Mindful simplification

Today on Radio New Zealand National Sir Howard Davies, Director of the London School of Economics was asked “How do we recover from the recession?” Especially interesting to me was that he pointed to the blindness (astounding in hindsight) of banks and government advisors that got us into it. They were blind because they didn’t see the signals of impending “brutal audit”. Their KPIs effectively blinkered their vision.

I see this happening to one degree or another in pretty much every organisation I’ve owned, worked for or worked with.

I’m very critical of many KPI/performance measurement systems because they frequently erode collaboration, promote and perpetuate bad management behaviour, and blinker perception. On the other hand I’m also an enthusiast for intimacy with valid, relevant data.

I’m am enthusiast for simplification for focused action. On the other hand I’m also very critical of mindless compliance and groupthink that’s frequently the consequence of simplistic analysis, rules, procedures, and expectations.

Not surprisingly perhaps, some find it hard to figure “whose side I’m on”.

I’m an Edwards-Deming fan (kind of like being a member of a dead poets’ society). Deming’s lifelong passion was collaboration to achieve quality. Not in a fuzzy, feel-good sense but in a logical, objective sense: informed by valid, relevant data. A statistician, he understood how quality is determined by systems of thought, practice and organisation. Not individuals. He was very successful in Japan. His countrymen in USA have been very slow learners.

KPI systems are inevitably simplistic and biased: a selective abstract of reality based on a particular set of assumptions. So they inevitably distort or leave out potentially crucial aspects of complex reality.

The problem is how to collectively commit to a set of goals and performance measures yet remain mindful that that very commitment will blinker us to potentially crucial information.

This may not matter much in a predictable environment. But in an uncertain, fast-changing environment its a big issue. That’s because fast adaptation and innovation are triggered and driven by information from outside our normal frame of reference – our established KPIs.

Nimble organisations maintain clear purpose and operate simple strategies to achieve that, continually reviewing their KPIs for validity and relevance to that purpose. Statistically significant exceptions and failures are seized as opportunities for learning. Mindful, collaborative experimentation is a valued source of innovation.

The Emperor Has No Clothes!

This last week, while I experimented at applying my reading of Weick and Sutcliffe’s Managing the Unexpected to my own current organisational experiences, Steve Denning surprised and impressed me with his piece: Radical transparency vs The age of bullsh*t . He damns Management, as epitomised by the career behaviours of recently late Robert McNamara, with causing the current recession.

Coming on top of the similarly critical series of articles in the June HBR (mentioned in my blog last week) it was like a triple whammy.

What sprang to mind for me was Weick and Sutcliffe’s quote from Charles O’Reilly’s 1989 California Management Review article “Corporations, Culture , and Commitment” :

In the chaos of the battlefield there is a tendency of all ranks to combine and recast the story of their achievements into a shape which will satisfy the susceptibilities of national and regimental vain-glory . . . . . On the actual day of battle naked truths may be picked up for the asking. But by the following morning they have already begun to get into their uniforms.

Denning’s piece seems to me like a naked truth, spoken in the wake of battle.

Half expecting some to be clothing that truth already, I hasten to point out that this isn’t a cloth-cap Marxist rant against Management. I’m not arguing against management (small m) and I don’t think any of the writers mentioned here are. The argument is against a set of pervasive assumptions about how organisations should be managed: against the “ism” managerialism.

For instance, though I may rant and rail against stupidly simplistic (mindless) obsession with goals and KPIs, I am a passionate advocate for mindful, statistically sound use of valid, reliable objective and subjective data in controlling operations. I’m firmly with Edwards-Deming on that.

The argument is that we must seize this opportunity to learn from what Weick and Sutcliffe would call the “brutal audit “ of the last year. We must seize this opportunity to learn to be sensitive to signals of impending failure that contradict our convenient, simplistic assumptions about cause–and-effect and relevance. We must learn to incorporate that mindfulness into our organisational infrastructure.

I reckon that perhaps the best place to pick up and act on those naked truths is in entrepreneur owned and led, small to medium sized enterprises (SMEs). There the boss is more able, more likely to engage directly with high performing teams in a marriage of strategic simplicity and operational complexity through radically transparent interrelationships.

If you want a how-to list on recognising and picking up those naked truths then take the above link to Steve Denning’s article. Don’t expect bullet points. He’s into stories.