Managing for the Unexpected –Understanding Emergence Theory In Business

Guest
post by James M. Kerr:

Driving the types of significant changes that truly
transform an organization is tricky business. 
Contrary to popular belief, if you’re too conservative, you can end up
with some unexpected consequences – that’s the theory of emergence at
work. 

At the heart of emergence theory, prominent in such
fields of study as
artificial intelligence,
climate modeling and smart grid energy distribution,
lies
the thought
that complex behavior can
emerge from the congregation of elements that are not found in the individual
elements themselves – meaning any subtle change can bring about an unanticipated
outcome from ghosts in the machine. 

The implications of the theory
are far reaching, in that, it suggests that fixed deterministic models are not
enough to make sense of the complexity that confronts us when implementing
dynamic change within an enterprise. 
So,
as suggested in my most recent book, The Executive Checklist
(Palgrave-Macmillan, January 2014), pursuing improvement for the sake of improvement
is not a wise move.  Incremental change
is too susceptible to the effects of emergence theory.

Rather, we should renovate only in order to strategically
differentiate our enterprises from the competition.  This distinction is an important one to make
because it serves to inform the decisions about which types of changes and
improvements we should pursue.

To be the organization of choice, for example, suggests
that we offer the right products, at the right price, through the right
distribution channels while providing the right customer experience.  It does not automatically imply that we offer
the lowest price or the best product in order to be “of choice”.
Quite the opposite, in fact, it proposes that we possess the optimum combination
of elements to make our enterprise stand out within the markets in which we
compete.

That’s why understanding the reason for business
renovation is so important.  For business
renovation efforts aimed at simply becoming the least expensive provider or
forming the most sophisticated product portfolio may be ill-advised.  A more appropriate approach may be to aim
business transformation efforts at initiatives that yield the right combination
of product, price and service.

The same can be said for differentiation initiatives
derived through employer and investment of choice objectives as well. It
follows that a subset of the renovation program attends to establishing the
right work setting, with the right culture, and the right compensation models
to attract the best employees and leading the organization in a way that
delivers sector-leading financial performance to its stakeholders.

By making strategic differentiation the goal of all
business renovation activities, organizations will begin to push for the right
kinds of changes in the way work is performed and in the way the enterprise is
run. In fact, when a business transformation program is designed with “of
Choice” goals in mind, improvements in virtually all areas of an organization
will result.

With that said, rethinking the whole process is the only
means to get the edge needed to become and remain “of Choice” and be positioned
to deal with any emergence issues that result as a by-product of the
institutionalization of needed changes.  Here
are some things to consider when approaching business transformation a whole
process at a time:

ü  Processes
will need to be reviewed and redefined, independent of current organizational
boundaries.  Emphasis will need to be
placed on performing the “whole job” instead of only specific pieces.  Artificial boundaries that promote a “silo”
mentality (see next section for more complete definition) need to be
eliminated.
ü  Jobs
will be redefined.  All attendant
responsibilities and commitments related to performing the “whole job” will
need to be folded into job specifications.
ü  Managers
will need education on how to manage the process to optimize results rather
than managing the activities of people performing the work.  The game is won by gaining the expected
results, not by micro managing the work of each employee.
ü  Projects
aimed at reengineering selected business processes will be necessary to ensure
that “best practices” and other quality standards are designed into new
processes.
ü  Business
Re-Design strategies will need to be adopted to continue the improvement effort
on an ongoing basis.
ü  Educating
employees about new organization designs, process definition and job
responsibilities is essential in gaining buy-in and reducing feelings of
friction or alienation that often come with change.

To close, it is imperative that we tackle the whole
process when endeavoring to transform our organizations.  Incremental improvements will never lead to
the sweeping changes required to enable the level of breakthrough thinking and
strategy formulation required to stay competitive for years to come.

Indeed, incremental change is far more exposed to the
effects of emergence theory than across-the-board redesign because wholesale
redesign dashes what was there before and replaces it with a complete new
system of operation.  That’s not to say
that the unexpected may result, but, if it does it is more likely to be due to
faulty design or implementation than the emergence of behaviors ruminating from
ghosts in the machine.

About The
Author:
James M. Kerr is a Partner at Blum
Shapiro Consulting
located in
West Hartford, CT where he heads the strategic planning and organizational
behavior practice. He is a recognized authority in corporate transformation,
strategy formulation and business process redesign.

The Executive Checklist (Palgrave Macmillan, 2014) is Jim’s fourth
business strategy book.  It demystifies all
of the elements needed for flawless execution and presents them in the form of
content-rich checklists that are easy to understand and use.  The book is intended to be a comprehensive
guide for setting direction and managing change.

Jim can be reached at jkerr@blumshapiro.com or by calling him at (860) 231-6635