1. The Practical Application of Complexity Theory in the Public and Private Sector Exploring the Science of Complexity in Aid Policy and Practice at ODI on 8 th July 2008 Prof. Eve Mitleton-Kelly Director Complexity Group LSE E.Mitleton-Kelly@lse.ac.uk www.lse.ac.uk/complexity

2. Using Complexity Theory in Practice? Are the ideas/concepts really useful? How? To whom? Why?

3. By understanding what it means for an organisation to be complex, (within a complex environment) we can work with those concepts and not block them unintentionally However, not enough to name and describe the concepts Can use the logic of complexity to: a. Understand the problem space when addressing apparently intractable problems b. Create enabling environments

4. How & Whom? Policy makers who become sponsors + all stakeholders, incl. those who need to implement the policies Examples: NHS RRM GSK

5. NHS 2 Hospitals, both with significant deficits Each had a double objective of reducing costs while improving the quality of service How they approached it, was different 2 Chief Executives created two different environments X was creative, collaborative, inclusive Y was perceived as inaccessible and the senior management team as having a hidden agenda

6. Creating an Enabling Environment EE for change: social, cultural, technical, physical, economic, political, etc, conditions that together create a sustainable environment that co-evolves with a changing social ecosystem Using the principles of complexity (a) as an explanatory framework (b) to offer a different way of seeing and thinking (c) a different language and set of concepts

7. Narrow Emphasis on the Problem Emphasis on cost cutting, from a purely financial perspective, met with resistance from clinicians Issues involved both ethical and power relationships Ethical: I joined the NHS to help save lives - difficult to reconcile the objectives of their profession with financial demands Power: a layer of management (often administrators with no clinical background) were perceived as diluting the power and influence of consultants More acceptable approach: reduce costs by reducing wastage rather than cutting services, with a strong emphasis on patient care

8. A key difference: Creating a Positive Future Hospital X: The CE (familiar with complexity) addressed the large deficit directly as a major challenge that everyone could contribute in resolving Provided the opportunity for beneficial change Had to make changes, but not just cost cutting exercises If they improved the patient journey and cut wastage, then financial savings could be made without affecting adversely the quality of service The CE saw other possibilities of a different future and offered a compelling picture I want to be part of Very positive and keen to discuss how they each approached the changes as an opportunity to rethink how their particular part of the service could be delivered - to improve the patient experience Will have the opportunity to be the best

9. A key difference Hospital Y: The change was viewed with fear, anxiety and apprehension Some of the clinicians had already gone through one major restructuring and downsizing, had left a very strong adverse impression - feared repetition Also felt the real issues were not being openly discussed – senior management team were not transparent and open, but were hiding some unpalatable truth Overall impression: one of anxiety and great uncertainty about the future – both about the future of the hospital and personally

10. Two different environments In X the problems were seen as possibilities for improvement in the service, everyone participated and tried their best to contribute to making a difference They were anxious about the future nature of the hospital, but this was a manageable anxiety, almost a curiosity about the future Approach: participative, dual top-down and bottom-up process to change In Y the anxiety was uppermost in their mind & obscured everything else Impression of not being given the space to contribute - talked about participation and contribution, but constrained in practice Approach: primarily top-down

11. In Complexity Terms: X X had facilitated self-organisation, exploration-of-the-space-of- possibilities, generative feedback, emergence and co-evolution Staff felt that they had permission to try out ideas locally To explore alternative procedures and processes to improve the patient journey Could discuss the outcomes openly and honestly within their group and share it more widely Cross-directorate projects: helped to bridge the tight boundaries between specialities. Cross-over was not always successful, but the possibility was present As each made a change the others were influenced to varying degree, but the generative feedback did make a difference and other directorates in the cross-over projects were encouraged to also try out some new ideas Reciprocal influence resulting in changes in the reciprocating entities – i.e. the co-evolutionary process was facilitated

12. In Complexity Terms: Y in 2005 Y talked about facilitating self-organisation, but constrained: new ideas had to be given the go ahead from the senior team Whole atmosphere was one of constraint rather than encouragement – limited exploration of the space of possibilities Y was not beset by problems (X had a much larger financial deficit); they did have significant successes in some specialities which were growing out of all expectations But there was no active learning from these successes and the focus was very much on attaining financial balance Little generative feedback, and few opportunities for staff to get together to review performance and reflect in an open, relaxed and informal atmosphere Reviewing done formally in terms of performance management By restraining self-organisation and exploration and by not actively reflecting on the outcomes (limited generative feedback) the learning environment was constrained

13. Hospital Y Changed significantly Following the reporting back after the first phase of the project, the hospital changed significantly. In the 18 months that followed, they made major changes Complete change in 2006/7

14. Exploring the space of possibilities Its not really telling people – I think its creating the organisation that takes the responsibility itself Introduced a new management structure Divisions took responsibility for their own plans Looked at inefficient departments and helped them to improve: looking at ways of doing things differently … now were reaping the real benefits, because weve cut out the stuff that wasnt working … staff are much more upbeat about it … theyre getting much more medical senior input and liaison with the rest of the hospital which has never happened before

15. Changes in the Health Ecosystem Payment by Results – higher salaries (Consultants, GPs) + Agenda for Change costs, but lower productivity we havent got better productivity through paying people more, weve actually got less… European Working Time Directive – junior doctor shifts, etc + societal changes – expect to leave on time Some work will go to Specialist Centres and other work to GPs – so the DGHs are losing some of their traditional work These changes were pushing the hospital to a far- from-equilibrium position

16. In Complexity Terms Changes in the ecosystem pushed the hospital far-from- equilibrium At the critical point they explored their space of possibilities and developed New ways of working – greater autonomy & self-org. + working better as a team, supporting each other and acknowledging their inter-dependence A different way of thinking + learnt a new bus. lang. New relationships – i.e. new patterns of connectivity internally and externally Created and continue to create new order i.e. they are actively co-evolving with their changing ecosystem They are becoming more tolerant and comfortable with emergence, unpredictability and uncertainty They have created a new co-evolving enabling environment

17. 2 Hypotheses + 2 Assumptions H1: that successful large-scale change can only occur through the adaptation of underlying principles and not by copying of best practice H2: that innovation and improvement are facilitated by the co-creation of an enabling learning environment A1: that collaboration and a dual top-down and bottom- up approach make such an environment possible and sustainable A2: if learning from successful experiments can be encouraged and shared then the improvement process may accelerate and spread nationally

18. Theories Natural sciences Dissipative structures chemistry-physics (Prigogine) Autocatalytic sets evolutionary biology (Kauffman) Autopoiesis (self-generation) biology/cognition (Maturana) Chaos theory Social sciences Increasing returns economics (B. Arthur) self-organisation emergence connectivity interdependence feedback far from equilibrium space of possibilities co-evolution historicity & time path-dependence creation of new order Generic characteristics of complex co-evolving systems

19. RRM Part of an EPSRC project, called ICoSS, which looked at systems integration. Two years after a major acquisition RRM was suffering from significant lack of social and organisational integration and all problems were attributed to a single cause. The research team, working with 16 volunteers from the organisation, identified a set of inter-related causes that would have seriously threatened the wellbeing of the company if not addressed. The outcome was a set of 12 work-streams implemented by the company, to address each critical issue identified and to create an enabling environment to improve integration

20. LSE Approach Identifying the real underlying problem when the organisation attributed all issues to a single cause Analysing a problem space to identify the multiple underlying and interacting causes Understanding why mono-causal explanations are inadequate when facing volatile, uncertain, complex and ambiguous environments

21. LSE-ALD Project Accelerated Leadership Development team 16 volunteers joined the LSE team Total of 4 teams Conducted 44 interviews with RRM execs on top 3 levels in Finland, Norway, Sweden, UK and USA LoM with all 70 RRM executives 2-day facilitated workshop with all interviewers and sponsors

22. 2-day Workshop to Identify the Problem Space 72 themes grouped into 8 clusters: OBU/CFBU Interface Complexity of structure (matrix) Human behaviours Cultures* Communication Leadership/role of central team/management Identity 12 Underlying Assumptions

23. Twelve Work-Streams to Create the EE Customer / Market Interface Account management process Customer Focus programme Product development process Working the Matrix Training and support for working in a matrix Facilitate informal networks Leadership / Management / Process Leadership Programme Co-ordinated change initiatives Strategy / Structure / Synergy Strategy and strategic process Structure, roles & interfaces Synergistic benefits and knowledge sharing

24. Conclusion 1 By understanding the complexity concepts and how the theory explained the phenomena they were experiencing, both organisations were able to a. Identify the problem space and address the problem b. Create an enabling environment that was sustainable

25. Conclusion 1 (cont.) - EE By understanding the multiple underlying interacting causes RRM was able to create an enabling environment to facilitate integration – that was sustainable 2 NHS Hospitals were able to create environments that not only addressed the immediate problem of deficits, but were also able to co-evolve with a changing social ecosystem

26. Conclusion 2 - transferability By understanding the underlying principles of why it worked and what would have stopped it working well, we can transfer the learning – not by copying best practice, but by adapting these principles to the local context. Not how and what but why it worked

27. Thank you … E.Mitleton-Kelly@lse.ac.uk www.lse.ac.uk/complexity

28. Additional slides for discussion

29. Changes in Y – Oct 2007 …this organisation just feels as if its much stronger, its a better place … not necessarily because the people are different, its the fact that theyve been given the opportunity … the responsibility and the authority to get on with it Now 18 months ago I used to hear, well, youre trying to give me autonomy, but actually theres people in the organisation keep saying, no, no, your cant do that. I dont hear that today. I hear that divisions are doing much more for themselves and taking that responsibility. … we have never been so strong financially, yet the external environment has never been so weak, so why are we so good? … I think its because divisions have really taken it on board, … it feels very different than the way it used to be, it was always a bit hit and miss … Whereas now its very firm, you will deliver on this, and people are given the authority to get on and do it. I mean were not quite there yet, but that does feel different.

30. Responding in a Weak External Environment e.g. Trusts and PCTs in deficit But Hospital Y had changed and was: Better organised to respond Had better equipment, and clarity through written protocols the throughput is very high … you can do a lot more patients in the time available with the same resource Better at forecasting some major shocks and crises e.g. a 20% reduction in A&E attendances by the PCT Ready to redeploy staff, etc – and encourage role extension Emphasised delivery on financial targets Culturally the organisation accepted the challenge and rose to it But they needed to understand the context and how they fitted in

31. Changes in the Health Ecosystem To survive the changes in the health ecosystem, the hospital has to: Be aware of what is happening and address it fully (no hiding under the carpet) i.e. scan the landscape and identify the emergent patterns Not just adapt to the changes, but find radically different ways of working, by exploring the space of possibilities Develop new relationships with the independent sector, GPs, PCTs, etc – develop new connectivities, feedback Use its resources differently – use their distributed leadership, intelligence, expertise, etc by facilitating local autonomy & self-organisation

32. A Different Way of Thinking Working in partnership with the independent sector To help market their services further afield Redress the balance of having to deal with the difficult long stay patients, by bringing in more lucrative work Do the core emergency work really well Think more in business terms: if something is making a profit, we should expand it. If its making a loss we need to sort it out and make it more efficient e.g. maternity and cardiology may be profitable, while rheumatology, because of the large drugs bill, can make a loss but you cant not do these things Address the conflict between the political and the cultural: whether to continue to provide a service that is needed for the local community, which makes a loss

33. A Different Way of Working Performance management and target orientated e.g. 4 hour target in A&E is a given e.g. reducing length of stay Patient pathway has been different as a consequence of hitting the A&E target – the process has been streamlined and theyve opened a Medical Assessment Centre A can do attitude with a smile Greater cultural mix with multiple faiths, beliefs, backgrounds