Training for instability

Marcelo Manucci
Paper presented at MANAGEMENT INNOVATION EXCHANGE

Summary
We have been educated for stability – and we continue to train people to be effective in known territories – but the current competitive environment is unstable. How can we prepare to live in unstable contexts? How can we prepare to be effective if the conventional management models are collapsing? We are experiencing a turbulent transition, moving from an old, predictable industrial model towards an unprecedented economic context. The current complex context can be characterized by three elements: 1) diverse global markets, 2) rapid changes generated by technological developments, and c) the exponential multiplication of unknown situations, which generates an unpredictable environment. Therefore, tools based on static models cannot effectively analyze the current situation. Preparing for instability means dealing with a new territory with situations and events that do not yet exist but which will probably impact future projects. So the challenge is: How do I manage this uncertainty about the future in order to be effective in the instability of the present? To address these challenges, it is necessary to develop new skills that allow for interaction with unstable environments. These skills are related to:     The capacity to explore and expand development options The ability to create opportunities and materialize possibilities The capacity to act and decide under uncertainty The capacity to assume challenges and lead projects in the context of dynamic change

The future is characterized by a new landscape, in which organizations need a new strategic map to deal with new conditions in order to be competitive. Therefore, we need to renew our beliefs, mental models, and skills to create future possibilities amid the current instability. Training for instability involves developing personal skills and designing corporate resources that will allow the organization to address unpredictable dynamics. The exploration of opportunities and the design of alternatives in an unknown world are essential for competitive development. Being efficient in a known world does not guarantee permanence or future competitiveness.

Tags: instability, leadership, competitiveness, uncertainty management, complexity, decisions,
strategy, planning, organization models, change, development.

Problem
Leadership models are supported by post-medieval principles such as control, power, objectivity, and prediction. These principles have been defined in organizational designs based on the efficiency of the processes (like a machine), but isolated from the dynamic context. This selfreferential design, which generated the great development of industrialization in this century, is collapsing due to three factors: 1) the conflicts in its functioning, 2) the difficulties in responsiveness, and 3) the impossibility of sustainable management models. In the first case, the mechanical design is a rigid structure that conflicts with the nature of human systems, which are: open, dynamic, and paradoxical. The structure of machines does not correspond to the dynamics of human processes and generate deep conflicts in a team’s performance. Second, in today’s increasingly volatile climate, this rigid design does not appropriately respond to changing environments. Inflexibility does not guarantee adequate responses, which intensifies the difficulties in operation and performance. Finally, classical management models are designed to "win or win." They are not intended for system development in all its dimensions. This principle defines the decisions and movements that focus on the exclusion of actors (market or community) and resource exploitation. We are living in a historic moment with two profound changes: a global change related to a new landscape full of unexpected situations, and another change related to the personal skills that are needed to address the instability. What resources do we need in order to advance in this unknown landscape? This question contains a fundamental shift for managers from the “administration of the known” to the “management of the unknown.” On the one hand, the complexity of this context can be characterized by three factors that generate daily challenges for the classical leadership:

A. An increase in actors involved in the dynamics of events: these actors have different scales of resources and structure, which expands and diversifies the interests of the economic sectors. B. A deep network of interdependence: this structure of relationships is generated by the speed of the transformations and the volatility of interactions. This dynamic increases the impact of mutual effects in space (effects may appear in different places or regions) and time (the speed of the impacts and the consequences of these effects on the relevant relationships). C. The multiplication of “the new," as manifested in a series of increasingly fast breaks (in the sequence of appearances) and deep changes (in the level of transformation). On the other hand, the classic management model has been focused on optimizing the limitations. This model is based on the idea that we share a “limited territory” in which other actors are “enemies” that restrict access to limited resources. From this perspective, the possibilities are limited and growth opportunities are mutually exclusive: "if some companies grow, others must be out of the territory." In this context, the administration becomes "an obstacle course" in which the manager's role is reduced to tackling anything that obstructs the action plan. Therefore when we refer to training for instability, we are not talking about “force and control.” This training is not based on more force to remove actors from the territory or limit their influence. Rather, it is based on the capacity to move within the current conditions. Working from a perspective of instability opens up the possibility to explore alternatives and design opportunities. In short, a new leadership must generate new competitive conditions that allow organizations to be able to move and create in order to meet the challenges of a new development landscape.

Solution
Preparing for instability requires a leadership that can guide the organization to maintain competitive responsiveness to deal with the new demands of the context. From this perspective, the competitiveness of an organization is measured by its ability to respond to environmental demands. Competitiveness is not related exclusively to profitability, market share, size, strength, or geographical coverage. Instead, it is the physical and emotional capacity of a human system to maintain its level of response with the lowest incidence of dysfunctional symptoms. Transforming an organization’s structural competitiveness must address three areas: A. Management of subjectivity: the personal dimension of transformation. How do we prepare people to face a new context? This involves cognitive aspects (i.e., expanding their capacity

to interpret the context), emotional aspects (i.e., handling the feelings generated by this new scenario), and technical aspects (i.e., developing new technical skills). B. Competitive architecture: the operational dimension of transformation. It is related to an appropriate structure for living in flux. Competitive architecture includes a series of processes that enables stability and flexibility simultaneously, in order to explore and create new architectures for organizations. The goal is to support the sustainability of the current processes while generating new areas of development. C. Management of possibilities: the strategic dimension of transformation, which is related to management models. This aspect implies a transformation of the conventional strategy, which is based on "the formula of the enemies," in favor of a position of exploration and design of development opportunities. A transformative leader is one who can generate and sustain new development conditions for an organization. He or she can explore and materialize "new conditions of life" with respect to context changes. To achieve this level of leadership, it is necessary to work on five factors that allow companies or organizations to maintain competitive participation:
1. Anticipate the local impact of the global complexity: enlarge the capacity to understand the

transformation of the context and the movement of new actors in order to maintain a dynamic position against the transformation of living conditions.
2. Transform instability in opportunities: analyze alternative actions before deciding on

movements. It is the ability to create alternative movements in the context of change and to map growth possibilities.
3. Design architecture for movement: develop resources for living under new conditions of

interaction. This architecture should materialize in units that explore possibilities and processes to manage growth alternatives.
4. Prepare teams for the unknown: develop new personal abilities that enable one to face

unstable contexts, and expand personal resources that will help drive decisions and lead projects in an atmosphere of uncertainty.
5.

Act in the present without losing future possibilities: handle different complexity levels in everyday decisions and keep the work focused on the present – but articulate goals for the future. It is the ability to manage the big picture, taking the interdependent factors into account.

Practical impact
Every strategy competes within an unstable context. Training for instability involves three processes: the design, the implementation, and the management of the map with which an organization charts its participation in this "new game." In this sense, is necessary to implement three aspects to transform the map of development:  Expand the context: by incorporating new variables of analysis and integrating diverse points of view to expand the development territory.  Generate value in the products: by working on new categories, beyond conventional definitions, to expand project development.  Keep alternative movements: analyze different growth areas to expand the possible movements to address the changes in context. This new map offers a new understanding of context with its potential and threats, a reorganization of internal resources to maintain competitive ability, and a design of alternative movements to address changes in the context. To create a new competitive map, an organization can implement three levels of movement:  Diversification in production: with new proposals for the same target, expanding the capacity of value from new physical inputs and developing new symbolic categories.  Diversification in the areas of intervention: to find new target groups for the same products as alternative markets, in new types of customers or new scales of consumer.  Diversification in operative units: by integrating structures for sustainability and mobile structures that allow flexibility and innovation. In recent decades, changes in the context have widened the instability gap and increased the unpredictability of the decisions landscape. Therefore, competitiveness is related to the corporate capacity to respond to the challenges (social, political, economic; technological, etc.) that influence the daily life of a business. The management of the “map” is based on three levels of approach:  Business development: the ability of an organization to create growth alternatives. It determines the profitability and sustainability of the organization. This refers to compliance with corporate goals and performance in business management.  Personal growth: the ability to create opportunities for personal development within an institutional framework. It is one element of the responsibility for the well-being of those who work in the organization.  Social involvement: the ability to create favorable conditions for social integration and development of common welfare in the society in which an organization operates. The

organization is responsible for the socio-political impact of the activities or project development.

Challenges
Stability, in classical terms of the absence of disturbances, is just an illusion. We probably cannot choose the game once we get involved, but we can define how we participate and then position ourselves within these competitive conditions. Under this concept, managing a transformation involves:    Cognitive processes: managing and integrating information Emotional states: handling feelings aroused by the process Historical behavior: articulating the experiences of the present toward the past and the future Three basic aspects define the management of transformation:  People live in a symbolic network that defines their space and time, and constitutes the framework for their actions.  The future is determined by the decisions of the present and constitutes the framework for exploration that allows the design of alternatives.  Change is an experience between uncertainty and action, which involves abandoning the known to move into the unknown. From this perspective, development challenges are based on four dimensions:
1.

Design a transcendental concept that gives meaning and significance to the process. A point of reference beyond the dates on the calendar that can move forward in an unknown space (Strategic Perspective).

2.

Develop key attributes that provide specific parameters for design implementation and actions to sustain the process (Tactical Perspective).

3.

Define a promise that describes the benefits of the process to provide a motivational dimension (Emotional Perspective).

4.

Create a management structure to materialize the development process by integrating the daily actions into the framework of the transcendental concept (Operational Perspective).

First Steps
At different times in life, people (individually or in a group) face moments of change when the future opens out into a wide range of possibilities. The present becomes a bifurcation point between the known and the unknown, which marks a change in living conditions and defines the boundary between a known order and a new unknown order. For the past, history is known. In the future, the story begins to unfurl based on the decisions of the present. At this time, there are few certainties about the future dynamics of events. The first steps in beginning a transformation process include:  Define a point of relevance to keep the image of the future as a development reference that will guide the course of transformation in the present.  Analyze possible states in which the instability of the present can be derived, in order to identify possible transformations of the context.  Identify current resources to create alternative courses of action and prepare for the diversity of possible states.  Define the requirements for building an operational network that will sustain alternative directions in an unknown landscape.  Analyze potential challenges and be alert to the context and internal structure of the system, and to new perspectives of development.

Read the paper on MIX site

May 2013

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