Transcending the Status Quo

I was recently asked about the reasons for the status quo, specifically the lack of attention given to selecting, prioritizing, and supporting strategic initiatives. Everyone knows that strategy is important, so how do you get people moving?

Let’s start by describing some concepts that help develop understanding about the sources of status quo.

“Flow” and being in “the zone.” Flow describes the psychological state where a person is absorbed in the task; they have a feeling of energized focus. Time seems to pass quickly. The presence of clear goals and measurable progress seems to enhance flow.

From a strategic thinking perspective, in conditions of flow, people lose their ability to self-consciously reflect upon their situation. They are captivated by psychological flow, an enemy of competent strategic thinking.

A preference for intuition. Intuition is a kind of memory that comes from repeated exposure to a task and the environment. Intuition leads to good decisions most of the time, but is frequently faulted when mistakes are made.

Intuition is also an enemy of strategic thinking.

Regrets and the “negative fantasy.” People tend to imagine more regrets from a choice to act.  They tend to have fewer regrets for staying put. Thus, making choices to act is associated with regret and the resulting cognitive bias is for the status quo.

Further, people are subject to imaging a story about themselves that escalates into an unrealistic, low-probability-but-horrible outcome.  Here is an example that I frequently see: A person is given a vague task.  Rather than ask clarifying questions, they tend to make their own assumptions (which are, many times, poor assumptions). They don’t ask questions because they regard themselves as a subject matter expert. Here’s where the logic and imagination gets slippery: If they ask a question, it means that they don’t know. If they don’t know, then they can’t be an expert. If they are not an expert, they have lost the respect of others and their own self-worth. (Here’s where the negative fantasy really takes off.) Because they have lost respect, they are unlovable, not valued, and unnecessary. Their employer will fire them and their family will abandon them. They will end up homeless and isolated. Our minds exaggerate things and justify our inaction.

Organizational culture tends to preserve and amplify conventional thinking

Here is a fourth reason for why the short-term status quo gets more effort than strategy work:

Strategy imposes a cost with uncertain benefits. Many managers follow an unwritten role of operational-thinking rule: don’t incur a cost unless it yields immediate and preferably economically-measurable direct benefits. Operational thinkers quickly sense that doing strategy work imposes a cost on the organization: taking the time to collect and analyze data about the competitive environment causes people to de-specialize. It moves energy away from the task at hand. That energy has a cost and the easy decision is to defer it to later.

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The status quo bias is a powerful challenge to strategy work. The tendency towards the status quo is a basic feature of human cognition.  This article describes a little bit of the underlying theory and will help you understand why it happens.  The pragmatists want to know: how do you transcend it?

The answers include developing self-awareness of your own thinking, noticing what’s going on around you, and having the courage to speak the truth. If you work in an empowerment culture, you will find it easier to speak your mind than if you work in a permission culture, where you need to find an audience with the powerful elites.

What are the other causes and solutions to the status quo?

 

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Connecting Strategy to Execution

Strategy road signI was recently asked, “How should the PMO (project management office) connect strategy to execution?”  In order to provide a compact answer, I’m going to sidestep the more-fundamental challenges: organizations have too many projects, every project is important to someone in the organization, and that organizations commonly confuse goals for strategy. My answer is for the ideal case: an organization with a good strategy that is commissioning a strategic initiative to close a performance gap. I suggest these three actions:

Understand the diagnosis for the strategy. 

Strategy is a form of specialized issues management.  A leader should start with questions like these: What is the business problem at the macro level? How will the strategic initiative effectively “move the needle” on cost structures and revenue streams? Is this the first time the organization has faced a similar set of business issues?

These questions are all probes for the ‘why’ and the insights that underlie the strategy.

There are some things to avoid as well: don’t fixate on goals, objectives and dates. Your time is better spent understanding the ambiguity that is certain to be in the strategic situation. In time, you can begin to drive into the specifics.

Understand the guiding ideas of top management

Again, more questions: Who gains and who loses in this strategy? What are the constraints on resources, technologies, and internal restructuring of the organization?

The idea here is to funnel broad policy ideas into narrower guidelines.  A good strategy is not specific on the details but provides guidance on the main points of focus.

Experiment well

Strategic situations are typically complex situations (see last month’s article).  In complex environments you need to experiment: looking for wins (which you will amplify and attempt to chain-link to other wins) and losses (which you will dampen).

Strategy execution, like formulation, requires a mental readiness to understand the situation at a deeper level. Do you agree?

Gregs new book available now

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Complexity: Four Principles for Program Managers

I started writing this article to report and elaborate on eleven useful practices as identified in a 2014 Project Management Institute (PMI) publication titled Navigating Complexity: A Practice Guide. I thought it would be a straightforward project, but it morphed into an article and outlook that I believe will be much more valuable for readers.

As a “practice guide,” the publication was a collaborative project, written and reviewed by dozens of people with expertise in program and project management. You can see those eleven practices are on the nearby graphic (which is an image clipped from the document’s table of contents).

 

Complexity TOCAs I began to elaborate on each of the eleven practices and their applicability to strategic initiatives, I had a growing sense of discomfort. It started with the document’s weak definition of complexity (page 1), “complexity may be viewed as challenging characteristics of programs and projects that organizations and practitioners encounter in today’s fast-paced, competitive, and dynamic environment.” In other words, the authors regard see complexity as a “challenging characteristic.” That’s pretty inclusive, as something as mundane as a broken photocopy machine, a corporate policy, or an aggressive schedule could be challenging.Navigating Complexity

For purposes of this article, I’ll point you to Neil Johnson’s definition of complexity (from Wikipedia) as

“the phenomena which emerge from a collection of interacting objects.”

The key characteristic of complexity is that it involves emergence: opportunities as well as threats emerge. The specifics of that emergence can’t be predicted in advance. (This article is a case in point: it started out as a straightforward listing and elaboration but transformed into a more sophisticated perspective about the presence of complexity in programs.)

What follows is four principles that emerged for me as I analyzed and synthesized the key elements of PMI’s eleven practices.

Principle 1 – Recognize the role of emergence

In the natural world, complex systems are characterized by emergence. Examples are weather events, epidemics, and even terrorist cells.  The time and place of the specific event are not predictable. In strategic initiatives, emergence can be in many forms: unexpected mergers, unexpected moves by competitors, and so forth.

One of the most useful habits is to encourage everyone on your team to pay attention to small signals, with the idea that they grow to be significant threats or opportunities. Establish a mindset in the program’s culture (especially the communications and decision processes) to expect the unexpected.

This brings us to one of the most important (and subtle shifts) from the traditional PMI mindset towards quality. I wrote earlier that I had a sense of discomfort as I read the document. Besides the definition, it was caused the emphasis on command and control. People preach the commonsense value of preventing defects from occurring in the first place. That certainly makes sense for well-understood and ordered systems. However, the emphasis on prevention tends to begat controls on top of controls, which unintentionally creates yet another layer of potentially-complex behaviors.

In complex systems, consider moving away from emphasizing prevention to emphasizing resilience. The idea of resilience is that some sort of failure is inevitable. It’s smarter to create a culture that encourages early detection of an event, and then quickly respond and remediation. Finally, figure out how to transform the threat to an opportunity.

We use the term integration all of the time in program and project management. I’d like to suggest that integration  –  when in domains characterized as complex – really means the approach that the team uses to monitor the entire system and quickly react to emergence.

Principle 2 – Avoid oversimplification

The practice of avoiding oversimplification is very similar to the first practice of recognizing emergence.

All people like simplicity, but often over-simplification leads to poor decisions. When we are in areas of complexity we recognize that rules of thumb are two-edged: when we use simple rules, we activate our intuition. However, a simple rule can also lead us to missing important nuances. They challenge the assumptions, and accept change as a constant.

Note this quote (attributed to Oliver Wendell Holmes, Sr.),

“I wouldn’t give a fig for the simplicity on this side of complexity; I would give my right arm for the simplicity on the far side of complexity.”

Strategic thinkers look for that simplicity on the far side of complexity. They do this by developing a nuanced understanding of the organization, especially the numerous interfaces with the external environment. You want to err on the complexity because small errors cascade and magnify into greater problems.

This means that managers should be aware of their own assumptions and challenge them. They should see data from the organization.

Principle 3 – Recognize and manage your strategic assumptions

Optimistic executives can often set the program up for failure by not understanding the true nature of the situation. A strategic assumption is an assumption that if invalid, causes cancellation of a key program element or a redirection in it. You can find more on recognizing and managing strategic assumptions at this link.

Principle 4 – Favor expertise over experience in staffing and communication

Experience and expertise are not the same thing. A person may have worked in an area for a long time and accrued much experience. However, an expert is more adept at recognizing the causes of symptoms. Here we can learn something from the academics that have studied experts and novices in fields like chess, counseling, and medicine. They tell us that experts are more thoughtful in approaching the problem. They search for important features and formulate a mental representation of the issue. That mental model contains abstract rules and principles.

On the other hand, novices tend to search for “methodologies” and best practices.  I find it is often because they are impatient to see some results, so they plunge into complex situations without the right mental stance.

You’ll get much better results if you orient your staffing and communications around this question,

“Who has the best ability to diagnose and understand the nuances of this specific situation?”

I’d welcome your comments, especially if you are familiar with Navigating Complexity: A Practice Guide. Do you agree with the four principles and do you agree they reflect the eleven practices?

 

 

Posted in Ambiguity and Strong-Minded Thinking, Competencies of Strategic Initiative Leaders, Program & Portfolio Management, Useful Practices & Management Tools | 2 Comments

Use the PAVER Framework to Assure Strategic Commitments

Promises & Strategic Commitments

As they left the courthouse on the day their divorce was finalized, Mark apologized to his now ex-wife Renee, “I told you I would do some things for the benefit of our marriage. I didn’t do them, and I’m sorry.” Such is the case with good intentions that are taken as promises, and then not fulfilled.

Strategy execution has an important similarity to Mark’s admission: an individual fails to follow through and the desired outcome suffers. I believe that we will get better execution of our strategic initiatives if we become more skilled at making and managing promises. To start, I’d like to introduce you to the PAVER framework (an acronym), which I adapted from an article by Donald Sull and Charles Spinosa, “Promise-Based Management: the Essence of Execution.” (Harvard Business Review, April 2007).

A good promise has five properties.

It is made publicly. All stakeholders can detect — through the promiser’s words and declarations — what has been promised. As you might suspect, public exchanges of promises are more emotionally-binding and transparent, both of which are desirable within strategic initiative team.

Perhaps the most important characteristic of a good promise is that it is an active exchange of expectations. Sull and Sponosa write that promises are active conversations that are comprised of “offers, counteroffers, commitments, and refusals.” That may seem a little formal and rigid, but consider the pain that you’ll avoid later when you try to cajole, plead, and bully non performers.

Let’s contrast that negotiation-oriented style with the more common practice of making mild and oblige suggestions. This also brings forward another important success driver: determining which individuals have authority to make decisions and commit resources.

Sull and Spinoza also note that much of the discourse in organizations is endless assertions about the state of nature; that is, a description of what the true conditions are. Some will say the market is growing, and others will assert that it has peaked. Someone will say that they have heard something from a top management and others will claim to have heard something differently. Here is yet another example: consider the frequent comment that “we’re different” that is used by many stakeholder’s to justify why ideas can’t be accepted in their culture. This kind of conversation is a waste of time!

A third property of a good promise is that it is voluntary. As most of us experience, it is easy for an executive to agree to a request, and defer the consequences of that ‘till later. In many cultures, those who say “no” are labeled negatively. However, the courage to say “no” to any request is a key for making the promise voluntary.

The forth property is that a good promise is explicit. Most people are familiar with the idea of SMART objectives, which makes clear the deliverables, the providers, the budget, and the timing.

Sull and Spinoza call the fifth property mission based, but I prefer the term rationale. When you can answer the question, “Why are we doing this?” you are providing a rationale that forces you to show that you understand the linkages and alignment with strategy. (The question “why” is the first of the four driving questions of radical innovation, and needs to be asked and answered before getting into the following questions of “Who needs to be involved? What are we going to do? When are we going to do it?”)

Too, recall that good strategy is a form of problem solving; your explanation of the rationale must link to the important issues and performance gaps that face the organization. Strategic initiatives exist to close a performance gap, so you need to be clear in describing how the strategic initiative supports changing the outcomes and filling that gap.

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Requests and promises are the basic units of work coordination. They take place in a network of external and internal relationships, most of which are informal.

Realize, too, that resources in organizations are constrained by existing commitments and a shifting set of priorities. I always tell my colleagues that they have the right to change their mind about a commitment, but they owe me a message to tell me that they’ve rescinded their commitment.

 Do you agree that making and managing promises is a useful focal point for building effective relationships with your network of colleagues?

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Strategic Experiments & Agile Responses

Most strategic initiatives involve complex environments. The emergent nature of complexity means that the use of experimentation is essential to progress. A good strategic initiatives design is one of experimenting, testing a hypothesis, and expecting emerging solutions. You want to anticipate (small) wins and enhance the benefits and keep the setbacks from getting worse.

In setting up strategic experiments, note this distinction:

Fail-safe experiments. In these situations, mission failure is not an option. The only way to assure success in a fail-safe situation is to spend heavily on resources and redundancy.

Safe-to-fail experiments. These are preferred for strategic initiatives. The experimental design is low cost and losses can be absorbed. In this situation, the purpose is to gain rapid learnings.

The strategic initiative leader needs to have a damping and amplification approach for experiments:

Amplification. The practice of amplification is one that seeks to increase the probability and impact of small wins.

Damping. The practice of damping seeks to decrease the probability and impact of setbacks.

One of the biggest challenges for project managers in their transition into strategic initiative program management is to increase the use of experimentation and experimental design.  Instead of linear, deterministic, and deductive approaches (methodology) the leader has to lean on non-linear and abductive approaches. It’s a different style of thinking.

A good strategic initiative leader has a functional forward view to anticipate the outcomes of experiments. Do you agree?

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Avoiding Four Pitfalls of Rapid Growth

Strategic Initiative PitfallsI was recently invited to join an expert panel who were addressing the challenges of strategic initiatives. This question was asked, and what follows is my response:

What is your best advice for avoiding common pitfalls during rapid growth?

#1. Adding complexity by reacting to demand. First, consider a manageable growth pattern.  Consider the challenge of a franchisor seeking to replicate a business model over a larger geography. Scale up is relatively straight forward. That doesn’t add much as complexity as this more-common pitfall of following the demand of large accounts to expand the footprint to get a bigger share of the business.  Let’s say you to well selling products to a customer, but now they want you to provide services and consulting.  That’s an entirely different business model that will add a lot of complexity.

#2. Confusing the aspiration of growth with strategy. A statement that “our strategy is to grow” is an aspiration which may motivate you or others, but won’t fool an astute investor. Always remember that growth is a consequence of a strategy.  Strategy is not vision and mission, but a design of resources and actions that advances the organization’s interests.  If the interest is to grow, then what specific actions will you take (and sacrifices will you make) to focus on the right things?

#3. Running out of money before you have a workable business model that can make the payments to your creditors, and sustains a return to your investors.

#4. Only planning for success (or not planning at all).  Everyone makes mistakes, and every firm makes mistakes. Sure, you want to avoid the ones that you can. But there will always be unavoidable mistakes. Too, there will be disruption. Can you sense, recognize, and robustly respond to those unpredictable forces? Here’s one bit of advice: Imagine yourself 15 years from now, and you have regrets over the decisions you made or didn’t make.  As you contemplate this scenario, consider the mistakes that you or others have made that led to those imaginary regrets.

What other pitfalls are present?

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Operational Excellence or Strategic Excellence?

Operational excellence or strategic excellenceThe following question was asked by an executive at a startup:

Is it ever too soon to start working toward operational excellence? What, if anything, needs to come before this?

Here is my answer:

Excellence is one of those “know-it-when-I-see-it” words. It’s always worth trying to be as good as you can be.

The more interesting word is operations, and that is something that needs to be defined in the context of the organization’s business model, starting with the related questions of “What are you producing?” and “What is your value proposition?” If your business success is dependent upon selling and services, you need to have a sound operational model in the areas of customer relationships (transactional, loyalty based, etc.) and distribution channels (direct sales, alliances, etc.).

If your business success is driven by production,  operations executives should focus on the key activities (sourcing, assembling, etc.) and key resources (capital assets, intellectual property, key knowledge, etc.)

Too many executives are unable to answer the question, “How is value created?” If you want to have operational excellence, or strategic excellence, or any other kind of excellence, you have to understand and design your business model.  There are no textbook answers for those questions: it comes from the fluid intelligence of strategic thinking.

Finally, remember that the purpose of strategic initiative is to close a performance gap. Rather than chase so-called best practices, it’s better to identify the big challenges that face the organization and apply the best energies and measures to closing gaps that make the firm vulnerable to competition.

Do you agree that understanding value creating is more important than understanding excellence?

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Design Thinking: Five Landmarks for Strategic Initiatives 

Design_ThinkingI find that when I adopt a design-thinking mentality, I develop more effective approaches for a strategic initiative. Here are five important landmarks of design thinking.

Functionality – Strategic initiatives, by definition, are endeavors intended to close an organizational performance gap. I always keep in mind this question: What is the problem or opportunity that is embedded in the performance gap? As I think my way through this, I look for simple expressions of verbs and nouns. These verb-noun phrases are functions, and they provide me the essence of the endeavor. As an example, the function of a strategic initiative is to close a performance gap.  Another hint: tie the performance gap to revenue streams or cost structures.

Evolvement – Good design is not static, it is iterative and evolving, especially in the face of the complexity and chaos inherent in many strategic situations. The word evolvement signifies that new things emerge and shape the initiative in ways that were not foreseeable.

On the demand side, stakeholders get new ideas and have new problems to solve, particularly as they start to imagine the new state. On the supply side, new technologies and events emerge.

A good designer expects the design to evolve. Starting conditions are important in anticipating emergence. As I have described in earlier articles, getting the right people on the team is essential. I gravitate towards those people who have expertise rather than simply on the most experienced people. You need to plan for the emergence of new ideas. It is one reason why small wins are useful (for more, see this article).

Tradeoffs – The familiar limits of time and resources are always concerns for strategic initiatives. To that, we must add the often ill-defined and ambiguous nature of strategic situations that can include technical uncertainty, stakeholder preferences, the need for discretion about sensitive matters, and the responses of rivals.

One of the key questions that drives design is this: What should I emphasize and should I subordinate?

Another way of asking strategy design questions is to focus on advantage. If you can gain advantage in one area, you will likely lose it in another. Thus, design thinking has to accept that tradeoffs will be made along the way.

Elegance – In arts and architecture, we tend to be most struck by designs that are simple and powerful. Strategy has more punch when it is simple and powerful. Elegance is one of those qualities that is tough to define, but you know it when you’ve experienced it.

Narrative – I’ve previously written about the importance of storytelling to strategic initiative leadership. A good story strikes a useful balance of familiarity and novelty. Thus, we could say that a story is designed, and a design is a story.

When you inspect a design, look for familiar things and look for new things, as their combination helps you to understand the design in more of a narrative sense. If there is too much new, it may not be credible. If there is too much that is familiar, it will gain little attention.

Putting it to Work

Don’t be afraid to be a little playful with this analogy. Take something familiar (your house, your car, your phone) and examine it through each of the above six lenses. That exercise will give you a sense of the challenges of good design.

Next, try those same six lenses to a strategic initiative. The exercise is certain to help you think better about the design and leadership of the initiative.

Do you agree that a sensibility about design is useful? What other examples can you identify?

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Seven Must-Do’s for Better Strategy Execution

7 Must Dos Strategy ExecutionA 2005 survey identified seven factors necessary to close the strategy-to-performance gap and those factors are valid for strategic initiatives launched in the present day. The survey 197 senior executives at companies with sales of at least $500 million. You can read more here. The survey asserted that,

Companies are delivering only about two-thirds of their potential due to failures in planning and execution.

The survey asked the executives what should be done to close this gap, and there were seven ranked-ordered responses. This article lists those factors and provides links to selected articles that provide useful practices.

Priority 1 – Effectively communicate the decision(s) made as part of the strategy

In this article, I discuss the communication of a decision into the strategic initiative program, and throughout the organization. You have to be clear on the decision itself, the value that is created, and especially on the future impacts on the organization and its competitive environment.

Priority 2 – Identify specific actions in the form of initiatives, programs, projects

One important element is to recognize the definition of a strategic initiative is that it is a program designed to close a performance gap.  Programs are different than projects and portfolios.

I think it is particularly important to emphasize that an organization should keep the number of strategic initiatives to a few. This article provides some evidence for why that is important.

Priority 3 – Establish milestones and track progress against them.

Timelines and project controls are useful starting points, but there is much more that is necessary for excellence with strategic initiatives.

Use program management and project management disciplines. Understand the differences between programs, projects, and portfolios.

This article describes why you should not be concerned about deadlines, and this article discusses small wins.

Priority 4 – Foster accountability so that individuals know and agree with metrics

I’ve also written on the topic of the metrics that matter.

Priority 5 – Give people the resources, authority to execute.

This article describes a helpful rule of thumb (allocate 20% of your time) for assuring that you’ve allocated enough effort.

Another important point is to develop an effective working relationship between the program manager and sponsor, as described in this article.

Priority 6 – Get the right people involved from the beginning

The program manager (a.k.a., strategic initiative leader) is probably the number one success factor, but it’s also important to have the right support expertise involved.

Priority 7 – Measure individual performance and make it more consequential.

Accountability is the willingness to have your performance measured. You can learn more in this article.

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What do you think about these findings? Would you rank any of the priorities higher or lower?

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Strategy as Problem Solving: An Example from a Large Technology Organization.

By Craig London, Guest Contributor

I am a technology project manager for a major financial-services company (MajFin). I’d like to share how I took the concept of “strategy as problem solving” and applied it to my own organization’s strategic problems.

As I endeavored to take a strategic perspective, I found my question keying on this challenge: how do we create a strategy that both identifies the critical problems to be solved and creates a strategic journey to solving them? I came to see this in the following terms:

Craig1

Critical Problems to be Solved

In MajFin, we have a large group that we call the Operate Team. It is dedicated to supporting the production environment, the large and complex computer systems that run the day-to-day business. The Operate team tends to be dissatisfied with the work they deliver. Too, many people perceived that customer satisfaction was also low.

I thought about how to define the situation. There were many symptoms and three of them seemed very important. They were (in priority order):

  • Unappreciated. The Operate Team members often worked very long, and sometimes irregular, hours in resolving critical system issues. Team members often feel that their contribution isn’t valued.
  • Reactive. Much, if not most, of the work performed by the Operate Team is in reaction to some problem or event. While everyone is glad to see the problem fixed, there is often discussion as to why the group can’t anticipate more problems.
  • Opaque. Due to the nature of that work, the amount of work performed by the Operate Team can be very difficult to measure. The Operate Team’s work is largely unseen by most in the broader organization.

These symptoms were important to us and worthy of problem solving effort. I felt they are not just the result of some inaccurate perception or lack of understanding about the work being performed by the Operate team. Perceptions could be changed through better communications between the Operate Team and the broader organization; key problems needed solutions and this meant that there needed to be a strategy.

Defining the Strategy Pillars and the Strategy Implementation

The critical problems led directly to defining the strategy pillars:

Craig2

Based on the problems identified, the translation from “problems” to “strategies” became clear. Unappreciated is transformed into value added, reactive to proactive, opaque to transparent. I had been told that strategy was a specialized kind of problem solving. This personal realization made it relevant.

As I looked at how I had initially ordered the problem, I saw I was focusing on the most salient part of the story (the customer did not appreciate the efforts of the Operate Team). What I had done was focus on the most painful symptom, the Operate Team was unappreciated. Naturally, I saw the highest strategic priority being “value added.” But, as I looked deeper, I saw that there was a “strategy story” that with the flow of elements as shown in this graphic.

I began to grasp the issue: our opaqueness (the work being performed is both unseen and poorly understood) was creating a reactive organizational response and behavior. This, in turn, creates the overall feeling of being unappreciated. This was my first cut. I needed to think about things not in terms of their emotional impact on me and the Operate Team, but rather in terms of X causes Y.

Once I drew the graphics, the approach seemed obvious. Keep in mind that my situation at MajFin is like many other complex operating environments: there are many moving parts and everyone is busy focusing on all those moving parts. It is hard to find a good perspective, and hard to focus.

Craig3

The key lesson: Understand the linkages between visible symptoms and root causes. While I want to move to “value added” as quickly as possible, it became clear that I need to focus on the leading indicators. My most important strategic objective, Value Added, cannot be achieved without obtaining the benefits from the other two predecessor goals.

As we charter this as an initiative, it has become clear that we need to identify basic incremental metrics starting with the Transparency Pillar. We will deliver those benefits incrementally. As we demonstrate progress, we expect more support that will lead to the Operate Team’s “value add.”

Do you work in a complex environment? How do you gain a strategic perspective?

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