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Leadership in Chaotic Environments John and Jo Lee Loveland Link VOLVOX Inc. Systems Dynamics Specialists John and Jo Lee Loveland Link VOLVOX Inc. Systems.

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Presentation on theme: "Leadership in Chaotic Environments John and Jo Lee Loveland Link VOLVOX Inc. Systems Dynamics Specialists John and Jo Lee Loveland Link VOLVOX Inc. Systems."— Presentation transcript:

1 Leadership in Chaotic Environments John and Jo Lee Loveland Link VOLVOX Inc. Systems Dynamics Specialists John and Jo Lee Loveland Link VOLVOX Inc. Systems Dynamics Specialists

2 Outline Chaos and Complexity Paradigm CHAOS Inc. Road to Complex Adaptive Systems Feedback Chaos: Stages of Equilibrium Leadership Case Example: Chaordic System - - VISA Chaotic Times: What is a Leader to do? Chaos and Complexity Paradigm CHAOS Inc. Road to Complex Adaptive Systems Feedback Chaos: Stages of Equilibrium Leadership Case Example: Chaordic System - - VISA Chaotic Times: What is a Leader to do?

3 Chaos and Complexity Paradigm Appeal of chaos and complexity science: Brings together disciplines as never before since philosophy meant all learning Risk of applying chaos and complexity science for organizational applications: Human systems have a special set of dynamics distinct and unlike physical systems Appeal of chaos and complexity science: Brings together disciplines as never before since philosophy meant all learning Risk of applying chaos and complexity science for organizational applications: Human systems have a special set of dynamics distinct and unlike physical systems

4 CHAOS Inc. A table-top game originally developed as research tool to examine chaos and complexity dynamics in organizations. No pre-determined outcome. Production organization is subjected to chaotic events. Participants redesign organization and examine what works or not. Continues as leadership tool to discover fitness landscapes in turbulent environments A table-top game originally developed as research tool to examine chaos and complexity dynamics in organizations. No pre-determined outcome. Production organization is subjected to chaotic events. Participants redesign organization and examine what works or not. Continues as leadership tool to discover fitness landscapes in turbulent environments

5 CHAOS Inc. - Results Outcomes: As various as the groups who have experienced the exercise Many participants decree: The only realistic workshop Ive ever encountered! Challenges are real and stimulate a myriad of creative solutions Outcomes: As various as the groups who have experienced the exercise Many participants decree: The only realistic workshop Ive ever encountered! Challenges are real and stimulate a myriad of creative solutions

6 The Road to Complex Adaptive Systems Linear systems: Rules governing behavior do not change and low number of variables Complicated Linear Systems: Rules dont change but may exhibit very complicated behaviors; however, these systems are (at least somewhat) predictable) Complex Adaptive Systems: Governing rules and behavior are emergent and dynamic. Complex Adaptive System learn by selection of new rules among a Random Repertoire of Possibilities. Linear systems: Rules governing behavior do not change and low number of variables Complicated Linear Systems: Rules dont change but may exhibit very complicated behaviors; however, these systems are (at least somewhat) predictable) Complex Adaptive Systems: Governing rules and behavior are emergent and dynamic. Complex Adaptive System learn by selection of new rules among a Random Repertoire of Possibilities.

7 Feedback Propelling feedback loops (self reinforcing) amplify and move the organization toward Chaos. - Think the squelch of microphone in front of speaker. Restraining feedback loops (limit system parameters) keep the system from moving into Chaos. -Think thermostat. ________ Most change management strategies build on propelling feedback loops Most traditional management strategies build on restraining feedback loops Either can lead to feedback traps Propelling feedback loops (self reinforcing) amplify and move the organization toward Chaos. - Think the squelch of microphone in front of speaker. Restraining feedback loops (limit system parameters) keep the system from moving into Chaos. -Think thermostat. ________ Most change management strategies build on propelling feedback loops Most traditional management strategies build on restraining feedback loops Either can lead to feedback traps

8 CHAOS: STAGES OF EQUILIBRIUM Equilibrium/(Dynamic Equilibrium) Near-Equilibrium Far from Equilibrium / Edge of CHAOS CHAOS New Dissipative Structure(s) /(Self-Organizing/ Emergent) Randomness Equilibrium/(Dynamic Equilibrium) Near-Equilibrium Far from Equilibrium / Edge of CHAOS CHAOS New Dissipative Structure(s) /(Self-Organizing/ Emergent) Randomness

9 Why are Stages of Equilibrium THE BEST DIAGNOSTIC TOOL TO LEAD ORGANIZATIONAL CHANGE? The closer an organization is to chaos, the easier it is to change the system. The closer an organization is to equilibrium- more energy is required to change the organization.

10 Case Example of Leadership: Dee Hocks Chaordic System (VISA) Now: 20,000 financial institutions 4 million merchants 600 million consumers 220 countries Now: 20,000 financial institutions 4 million merchants 600 million consumers 220 countries

11 Dee Hocks Chaordic System (VISA) -2 Then: Hock asked: What would be the nature (NOT the structure) of an ideal organization to create the worlds premiere device for exchange of value? Then: Hock asked: What would be the nature (NOT the structure) of an ideal organization to create the worlds premiere device for exchange of value?

12 Principles of Chaordic Systems -1 Response -- Simple few principles: Equitably owned: All advantage from individual ability & initiative Distributed power & function: No function except at max periphery, no power not driven down Distributed governance: No one person/institution able to dominate Response -- Simple few principles: Equitably owned: All advantage from individual ability & initiative Distributed power & function: No function except at max periphery, no power not driven down Distributed governance: No one person/institution able to dominate

13 Principles of Chaordic Systems -2 Infinitely malleable (adaptive) yet durable: Capable of constant self- organizing without sacrifice of core nature/ principles Embrace diversity and change: Attract people/institutions comfortable with principles & provide environment to allow to flourish Infinitely malleable (adaptive) yet durable: Capable of constant self- organizing without sacrifice of core nature/ principles Embrace diversity and change: Attract people/institutions comfortable with principles & provide environment to allow to flourish

14 Principles of Chaordic Systems -3 Core Tools for Leaders to Create Create Effective Chaordic Systems: 1.Compelling, shared vision 2.Set of few simple guiding rules or principles Thats it! Core Tools for Leaders to Create Create Effective Chaordic Systems: 1.Compelling, shared vision 2.Set of few simple guiding rules or principles Thats it!

15 So – How Can Todays Leaders Convert These Principles to Successful Action? What are new, effective leadership approaches in these chaotic times????

16 Chaotic Times: What Is a Leader To Do? Leadership starts with shared vision (often jettisoned in turbulence if too complicated – keep it simple!). Determine equilibrium stage (organization and environment) -- then act to align with appropriate equilibrium strategy. Focus on quality, relevance, and criticality of the organizations rules…and periodically re-examine (no sacred cows!). Leadership starts with shared vision (often jettisoned in turbulence if too complicated – keep it simple!). Determine equilibrium stage (organization and environment) -- then act to align with appropriate equilibrium strategy. Focus on quality, relevance, and criticality of the organizations rules…and periodically re-examine (no sacred cows!).

17 Chaotic Times: What Is a Leader To Do? -2 Dont be fooled by linear org charts- your organization is a Complex Adaptive System -- and what is really happening will elude you. Rather than linear org charts – think early communications techniques – smoke signals, listening posts, runners from tribe to tribe, etc. – to find out whats really going on Dont be fooled by linear org charts- your organization is a Complex Adaptive System -- and what is really happening will elude you. Rather than linear org charts – think early communications techniques – smoke signals, listening posts, runners from tribe to tribe, etc. – to find out whats really going on

18 Chaotic Times: What Is a Leader To Do? -3 Beware of best practices - they tend to limit the solution set (current & emergent). Instead of best practices – think about a hip pocket full of mighty good practices – if one does not work, youll have Plan B … Plan C … etc. Beware of best practices - they tend to limit the solution set (current & emergent). Instead of best practices – think about a hip pocket full of mighty good practices – if one does not work, youll have Plan B … Plan C … etc.

19 Chaotic Times: What Is a Leader To Do? -4 Heavy handed management-by-metrics gives rise to negative feedback, suppresses emergence and adaptiveness. Metrics only partially useful – can delude and mislead –Instead, use cross-organizational teams to validate, sniff out erroneous implications, uncover innovations, etc. Heavy handed management-by-metrics gives rise to negative feedback, suppresses emergence and adaptiveness. Metrics only partially useful – can delude and mislead –Instead, use cross-organizational teams to validate, sniff out erroneous implications, uncover innovations, etc.

20 Chaotic Times: What Is a Leader To Do? -5 Remember: Great management today is BOTH global AND local. Remember: Great management today is BOTH global AND local.

21 Contact Information John W. Link & Jo Lee Loveland Link VOLVOX Inc. PO Box 610, Middletown VA Ph: John W. Link & Jo Lee Loveland Link VOLVOX Inc. PO Box 610, Middletown VA Ph:


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