. This must be as close to mad as Clay Christensen ever gets, for he accuses her of a “criminal act of dishonesty”.

HBS Professor Clayton Christensen

Initially Lepore’s quarrel is with the evidence that Christensen used to develop his theory and the validity of its predictions. She charges him with cherry-picking examples and creating arbitrary definitions of success that favour his case. In his spirited rebuttal Christensen handles each of these points and accuses Lepore of neglecting to consult any of his or others’ writings on disruption since his 1997 book, The Innovator’s Dilemma. He said she failed to understand that disruption is a process, not an event, with outcomes becoming apparent only over time. This point goes to Christensen…

A second complaint by Lepore is the widespread misuse of the concept of disruption, especially by the denizens of Silicon Valley, who have seized upon it as a powerful narrative that describes what they do. Here Lepore is right and Christensen seems to agree with her: disruption theory is becoming a management fad and being hyped on a scale not seen since the rise of the reengineering movement in the 1990s or Thomas Kuhn’s coining of the concept of a paradigm in the early 1960s. It is attracting the usual horde of hucksters and snake oil salesmen. Much of this activity seems to consist of taking the idea to areas where it was never intended to go. In business it is built around the proposition that established firms can anticipate disruption and protect themselves against it. The evidence for this is slender: disruption is much easier to detect in hindsight than it is to identify in prospect. It can be used to explain why an enterprise failed, but it is unclear whether it can be used to predict disruption reliably enough for a firm to take pre-emptive action.

Continue reading →

Posted in Change, General | Tagged analogical, business process reengineering, Clayton Christensen, community, disruption, Faustian bargain, Harvard Business School, innovation, instrumental rationality, Jill Lepore, machine, mechanical, metaphor, Mormonism, Silicon Valley, STEM | Comments Off

A Theory and a Hammer: Managing With Incentives (Part II)

Posted on June 17, 2014 by David

Aristotle

I spent the past week teaching a leadership class at the Kenneth Levene Graduate School of Business at the University of Regina. At the same time my HBR blog “Is Management Due For a Renaissance” has been attracting continuing comment and during the week I was hard put to keep up with the responses. Management writer Steve Denning and I ended up discussing the role of purpose in organizations and would-be professions like management. Steve emphasized the importance that Aristotle placed on telos, or the purpose of a profession. He wrote:

“I am wondering whether the biggest shortfall in management today in  terms of practical wisdom is having the wrong telos. The conventional wisdom in big business is that the purpose–or telos–of an organization is to maximize shareholder value, a notion that even Jack Welch has called ‘the dumbest idea in the world.’ Should we not be getting back to what Peter Drucker said was the only valid purpose of a private sector firm: to create a customer? If we have the wrong telos, can even the best practical wisdom save us?”

Continue reading →

Posted in Change, Leadership, Strategy | Tagged Alfie Kohn, change, complex systems, context, creativity, Jack Welch, means and ends, Peter Drucker, purpose, Sears Roebuck, Steve Denning, telos | Comments Off

A Theory and a Hammer: Managing with Incentives (Part I)

Posted on June 10, 2014 by David

VAH Phoenix where the wait time scandal was uncovered

The wait time scandal, recently revealed in the Veterans Affairs Hospital (VAH) network in the U.S., is another indication of how difficult it can be to change large-scale, complex organizations. The VAH system has had a long roller-coaster history. It has been “turned around” often enough to make anyone’s head spin. These efforts appear to generate short-term improvements but the system seems inevitably to slide back into the swamp. The latest report is an interim one and it outlines preliminary findings without any attempt to understand the root causes – they will come later this year with the final report.

What we do know is that about a year ago senior people decided to focus on improving waiting times. These were to be measured by an Electronic Waiting List (EWL), which counted the number of days between the date when a veteran booked an appointment to the date the appointment took place. The target was that no veteran should have to wait more than 14 days and incentives were attached to meeting the dates. What could be simpler? You can’t manage what you can’t measure…

What ensued was measurement mayhem. Waiting time in hospitals is a classic, systemic problem – usually the result of a combination of complexity, lack of resources and broken work processes. People embedded deep in the system can rarely improve the situation through their own individual efforts. As a result, administrative officials found myriad ways to game the wait times. The most popular approach seems to have been to create a buffer paper list ahead of the EWL. This gave the veterans the impression that they were on a wait list but did not trigger the actual measurement of a wait time. Appointments could be transferred from the paper lists to the EWL as and when actual appointments became available. This could be done within the target of 14 days, often on the same day, showing zero wait time! The administrators collected their bonuses until the calm was interrupted by a whistleblower…

The Persistence of Managing With Incentives

We don’t know exactly what went wrong in the VAH but it is highly likely that, whatever it turns out to be, it will have been aggravated by the incentive plan. The problems associated with managing using incentives are legion, especially in the public sector. I blogged a few months ago about the dysfunctional results that ensued when test-based incentive schemes were introduced into the American education system. Yet their popularity seems to remain undimmed. Why is this the case? I suspect it is because of a self-reinforcing loop that rationalizes away any problems and allows its devotees to hold on to the basic principles. What are those principles and where do they come from? Next week I am going to suggest that they are the result of a rationalist approach to management. This week I want to look at what the self-reinforcing loop might look like:

A Self-sealing “Solution”

Here is an impression of how it might work: Managers invoke the mantra, “If you can’t measure it you can’t manage it”, starting the sequence. [Few people seems to ask who it is that is doing the measurement – Peter Drucker always argued for self-control which implies self-measurement]. They then add incentives to reinforce their message. In complex systems, with insufficient resources and broken processes, the measurements usually end up being gamed. Typically this problem is not seen as systemic. Instead it is diagnosed as the work of bad actors – “bad apples”. The authorities introduce an ethics policy, accompanied by training, and the incentive scheme continues…They also hire some new “heroes” who may produce some short term improvements, or at least the appearance of them, and the larger cycle of short-term recovery followed by long run decline repeats itself indefinitely…

Posted in Change, Leadership, Strategy | Tagged incentives, scandal, VAH, Veterans Affairs, wait time | Comments Off

Is Management Due for a Renaissance?

Posted on June 3, 2014 by David

Late last week this blog was published in the Harvard Business Review blog network, where it is attracting a good deal of interest and comment. It is part of a series by speakers participating in the Global Drucker Forum November 13-14 in Vienna:

Every now and then, a thinker calls for a renaissance in some field of work – a rebirth, or return to classic roots after a period of straying from them. Is management – not yet a very old discipline – due for one? When Richard Straub, President of the Peter Drucker Society of Europe, recently declared so, it got me thinking by analogy about how one might come to pass.

Renaissance Perspective

The first Renaissance was of course the sweeping cultural movement that began in 14^th century Florence and, aided by the newly invented printing press, spread throughout Europe. It lasted into the 17^th Century, when it was succeeded by the European Enlightenment. The causes of the movement are complex and much debated. During the long decline of the Roman Empire, Italy experienced a steady influx of Greek scholars and texts. Their appearance sparked a new interest in classical writings. At the same time there was growing criticism of the sterile scholasticism of the medieval universities, which had focused on defending dogma with rigorous conceptual analysis and vigorous argument. Instead, there was a new focus on nature and experience and what it meant to be human. Some say that the Black Death, which hit Italy particularly badly in the mid-14^th century, catalyzed this concern with humanism. Instead of being preoccupied with the afterlife, people turned their attention to life on earth. Thus the recovery of ancient wisdom was accompanied by the pursuit of new perspectives (quite literally, in the case of painting) that would render a more realistic picture of the human condition.

We could even say that the subject of management was touched by that first Renaissance. Niccolò Machiavelli (1469-1527) was one of the first writers to give us an unvarnished perspective of how things really are in powerful enterprises, rather than how we would like them to be.

Continue reading →

Posted in Change, General | Tagged Black Death, Drucker, Florence, Haidt, intuition, Machiavelli, phronesis, practicalwisdom, prudence, reason, Renaissance, Richard Straub, Righteous Mind, Roman Empire, scholasticism | Comments Off

Exploring The Ecology of Leadership: the Power of Analogical Thinking

Posted on May 27, 2014 by David

“Lots of measurements but little that’s useful” – comment in response to an image

I spent the past week in California working with a senior management team from a large global corporation as part of their extensive executive development program. This was my third time with the same organization and I had worked hard to improve and upgrade the program to focus more closely on their issues. The conceptual underpinning of the one-and-a-half day sessions has always been the ecocycle, but the challenge has been to find ways to engage the participants so that the framework speaks directly to their concerns and their leadership culture. The standard approach is to use case studies, but I had been unable to find ones that addressed their issues without taking an inordinate amount of reading and preparation time on the part of the participants. And what they learn from the case may not be easily applied to their own situation

As I described in my blog a few weeks ago, in my previous session I had used the Visual Explorer and Leadership Metaphor Explorer instruments from the Center for Creative Leadership as catalysts for discussion. The results were excellent and this time I decided to weave these instruments into the program even more tightly. During the first half-day session I asked the participants to think about the major challenges that their organization faced and then asked them each to find a Visual Explorer image that spoke in some way to that challenge. They each selected their own image and then went through a debrief, first in teams of five and then with each team giving a plenary presentation to the larger group. The result was a multi-faceted picture of how their images related to the corporate challenge.

Continue reading →

Posted in Change, General, Leadership, Strategy | Tagged abduction, alignment, analogical thinking, analogy, change, choice, commitment, complex systems, creativity, crisis, direction, ecocycle, ecological perspective, executive development, image, leadership culture, Leadership Metaphor Explorer, metaphor, narrative, The New Ecology of Leadership, Visual Explorer, wicked systems | Comments Off

Double Vision: “Boxes and Bubbles” Thirty Years On [Part II]

Posted on May 20, 2014 by David

This is the second blog on the thirtieth anniversary of my article “Of Boxes, Bubbles and Effective Management” appearing in the May-June 1984 issue of the Harvard Business Review. I had been inspired to write the article when I read Benjamin Hoff’s The Tao of Pooh and realized that the Taoist duality of yin and yang and the dynamics of their relationship captured what had happened to us as a management team. After that I started to read the Taoist classics – the Tao Te Ching and the Chuang-tzu. I found that the dualistic framework helped me to understand a number of the tensions in Western thinking and the polarization that one encountered, especially in the social sciences.

From Taoism it was a short step to research on the brain, especially the split-brain experiments that suggested that, although the left and right sides of the brain did not perform different functions, they constituted two separate “takes” on the world and that the corpus callosum, which connected the two halves, played an important but complex role. The implications of this research continue to rumble around and have been revived most recently in Iain McGilchrist’s encyclopaedic The Master and His Emissary in which he contends that the left-brain (the emissary), with its linear, reductionist take on the world, has usurped the role of the right-brain (the master) with its more holistic, figurative understanding.

The real breakthrough in my thinking came when I was introduced to the work of Canadian ecologist, C.S. “Buzz” Holling and his concept of the adaptive cycle. His study of ecosystems of various kinds suggested that they all followed a distinctive infinity loop trajectory of birth, growth, destruction and renewal. In 1994 together with an academic colleague I wrote a paper in which we applied this cycle to human organizations and called it the “ecocycle”. This was to provide the foundation of an ecological perspective with huge integrative powers.

An Ecological Perspective

Here is a diagram of Holling’s adaptive cycle as presented in his 2002 book, Panarchy, written with Lance Gunderson:

Holling’s Adaptive Cycle (Panarchy, 2002)

The diagram shows the adaptive cycle passing through four distinct phases. The first two ‘r’ and ‘K’ are named after the two terms in the logistics equation, where r is the growth rate and K is the carrying capacity of the ecosystem. These are two distinctive selection environments that favour two distinctly different growth strategies. r-Strategists produce a high number of offspring with limited parental care often in volatile, unstable environments. K-strategists, on the other hand produce a limited number of offspring and invest a significant amount of time in their development; this works well in stable environments. Experiments with fruit flies shows that their strategies will change based on the type of environment that they are exposed to. There are obvious echoes of these approaches in the business world, with internet startups typically pursuing r-strategies and longer established firms in stable markets pursuing K-strategies.

The other two phases through which the ecocycle passes are named after alpha and omega, the first and last letters of the Greek alphabet. Omega is the release phase, when large, apparently successful systems become overconnected and brittle and vulnerable to sudden change. Alpha, on the other hand, is the phase when new connections are made among myriad loosely-connected components of the system to create new possibilities for growth and the emergence of r-strategists. And the whole cycle can be linked back to Taoism in its role as an early systems view of how nature functions.

Adding Another Framework

By 1995 I was able to add to this ecological view management theorist Jeffrey Pfeffer’s three perspectives on action. In his 1982 book, Organizations and Organization Theory, he had suggested that theories of organization tended to be built around one of three different perspectives on action:

Action as purposive, rational (at least in intent) and goal-directed
Action as externally constrained and situationally determined
Action as more random and emergent, depending on an unfolding process

The first one is by far the most popular in the Western world, particularly in America where free will and conscious choice are idealized. In the second view the role of human cognition emerges after choice to make sense of what has been chosen and to provide meaning and a sense of control. In the third view action is all about experiencing outcomes and developing preferences; rationality and cognition emerge from this process of discovery of cause-and-effect. I realized that these three perspectives could be seen as phases in the ecocycle. All action begins as almost random and emergent, becomes purposeful and rational as preferences and an understanding of cause-and-effect emerge and develops into a dogma that gives a sense of control and legitimizes the use of power. The result of “rubbing” Holling’s and Pfeffer’s frameworks together was a new ecological synthesis that could be used to understand human organizations. It would form the foundation for both Crisis & Renewal and The New Ecology of Leadership.

Thirty years ago “Of Boxes, Bubbles and Effective Management” provided the seeds for some large trees! And there is some evidence that others find this direction useful. In his latest book, Accelerate, well-known change expert John Kotter calls for organizations to develop a dual operating system with a management–driven hierarchy for reliability and efficiency and a strategy acceleration network for agility and speed. It’s a call for “both…and” rather than “either/or” and although Professor Kotter seems to think it a new idea in management, it’s been around philosophically for several thousand years and the basic clues of how to do it are written in the book of Nature.

Posted in Change, General, Leadership, Strategy | Tagged Accelerate, adaptive cycle, Boxes & Bubbles, change, Chuang-tzu, Crisis & Renewal, ecocycle, ecological perspective, ecosystem, Holling, Kotter, McGilchrist, Tao Te Ching, Taoism, The New Ecology of Leadership, yang, yin | Comments Off

The Double Vision: “Boxes and Bubbles” Thirty Years On [Part I]

Posted on May 13, 2014 by David

William Blake (1757-1827)

“For double the vision my Eyes do see, And a double vision is always with me:”

In 1984 the first article I ever wrote on management appeared in the May-June issue of the Harvard Business Review. Entitled “Of Boxes, Bubbles and Effective Management”, it told the story of a team of managers struggling to save their firm, which was insolvent and on the edge of bankruptcy. The firm, an industrial distributor, had been taken over in a highly-leveraged buyout on the eve of a sharp recession. During this time economic activity slumped and short-term interest rates exceeded 25%. The firm’s revenues fell sharply and its profits disappeared but the real damage was done by the debt and the interest charges. Almost overnight the shareholder’s equity disappeared; leaving a gaping hole that could not be filled. Yet the firm survived, thanks to the management team thrown together by crisis; and the article told the story of what had happened and how they had done it.

I think that I have always been a reflective management practitioner, especially during the twenty-five years when I was an operating manager involved in a series of mergers and acquisitions, takeovers and turnarounds. I have always thought about how one would map one’s action onto conceptual frameworks and in what way those frameworks could help one go back the “other” way from thought to action. But when, at the end of 1983 with the firm stable again, I looked back at what had happened, I was faced with a problem. I could not map what we had done onto any of the management frameworks I knew about. They were all too conceptual, too formal and too “hard”. Before the leveraged buyout we were a group of highly-structured, task-oriented managers focused on efficiency and performance. The management frameworks I knew about all focused on those tasks. After the buyout we changed completely. It was as if we had passed through a managerial looking-glass: before we had been tightly structured, now we were loose; the organization had been rigid, now it was flexible; doors had been closed and now they were open and so on and so on…I could not find any frameworks that embraced this duality between the “hard” that we had been and the “soft” that we became.

Continue reading →

Posted in Change, General, Leadership, Strategy | Tagged Boxes & Bubbles, hard, Harvard Business Review, holism, Jay Galbraith, leveraged buyout, reflective practitioner, relationships, soft, systemic, Tao of Pooh, Taoism, task, yang, yin | Comments Off

Climate Change and Evidence-based Management [Part II]: The Case for Practical Wisdom

Posted on May 6, 2014 by David

This blog is a continuation of last week’s in which I suggested that in managing complex systems with unstable parameters one cannot rely just on data-based predictions, one has to depend more on judgement-based anticipations:

Berlin made the case of the use of practical wisdom in the human sciences

Isaiah Berlin (1909-1997)

In The Rational Optimist Matt Ridley never gives the reader his definition of rationality. Instead he writes, “I am a rational optimist; rational, because I have arrived at optimism not through temperament or instinct, but by looking at the evidence.” The $64,000 question, of course, is: “How does he know that?” On what “evidence” does he base that conclusion? How does he know that he is not using “hard” evidence to support an Enlightenment faith in Progress? And so on.

The very word “evidence”, with its scientific and legal connotations, has a nice solid ring to it that makes it sound as if its definition was equally solid and uncontroversial. Back in the 1950s and 60s we certainly thought that, especially at Oxford (Dr. Ridley’s alma mater), where the devotion to analytical philosophy and logical positivism was particularly strong. Back then the mind of the scientist was seen as rational in a logical way; detached, objective and dispassionate, rather like that of Mr. Spock of Star Trek fame. The reform of the management academy in the USA was based on similar assumptions with the intention of driving intuition out of management and replacing it with algorithms and cool calculation.

Continue reading →