Can you identify the drivers of complexity in your organization? Are you able to diagnose the level of uncertainty in your environment? Can you assess a given situation’s complexity and use a framework for choosing an appropriate course of action?

The ever-increasing complexity facing organizations demands that leaders improve performance outcomes for their organizations. This is especially true for those working in unforgiving social, political and regulatory environments, which are rich with complexity and where the scale of consequences can be catastrophic. In addition, cognitive biases interfere with accurate perception of a circumstance and prevent the person from attending to additional incoming data. Further, it is very hard for the person whose perceptions and judgements are compromised to see it until long after the fact. 

Leading through complexity requires leaders to possess impeccable awareness of their behavior and of how others interpret it. As leaders, we need to create actions that allow our people to quickly diagnose their level of complexity and respond accordingly. The following six principles are emerging as priorities for leading in a complex world.  

British Columbia is one of the most beautiful regions in North America. Most think of Vancouver, Victoria and Whistler Mountain as the high points of British Columbia. Truly each of these locations is spectacular. Kelowna is one area to add to this list of amazing places in BC. This town with a native Indian name sits in the heart of the Okanagan Valley. The Okanagan Valley excels as a region for agricultural and wine. It also sits at the base of a spectacular Okanagan Lake. This deep, clear lake is breathtakingly beautiful. It also is home to the mythical sea monster, Ogopogo.

Ogopogo is described as a 40-50-foot sea monster. It has reportedly been seen by First Nations people since the nineteenth century. Another sighting reportedly happens in the 1920’s and the 1970’s. The Okanagan Lake is home to forests, logging camps and saw mills. Given the industry, many have assumed that these sightings are actually large logs floating in the lake. Who knows? Maybe there is a sea monster actually living in the lake. Regardless of the “facts”, telling the story of Ogopogo continues to this day. The retelling of the story seems to make it “more real”. One way people from this area interact with strangers is to ask if they have seen Ogopogo? It’s a good conversation starter, and ultimately a source of good humor.

Ogopogo & Business Strategy Execution

The phenomenon of Ogopogo often applies to how employees think about strategies in their organizations. That is, many people speak about their organization’s strategies as if it is a myth. Try asking people in an organization if they know their organization’s strategies. They will say that they have heard stories that it might exist, but have not actually experienced anything to prove it is real.

A common misconception in business is that management and leadership are the same. They are not. The impact and roles of leadership and management are quite different. Leadership is essential for companies who need to grow and create value beyond the levels given by the market. That is, to make things happen which were not already going to happen. If a business has all the growth and value creation it needs, then leadership commitment is not important. Of course, that describes few if any businesses today.

If you want to expand the importance of leadership in your organization, it is useful to determine what the term leadership means to people in your organization. Many do not have a good understanding of leadership and management, as well as why there is a distinction between the two. Many consider the two terms to be interchangeable, that is to be describing the same capabilities. Some will differentiate leaders from managers based on position in the organization. Senior managers are considered to be leaders since they have greater responsibilities.

Leadership is needed in order to produce the “elements of inspiration, vision and human passion which drive corporate success”. In case you think this description is from a recent work, that phase was written in 1977 in a groundbreaking article in the Harvard Business Review. Leaders create the environment which promotes others to excel.

The confusion about differences in leadership and management is harmful to organizations. It serves to diminish the importance of leaders, often in the organizations which most need powerful leaders. Further it reduces the emphasis placed on development of leadership, which only makes the matter worse.

Seventy percent (70%) of change efforts fail to deliver the expected results, according to Changing Change Management in the July 2015 issue of McKinsey Quarterly. The low success rate is attributed in part to the limited scope of most change management techniques, which focus on control and minimizing distractions. Change management is appropriate for small, contained changes such as updating the software in an accounting department. It is not appropriate for change efforts as complicated as post-acquisition integrations, in which case change leadership techniques are required. John Kotter describes the differences in change management and change leadership as:

Change management, which is the term most everyone uses, refers to a set of basic tools or structures intended to keep any change effort under control. The goal is often to minimize the distractions and impacts of the change. Change leadership, on the other hand, concerns the driving forces, visions and processes that fuel large-scale transformation.

Post-acquisition integration is a complicated form of strategic execution that requires breakthrough designs and unique organizational accountability during implementation. We think that organizing the integration as a series of well-orchestrated breakthrough projects is the optimal means of:

Empowering Accountability first and foremost occurs in the overt actions of leaders, such as communication. Other equally important actions include quality of strategic thinking, planning, design of strategic initiatives, sustaining execution during hard times, learning from experiences, and sustaining momentum until desired results are achieved. All of these actions are part of what is required to be a leader in a complex world.

Often, I am asked, “How can I see accountability in my organization”? The answer to seeing actual accountability in your organization is watching the action. That is, the manifestation of accountability is action. Actions shine a bright light on executives and managers being accountable, or the lack thereof. The effectiveness of your organization is determined by the degree to which your leaders hold themselves to account for their actions, communications, and results.

Executives must act from being accountable for all the results, not just the ones they like or those that make them look good. Leaders' actions must include communication about decisions made and intended results from these decisions and actions. Employees pay very close attention to executives’ and managers’ actions and non-actions, what is talked about and what is ignored, what is rewarded and punished, and the support given for those in the organization who step out and try to lead.

Executives approach a possible transaction with the steely resolve to be disciplined in negotiations. Accountants, investment bankers and lawyers are hired to assist internal resources in this process. Then somewhere along the line, this self-imposed discipline breaks down and the prices and terms which are accepted are much less attractive than planned.

I had the pleasure of collaborating with the head of M&A practice for a premiere New York law firm. His firm specializes in mergers and acquisitions and is involved in many of the largest transactions. I asked my colleague to explain the phenomenon in which executive teams start off with a disciplined approach to price and terms, only to see that discipline erode towards the end of negotiations. My friend laughed, and then gave a colorful explanation. He said that what happens at the start of the process is that the executives give instructions to advisors that they must get the deal done on the executives’ terms. With that mandate, the lawyers begin hard negotiations with the other side. Then somewhere along the way, the instruction changes to “win the deal”. While it is seldom said “Win the deal at all costs”, that is essentially the message.

Leading in a complex world requires continued development of leadership attributes and tools.

An excellent example of this is when accountability is created in the context of leadership, rather than management. Leaders use accountability to empower, while managers use it to control. This is entirely consistent with the differences in management and leadership.

In many organizations creating leadership accountability this is easier said than done, since there is such strong presence of management orientation and little leadership orientation. John Kotter once wrote, “Most U.S. corporations today are overmanaged and underled”. In companies which are 'overmanaged', accountability will be designed to produce consistency, control and order. In contrast, accountability in leadership context is designed to align, communicate, engage, motivate and inspire.

Leadership accountability is a primary tool of executives to successfully achieve strategic growth. Executing growth strategies involves implementing substantial change, which in turn requires leadership. While leadership accountability provides a powerful leverage for growth, it can lose its power if the executives and senior managers fall into common organizational traps. These traps can in ensnarl even the most committed, experienced and intelligent executive.

Having been a part of many integrations of mergers and acquisitions with different clients, we have observed numerous issues that predictably arise. These issues affect the integration project leaders, the integration teams and ultimately a broader group of employees. While there was great effort in the pursuit of an M&A deal, some of the effects of these efforts on everyone else in the organization often go unnoticed.

The Chase Begins

There are predictable dynamics that will happen as the “chase begins”. As an example, rarely do the M&A integrations go as scheduled. Rather, there is a continual speeding up and then slowing down of the process. A visual analogy to this phenomenon is what happens when a train with a heavy load of cars begins to move. There is often lurching back and forth.

This phenomenon of speeding up and slowing down is due to several factors:

Quite a few years ago, I was hitting golf balls with my 5-iron, when Kelly, my golf instructor, asked “Larry, what do you want to get out of your lesson today?” I told him of my frustration of hitting a short 150 yard slice (ugly) and I want to hit a 175 yard shot with a slight draw (beautiful!). After hitting a few balls, Kelly showed me a “strong grip” – which is not about how firm to hold the club, but rather the location of the hands on the club.

I tried hitting the ball using this new grip, and I swear, I could hardly get the club face on the ball. After a number of tries, I turned and looked at Kelly and said in frustration, “Kelly, I can’t hit the ball this way. It just feels too strange. Let me go back to my old grip and show me something else!”

I will never forget the look on Kelly’s face. He said, “But Larry, it is SUPPOSED TO FEEL STRANGE! If it doesn’t feel strange, then there is no change, and if you don’t change, you will never hit a 5-iron 175 yards with a slight draw!”

What a lesson! Yes, I can still hit that shot, but that’s really not the point. The biggest lesson for me was, how change can be so difficult, even when I wanted to result of the change! Here I was, a relatively inexperienced golfer, wanting to become a much better golfer, and yet, making the change was so challenging.

This colorful phrase came from a CEO. I don’t know if he invented it or borrowed it from someone else. I worked with this new CEO to create new strategies for several of the large businesses in his portfolio. This CEO had been promoted up from one of the business units and had little experience with the other larger business units. These businesses were in the down part of the cycle, which created a challenging period for his company. Our challenge was to learn as much as we could, as quickly as possible to support the business unit executives in dramatically improving their businesses. We spent endless hours in strategic review sessions as well as a lot of time on the airplane moving between locations. Often at the end of a grueling day of leadership team development and business review, we would pile onto the plane to reflect on the day. It was at this time the assessment “not a strategic bone in the body” could be used when describing the management team.

It’s wasn't that these executives were not intelligent - they were. Nor was it that they didn't know their businesses - they did. Unfortunately though, all they knew was the operational side of the business. For quite some time there had been a lack of organizational accountability for strategic thinking. Consequently, these executives did not recognize that operations and strategy were different. They were “out of balance”, in that they were strong on operations and weak on strategy. The lack of balance between operations and strategy was an issue for the previous CEO, which was part of the reason my client was hired to replace him. This body was in definite need of leadership team development, particularly in the area of strategic thinking.