UNDERSTANDING CHANGE IN A COMPLEX ENVIRONMENTTo maximize opportunities in today’s complex and competitive business environment, leaders must be able to effectively “engage the hearts and minds” of a multitude of stakeholders. It is evident that organizations are becoming more multifaceted, either growing larger or restructuring themselves in many different ways to deal with the ever-increasing change and turbulence in their day-to-day operations. The challenge for leaders is understanding and managing the relationships between the multiple stakeholders that they now have to deal with.Leadership today is more complicated, and a great deal depends upon the influencing skills of the leader. Therefore, every organization must put into consideration the following;1.
EMPOWERING DECISIONS AT LOWER LEVELS”To get this right, you have to start from the top. Successful leaders are making sure that their people have access to the knowledge and information they need to do their jobs; that they understand the strategic alignment between their jobs and other people’s jobs; and that the organization’s culture encourages people to work together.” This means that all necessary information must be cascaded down to every quarter of the organization.Steve Vamos, president of the Society for Knowledge Economics (SKE) and the former chief executive of Microsoft Australia, suggests some aspects of business are more complex in an environment that is more connected and subject to rapid change. As a result, he says hierarchical approaches to management and command-and-control leadership styles are less relevant. “They are not optimized for this new world.
So, if there is complexity, it’s because we might be using old mindsets and old mechanisms to deal with a different environment.” The focus of modern leadership should be around breaking down complexity – or “making the complex simpler”, Vamos says.This requires a management style that has clarity of purpose and emphasizes principles and values around how the business operates and the way its employees are treated.
People are the key. Vamos believes an organization can break down complexity if employees within the business understand their place within it. “It enables them to take the initiative and innovate because they are provided with more context for why they are there and what is important to the organization,” he says. “Staff at all levels must understand why they are there.
” 2. CHANGING LEADERSHIP CULTUREStrong leaders who surround themselves with other good managers and ultimately make themselves less needed in a day-to-day context because they are relentless in aligning and enabling others are required, Vamos argues. In an era when more complex problems are emerging, the norms of organizational leadership have to be questioned.
“Knowing the answer isn’t possible anymore whereas 30 years ago the leader could conceivably know most of the answer,” he says. “You have to try new things and let others try new things otherwise the complexity of the environment becomes one person’s problem and it will never be solved.”For executives trying to tackle big problems, there are three questions be clearly answered;1. Is the leadership dedicated to making effective management of people the priority of the organisation?2. Does the business measure the performance of its people managers in leading their people, based on feedback from their people?3. And is senior management willing to remove underperforming people managers who do not respond to feedback and assistance with their performance? “I don’t care how good a salesman, marketer, developer or manufacturer you might be as a professional, if you’re a consistently poor people manager you are gone,” Vamos says.
“It’s non-negotiable.”The aim is to encourage different ways of thinking and promote new solutions to the challenges that many organizations are facing. This will give them an enhanced capacity to meaningfully tackle complex problems. WHAT GENERATES CULTURE CHANGE?Based on research, we’ve identified four major sources that interact together to create today’s environment.
Each of these sources of complexity was created by the erosion of boundaries, but their effects are different from each other 1. DIVERSITY: Global organizations face a complex set of challenges characterized by diversity both inside and outside the organization – across every aspect of the business itself and its strategy drivers. Inside the organization, executives must manage and respond to more diversity in the organization; more variety in the management systems; more variation in the means and ends ranging from simple financial goals to a more comprehensive view; and different business models for different types of business units. Outside the organization there is higher diversity: heterogeneous customer needs; differing cultural values; a plethora of stakeholders with different claims (investors, customers, employees, regulators etc.); various political, economic and legal environments; and finally, competitors’ differing strategies.
Most firms today increasingly face each of these types of diversity. Managing the differences is not trivial, and reducing diversity often means being less responsive.2. INTERDEPENDENCE: Companies must manage the effect of global interdependence to an unprecedented degree: everything is related to everything else, and the impact is felt more rapidly and pervasively. Value webs have replaced traditional value chains. Reputation, financial flows, value chain flows, top management and corporate governance issues have reached advanced levels of interdependence.
The less clear-cut the boundaries of a company become, the more it is exposed to impacts on the value chain flow through mistakes, frictions, reverse trends, or even shocks. Interdependence creates opportunities for globalization, but taking advantage of these opportunities raises difficult challenges.3. AMBIGUITY: The business world today is characterized by too much information with less and less clarity on how to interpret and apply insights. A diversity of accounting standards renders financial figures ambiguous. Studies, scenarios, survey results, and reports become less reliable due to an ever-increasing uncertainty. Many businesses find it more and more difficult to discover what their clear value drivers are.
Are they image, price, related services, privileged relationships, speed, knowledge, or something else? The cause-effect relationships become blurred.4. FLUIDITY: As if these three multifaceted drivers were not enough, managers have to face yet another one, fluidity or change. Even if you figure out temporary solutions regarding interdependence, diversity and ambiguity for your specific company, industry, and personal situation, the situation can change the next day. Today’s solutions may be outdated tomorrow.
Therefore, managers must be equipped to manage emergent changes by understanding and studying the trends in the industry to better equip their direct reports.High-impacts and results oriented organizations are constantly equipping their people by training and increasing the knowledge base of their workforce by ensuring that organizational communication, culture change management and capacity development consulting engagements are implemented to ensure an organizational culture that adapts to changes in an ev