Part V - Leadership and Organization Development by Design - Environmental Dynamism and Complexity

What do snowflakes have to do with leadership? Snowflakes are unique in structure and obtain their shape and size as the flake moves through the atmosphere and is affected by different temperatures and humidity systems. Since snowflakes are virtually unique, their structure is complex and contains a high degree of variation. Just as the natural environment impacts the complexity and variation in the size and shape of a snowflake, the organization's environment impacts the magnitude and character of leadership thinking and decision making.

Two terms emerging from the description of snowflake formation come to mind as I contemplate leadership thinking and decision making. They are environmental dynamism and complexity.


Just typing those terms tends to give me a slight headache! However, those awfully big words convey very important concepts which can affect leaders' thought processes. If understood and appropriately acted upon, then these concepts can help to frame and appreciate the perils and victories of leadership decision making.

 

So, what is environmental complexity? Aldrich essentially defines environmental complexity as a function of the level of standardization (uniformity) or variation (heterogeneity) of firms within an industry.  Can you think of a firm that is in a fairly standardized industry? How about banks...?

What is dynamism? Aldrich describes dynamism as the variability of the industry’s growth or market instability. Can you think of an industry growing by leaps and bounds? How about Internet-related services and products...?

Some researchers view complexity as meaning the number of factors in an environmental event and dynamism as meaning the rate of change in and among the factors (Clark, Varadarajan, & Pride, 1994; Sharfman & Dean, 1991).

Underwood describes complexity as nonlinear or unpredictable interactions of systems within the global system in which there are still elements of predictability. The factors that need to be understood include economic, government, legal, media, climate, moral, psychological/social, and ideological. According to Griffin, organizational environments consist of internal and external forces which must be understood in the context of change. Cummings and Worley argue major disruptions in an organization’s external and internal environment can trigger transformation in response to or in anticipation of those changes. More importantly, Underwood describes marketing and technology forces as dictating the rate of change. The two combined indicate the level of competition in the environment. The term Underwood uses to describe the level of competition is turbulence.

Why are these distinctions important as it pertains to how leaders think? Can you say the words "increased potential for mismatch"? Yes, according to Payne, as complexity of a decision increases decision makers will go for problem solving, learning, and discovery techniques that eliminate choices as quickly as possible. Their choices will be based on limited exploration and evaluation of information. In times of complexity and uncertainty, leaders’ with mental models limited to Hodgkinson's linear economic model are more likely to mismatch the response of the organization and the demands of the environment (Julian & Scrifres, 2002).be valid. The

Julian and Scifres propose decision-makers who operate in stable and simple environments tended to think there is plenty of time to respond to emerging strategic issues. Their thinking is made plausible because it has been reinforced by their past experiences.  In high levels of dynamism and complexity, the tendency to think there is plenty of time to respond leads to what statisticians refer to as an increase in Type II errors.

This environmental misperception leads to decision-makers choosing not to act when they should (Boyd, Dess, & Rasheed, 1993). In times of stability, the potential for Type I errors increases when the mental model is opposite of what was previously described. This misperception leads to decision makers taking unnecessary actions.

What is any self-respecting Leadership and Organization Development professional to do given these circumstances? Again, the answer points back to understanding underlying assumptions and the frame the leader utilizes as he/she processes information. The added challenge is to get clarity on how the complexity of the environment and the dynamics of the industry are informing his/her thinking.

While you may choose for your consultation to be simple and "surface deep", remember your counsel, solutions, and credibility are linked to clarity regarding the situation and the outcomes expected. So, go deeper. Ask more of the right questions to understand and then to simplify the situation. Once you understand and simplify the situation, then you can get to the golden treasure known as clarity. Remember decisions are no better than the information they are based upon.

The next post will be dedicated to the topic of munificence. Don't let that word worry you too much! The word munificence refers to an abundance or scarcity mentality. I'll bet you can't wait to see what impact this mentality has on leadership thinking and decision making. However, I do imagine you already know! Nonetheless, take a look at the next post to learn more. Until then ask and answer the right questions in the right way and be the change you want to see! 

Phyllis L. Wright, Ph.D.

View my profile on LinkedIn: www.linkedin.com/in/phyllislajunewright/

Follow @PhyllWright Twitter

References

Aldrich, H. E. (1979). Organizations and environments. Stanford, NC: Stanford

        University Press.

 

Boyd, B. K., Dess, G. G., & Rasheed, A. M. A. (1993). Divergence between archival

        and perceptual measures of the environment: Causes and consequences. The

        Academy of Management Review, 18(2), 204-226.  Retrieved from

        http://www.jstor.org 

 

Clark, T., Varadarajan, P. R., & Pride. W. M. (1994). Environmental management:

        The construct and research propositions. Journal of Business Research, 29(1),

        23-38. Abstract retrieved from http://www.sciencedirect.com

 

Cummings, T. G., & Worley, C. G. (1997). Organization development and change

        (Sixth ed.). Cincinnati, OH: South-Western College Publishing.

 

Hodgkinson, G. P. (2005). Images of competitive space: A study of managerial

         and organizational strategic cognition. New York, NY: Palgrave MacMillan.

Julian, S. D., & Scifres, E. (2002). An interpretive perspective on the role of

         strategic control in triggering strategic change. Journal of Business Strategies,

        19(2), 141. Retrieved from http://www.questia.com 

Underwood, J. D. (2002b). Thriving in e-chaos: Corporate strategy for uncertain
        times. New York, NY: Writers Press Club.

 

Part III: Leadership and Organization Development by Design - Strategic Agility

Strategic agility is all about leadership thinking and decision making.

Let's focus on thinking. I really like Kenneth Craik's definition of thinking. He proposed thinking is a feedback support process which is both physical and mental in nature. The process occurs between the time we perceive something and the resulting actions. As humans, we decide a couple of things either consciously or unconsciously. Among them are:

1. How long to remain in the thinking process
2. The framework we will utilize to examine our perceptions

A choice to overly lengthen or delay the thinking process can also lead to "analysis paralysis".

In an excellent piece of work titled Mental Models, the authors said, as humans, we tend to see things through mental frameworks we have constructed. The frameworks or mental models and patterns we use can lead us to either course:

1. rectification (correction)
2. reinforcement (keep going in the same direction)
3. redirection (new paths forward)

Therefore, our view of the world, ourselves, what we are to do, and how we are to do it are
dependent on the mental models we have constructed. These models help us to anticipate and clarify our interactions with others and with the environment.

Consequently, according to McKendree, Small, and Stenning, mental models are a tool of thinking and they are constantly evolving models of models. Mental models and representations are so powerful that they can affect not only the rules, procedures, and strategies one holds but also how one performs (Mental Models, 1983). So, in terms of speed and the frameworks utilized, leadership thinking agility is astronomically important. Why?
 

If strategy and the goals of the firm are interdependent, then a mistake in strategic thinking can lead to a mistake in goals established for the firm. How could this happen? Robert Grant proposed agility challenges occur as a result of behavioral and cognitive factors. Included among the factors are:

1. rigidity relative to core capabilities (sticking with core competence no matter what)
2. social pattern disruptions (patterns of collaboration, coordination, communication)
3. perceptions of threats to power (control)
4. and complex configurations between strategy, structure, systems, culture, and employee skills (complexity).

According to Grant, we also have a tendency to lock into common structures and strategies and to prefer what's known over what's to be discovered. The preferences are reinforced by what is called bounded rationality and satisficing. Bounded rationality refers to the limited capacity of humans to process information. The limitation ultimately leads to constraints on the set of choices from which one can select. Satisficing refers to settling for satisfactory rather than optimal performance as a result of the termination of the search for better solutions once a satisfactory performance level is achieved.

Consequently, Hickman proposed the response to the environment is a critical and systemic thinking challenge for which leaders have to be adept at conceptualizing their strategic insight. Leaders have to be adept at surfacing their thinking and associated underlying assumptions in order to understand how they operate to undermine their own intentions. Again, thinking ability is critical because as Odiorne (1979) explained, a mistake in goals will produce a mistake in activity.

So, what is an L&OD professional to do in the face of these challenges during complex and chaotic times. Well, to use a Becky-ism, proposing that "it is 5 o'clock somewhere" is not the answer. This Becky-ism was the cue that it was time for Happy Hour and the alcohol that comes along with it. Yes, and one must soberly face up to these challenges.

The key as an L&OD professional is to examine underlying assumptions as part of the work. If true clarity and communication is to be attained, then this level setting step should not be missed. Why? Because, in my experience, often the underlying assumptions are different for each key decision maker. Further, the key decision makers may also not be on the same page regarding key terms or words they are using to describe the circumstances or solutions.

So, is everyone really on the same page and singing from the same hymn book? Are we just assuming so? Would you think it probably important to have clarity regarding assumptions for alignment, change management, and true sustainability of solutions implemented. As a very wise and wonderful leader once said, if the assumptions are right then the options to deal with the challenges stand the chance of being right.

The next post will include a discussion of three strategic organizational frameworks leaders may be using to make decisions. Until then, ask and answer the right questions in the right way and be the change you want to see!

Phyllis L. Wright, Ph.D.
View my profile on LinkedIn: www.linkedin.com/in/phyllislajunewright/
Follow @PhyllWright Twitter

This post contains an "ism" from a former colleague, Becky Hall. She could easily come up with quips to add humor to any situation. Of course, no alcoholic beverages were allowed during the course of a work day from 8:00 a.m. until 5:00 p.m. at any time. So, at various times during the day, if a heavy conversation led most of us to think we needed to be at Happy Hour immediately, then Becky would break the tension by saying, "Well, it's five o'clock somewhere!". This was, of course, a joke! Thank you for the humor Becky.

References
Craik, K. J. W. (1966). The nature of psychology. Stephen L. Sherwood (Ed.). Cambridge,
          United Kingdom: Cambridge University Press.
Grant, R. M. (2010). Contemporary strategy analysis (Seventh ed.). Chichester, United
          Kingdom: John Wiley & Sons, Ltd.
Hickman, G. R. (Ed.). (1998). Leading organizations: Perspectives for a new era. Thousand
           Oaks, CA: Sage Publications, Inc.
McKendree, J., Small, C., & Stenning, K. (2002). The role of representation in teaching
           and learning critical thinking skills. Educational Review, 54(1), 57-67. Retrieved from
           http://web.ebscohost.com.library.dub.edu:2048/ehost/pdf? 
           vid=5&hid=114&sid=63b1980c-eb34-4915-b639-892cf7e89aa5%40sessionmgr102
Mental Models. (1983). In Dedre Gerner and Albert L. Stevens (Ed.). Hillsdale, NJ:
           Lawrence Erlbaum Associates. Retrieved from http://www.questia.com/PM.qst? 
           action=openPageViewer&docId=55455342#
Odiorne, G. S. (1979). MBO II: a system of managerial leadership for the 80's. Belmont,
            CA: Fearon Pitman Publishers, Inc.