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A Leader’s Framework for Decision Making

by David J. Snowden and Mary E. Boone

Wise executives tailor their

approach to fit the complexity

of the circumstances they face.

Reprint R0711C This document is authorized for use only by Albert Baker ([email protected]). Copying or posting is an infringement of copyright. Please contact

[email protected] or 800-988-0886 for additional copies.

A Leader’s Framework for Decision Making

by David J. Snowden and Mary E. Boone

harvard business review • november 2007 page 1

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Wise executives tailor their approach to fit the complexity of the

circumstances they face.

In January 1993, a gunman murdered seven people in a fast-food restaurant in Palatine, a suburb of Chicago. In his dual roles as an ad- ministrative executive and spokesperson for the police department, Deputy Chief Walter Gasior suddenly had to cope with several different situations at once. He had to deal with the grieving families and a frightened community, help direct the operations of an extremely busy police department, and take questions from the media, which inundated the town with reporters and film crews. “There would literally be four people coming at me with logistics and media issues all at once,” he recalls. “And in the midst of all this, we still had a department that had to keep running on a routine basis.”

Though Gasior was ultimately successful in juggling multiple demands, not all leaders achieve the desired results when they face situations that require a variety of decisions and responses. All too often, managers rely on common leadership approaches that work well in one set of circumstances but fall short

in others. Why do these approaches fail even when logic indicates they should prevail? The answer lies in a fundamental assumption of organizational theory and practice: that a certain level of predictability and order ex- ists in the world. This assumption, grounded in the Newtonian science that underlies scien- tific management, encourages simplifications that are useful in ordered circumstances. Circumstances change, however, and as they become more complex, the simplifications can fail. Good leadership is not a one-size- fits-all proposition.

We believe the time has come to broaden the traditional approach to leadership and decision making and form a new perspective based on complexity science. (For more on this, see the sidebar “Understanding Complex- ity.”) Over the past ten years, we have applied the principles of that science to governments and a broad range of industries. Working with other contributors, we developed the Cynefin framework, which allows executives to see things from new viewpoints, assimilate complex

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A Leader’s Framework for Decision Making

harvard business review • november 2007 page 2

concepts, and address real-world problems and opportunities. (

Cynefin

, pronounced ku-

nev

-in, is a Welsh word that signifies the multiple factors in our environment and our experience that influence us in ways we can never understand.) Using this approach, leaders learn to define the framework with examples from their own organization’s his- tory and scenarios of its possible future. This enhances communication and helps execu- tives rapidly understand the context in which they are operating.

The U.S. Defense Advanced Research Projects Agency has applied the framework to counterterrorism, and it is currently a key component of Singapore’s Risk Assessment and Horizon Scanning program. Over time, the framework has evolved through hun- dreds of applications, from helping a pharma- ceutical company develop a new product strategy to assisting a Canadian provincial government in its efforts to engage employees in policy making.

The framework sorts the issues facing leaders into five contexts defined by the nature of the relationship between cause and effect. Four of these—simple, complicated, com- plex, and chaotic—require leaders to diagnose situations and to act in contextually appropri- ate ways. The fifth—disorder—applies when it is unclear which of the other four contexts is predominant.

Using the Cynefin framework can help ex- ecutives sense which context they are in so that they can not only make better decisions but also avoid the problems that arise when their preferred management style causes them to make mistakes. In this article, we focus on the first four contexts, offering exam- ples and suggestions about how to lead and make appropriate decisions in each of them. Since the complex domain is much more prevalent in the business world than most leaders realize—and requires different, often counterintuitive, responses—we concentrate particularly on that context. Leaders who understand that the world is often irrational and unpredictable will find the Cynefin framework particularly useful.

Simple Contexts: The Domain of Best Practice

Simple contexts are characterized by stability and clear cause-and-effect relationships that

are easily discernible by everyone. Often, the right answer is self-evident and undisputed. In this realm of “known knowns,” decisions are unquestioned because all parties share an un- derstanding. Areas that are little subject to change, such as problems with order process- ing and fulfillment, usually belong here.

Simple contexts, properly assessed, require straightforward management and monitoring. Here, leaders sense, categorize, and respond. That is, they assess the facts of the situation, categorize them, and then base their response on established practice. Heavily process- oriented situations, such as loan payment processing, are often simple contexts. If some- thing goes awry, an employee can usually identify the problem (when, say, a borrower pays less than is required), categorize it (review the loan documents to see how partial payments must be processed), and respond appropriately (either not accept the payment or apply the funds according to the terms of the note). Since both managers and employ- ees have access to the information necessary for dealing with the situation in this domain, a command-and-control style for setting parameters works best. Directives are straight- forward, decisions can be easily delegated, and functions are automated. Adhering to best practices or process reengineering makes sense. Exhaustive communication among managers and employees is not usually re- quired because disagreement about what needs to be done is rare.

Nevertheless, problems can arise in simple contexts. First, issues may be incorrectly clas- sified within this domain because they have been oversimplified. Leaders who constantly ask for condensed information, regardless of the complexity of the situation, particularly run this risk.

Second, leaders are susceptible to entrained thinking, a conditioned response that occurs when people are blinded to new ways of think- ing by the perspectives they acquired through past experience, training, and success.

Third, when things appear to be going smoothly, leaders often become complacent. If the context changes at that point, a leader is likely to miss what is happening and react too late. In the exhibit “The Cynefin Frame- work,” the simple domain lies adjacent to the chaotic—and for good reason. The most frequent collapses into chaos occur because

David J. Snowden

([email protected] .com) is the founder and chief scientific officer of Cognitive Edge, an interna- tional research network. He is based primarily in Lockeridge, England. Mary E. Boone ([email protected] .com) is the president of Boone Associ- ates, a consulting firm in Essex, Con- necticut, and the author of numerous books and articles, including Managing Interactively (McGraw-Hill, 2001).

This document is authorized for use only by Albert Baker ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

A Leader’s Framework for Decision Making

harvard business review • november 2007 page 3

success has bred complacency. This shift can bring about catastrophic failure—think of the many previously dominant technolo- gies that were suddenly disrupted by more dynamic alternatives.

Leaders need to avoid micromanaging and stay connected to what is happening in order to spot a change in context. By and large, line workers in a simple situation are more than capable of independently handling any issues that may arise. Indeed, those with years of experience also have deep insight into how the work should be done. Leaders should create a communication channel—an anonymous one, if necessary—that allows dissenters to provide early warnings about complacency.

Finally, it’s important to remember that best practice is, by definition, past practice. Using best practices is common, and often appropriate, in simple contexts. Difficulties arise, however, if staff members are discour- aged from bucking the process even when it’s not working anymore. Since hindsight no

longer leads to foresight after a shift in con- text, a corresponding change in management style may be called for.

Complicated Contexts: The Domain of Experts

Complicated contexts, unlike simple ones, may contain multiple right answers, and though there is a clear relationship between cause and effect, not everyone can see it. This is the realm of “known unknowns.” While leaders in a simple context must sense, catego- rize, and respond to a situation, those in a complicated context must sense, analyze, and respond. This approach is not easy and often requires expertise: A motorist may know that something is wrong with his car because the engine is knocking, but he has to take it to a mechanic to diagnose the problem.

Because the complicated context calls for investigating several options—many of which may be excellent—good practice, as opposed to best practice, is more appropriate. For exam- ple, the customary approach to engineering a

Understanding Complexity

Complexity is more a way of thinking about the world than a new way of working with mathematical models. Over a century ago, Frederick Winslow Taylor, the father of scien- tific management, revolutionized leadership. Today, advances in complexity science, com- bined with knowledge from the cognitive sciences, are transforming the field once again. Complexity is poised to help current and future leaders make sense of advanced technology, globalization, intricate markets, cultural change, and much more. In short, the science of complexity can help all of us address the challenges and opportunities we face in a new epoch of human history.

A complex system has the following char- acteristics:

•

It involves large numbers of interacting elements.

•

The interactions are nonlinear, and minor changes can produce dispropor- tionately major consequences.

•

The system is dynamic, the whole is greater than the sum of its parts, and solutions can’t be imposed; rather, they arise from the circumstances. This is

frequently referred to as

emergence

.

•

The system has a history, and the past is integrated with the present; the ele- ments evolve with one another and with the environment; and evolution is irreversible.

•

Though a complex system may, in retro- spect, appear to be ordered and predict- able, hindsight does not lead to foresight because the external conditions and systems constantly change.

•

Unlike in ordered systems (where the system constrains the agents), or chaotic systems (where there are no constraints), in a complex system the agents and the system constrain one another, especially over time. This means that we cannot forecast or predict what will happen.

One of the early theories of complexity is that complex phenomena arise from simple rules. Consider the rules for the flocking behavior of birds: Fly to the center of the flock, match speed, and avoid collision. This simple-rule theory was applied to industrial modeling and production early on, and it promised much; but it did not deliver in

isolation. More recently, some thinkers and practitioners have started to argue that human complex systems are very different from those in nature and cannot be modeled in the same ways because of human unpre- dictability and intellect. Consider the follow- ing ways in which humans are distinct from other animals:

•

They have multiple identities and can fluidly switch between them without conscious thought. (For example, a per- son can be a respected member of the community as well as a terrorist.)

•

They make decisions based on past patterns of success and failure, rather than on logical, definable rules.

•

They can, in certain circumstances, pur- posefully change the systems in which they operate to equilibrium states (think of a Six Sigma project) in order to create predictable outcomes.

Leaders who want to apply the principles of complexity science to their organizations will need to think and act differently than they have in the past. This may not be easy, but it is essential in complex contexts.

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A Leader’s Framework for Decision Making

harvard business review • november 2007 page 4

new cell phone might emphasize feature A over feature B, but an alternative plan—emphasizing feature C—might be equally valuable.

Another example is the search for oil or mineral deposits. The effort usually requires a team of experts, more than one place will po- tentially produce results, and the location of the right spots for drilling or mining involves complicated analysis and understanding of consequences at multiple levels.

Entrained thinking is a danger in compli- cated contexts, too, but it is the experts (rather than the leaders) who are prone to it, and they tend to dominate the domain. When this problem occurs, innovative sugges- tions by nonexperts may be overlooked or dismissed, resulting in lost opportunities. The experts have, after all, invested in building

their knowledge, and they are unlikely to tolerate controversial ideas. If the context has shifted, however, the leader may need access to those maverick concepts. To get around this issue, a leader must listen to the experts while simultaneously welcoming novel thoughts and solutions from others. Executives at one shoe manufacturer did this by opening up the brainstorming pro- cess for new shoe styles to the entire com- pany. As a result, a security guard submitted a design for a shoe that became one of their best sellers.

Another potential obstacle is “analysis paralysis,” where a group of experts hits a stalemate, unable to agree on any answers because of each individual’s entrained thinking—or ego.

Working in unfamiliar environments can help leaders and experts approach decision making more creatively. For instance, we put retail marketing professionals in several mili- tary research environments for two weeks. The settings were unfamiliar and challenging, but they shared a primary similarity with the retail environment: In both cases, the market- ers had to work with large volumes of data from which it was critical to identify small trends or weak signals. They discovered that there was little difference between, say, handling outgoing disaffected customers and anticipating incoming ballistic missiles. The exercise helped the marketing group learn how to detect a potential loss of loyalty and take action before a valued customer switched to a competitor. By improving their strategy, the marketers were able to retain far more high-volume business.

Games, too, can encourage novel thinking. We created a game played on a fictional planet that was based on the culture of a real client organization. When the executives “landed” on the alien planet, they were asked to address problems and opportunities facing the inhabitants. The issues they encountered were disguised but designed to mirror real situations, many of which were controversial or sensitive. Because the environment seemed so foreign and remote, however, the players found it much easier to come up with fresh ideas than they otherwise might have done. Playing a metaphorical game increases man- agers’ willingness to experiment, allows them to resolve issues or problems more easily

The Cynefin Framework

The Cynefin framework helps leaders determine the prevailing operative context so that they can make appropriate choices. Each domain requires different actions.

Simple

and

complicated

contexts assume an ordered universe, where cause-and-effect relationships are per- ceptible, and right answers can be deter- mined based on the facts.

Complex

and

chaotic

contexts are unordered—there is no immediately apparent relationship between cause and effect, and the way forward is determined based on emerg- ing patterns. The ordered world is the

world of fact-based management; the unordered world represents pattern- based management.

The very nature of the fifth context—

disorder

—makes it particularly difficult to recognize when one is in it. Here, multi- ple perspectives jostle for prominence, factional leaders argue with one another, and cacophony rules. The way out of this realm is to break down the situation into constituent parts and assign each to one of the other four realms. Leaders can then make decisions and intervene in contextually appropriate ways.

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This document is authorized for use only by Albert Baker ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

A Leader’s Framework for Decision Making

harvard business review • november 2007 page 5

and creatively, and broadens the range of options in their decision-making processes. The goal of such games is to get as many perspectives as possible to promote unfet- tered analysis.

Reaching decisions in the complicated do- main can often take a lot of time, and there is always a trade-off between finding the right answer and simply making a decision. When

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