Strategy out of Strategy out of ChaosChaos

Webster UniversityLeiden, 8 April 2002

Henk Hogeweg MBA

Field of work: strategy and change management

Consulting and Interim Management

One of the initiators of www.chaosforum.com a society thinking about Chaos Theory and Complexity

Management Book Reviews for www.managementboek.nl

Co-author ‘In Control with Chaos’ and ‘Consulting with Chaos’

Author of ‘Professionals & Interim Management’

Overmars Organisatie Adviseurs in De Bilt

How do YOU draft strategy? Started spontaneously by a small group of

people A pattern develops in time as a result of

the internal system structure Strategy grows from the search for the

solution of a random problem That what has happened gets (new)

meaning afterwards and that’s called the strategy

Strategy consists of a lot of self-fulfilling prophecy (action-reaction-action-reaction-etc.)

Drafting strategy is difficult. You can’t predict future human behavior and hear drivers

In spite of the complexity and unpredictability our collective organizational behavior appears to be rather predictable over time because of the patterns we seem to follow

As ‘outside’ the hectic increases we have to organize ourselves more loose to absorb the hectic. That’s why our own behavior sometimes is so incomprehensible and unpredictable

We are self-designing

In the end we all depend on the improvisation capacity of our people

Thought up and worked out upfront by a group

Originates explicitly by forces from outside the organization

Strategy is developed by a group of employees depending on each other and with a common goal

Strategy is the result of the widely spread wished future state

Change of strategy is adjusting to changes environmental variables

Drafting strategy is a useful activity. Most of the time the predictions become reality

The complexity of live makes it necessary to change the organization radically every few years. In that way our organizational behavior is unpredictable

As ‘outside’ the hectic increases we have to be more in control to find the right answers collectively. That makes our behavior predictable

We decide on the next step using environmental variables

As we disciplinary execute the planning and control cycle everything will be OK

-3 -2 -1 0 +1 +2 +3

What is Strategy?(Karl E. Weick)

Article Henry Mintzberg(NRC 4 maart 2000)

Drafting strategy is like pottery

Is business a poker game or justdoing the best you can everyday?

There is something in the air

Sometimes a strategy is brilliant.Sometimes it’s like muddering onwhen totally unexpected and unprospected a uniquePossibility pops up. Often the genius is brought inAfterwards.

Intelligent bees and stupid flies

’Let’s say, you put the same number of bees and flies in a bottle.You put the bottle horizontal with the bottom turned to the light. The bees

think they are smart. They know from their hive-experience (= best- practices) that the way out is there where the light comes from. So they

swarm to the bottom of the bottle and keep on trying to get out there(= more of the same). The non-programmed, stupid flies know nothing about this and are just flying around. Within five minutes all flies have

found the way out of the bottle while the bees are still trying the bottom and die of hunger and exhaustion. The problem is that we have too many

bees drafting strategy and not enough flies’(Henry Mintzberg in NRC 4 maart 2000, page 16)

The conventional methodPlanning & Control cyclPlanning & Control cycle (De Wit – e (De Wit – Meyer)Meyer)

Strategy (by Mintzberg)

Realizedstrategy

Intendedstrategy

Unrealizedstrategy

Emergent strategy

Deliberate strategy

What’s strategy about according to Mintzberg? creativity intuition persevere open mind coincidence learning capacity

Resourced bases schoolComplex / Chaotisch

Simple / Rational

Complex / Chaotic

Environment /Simple / Rational

designschoolentrepreneurial

school

organizationalaction school

organisationallearningschool

planningschool

positioningsschool

chaosschool

incrementalistschool

more emergent

more deliberate

Strategy Schools

the experts speak:

‘We don’t like their sound. Groups of guitars are on the way out.’ (A Decca Records co-executive about The Beatles in 1962).

‘The phonograph ... is not of any commercial value.’ (Thomas Alva Edison, the inventor himself in 1880).

‘There is no reason for any individual to have a computer in their home.’ (Ken Olson, president, Digital Equipment Corporation in 1977).

Re-formulating Here & Now(internal zapping)

STRATEGY IS:

The future hasThe future hasstarted today!started today!

Dilemma’s

Choosendilemma

complex paradoxalsituation

alternative 1 alternative 2

Valuesystem 1

Valuesystem 2

Various alternatives

based on values

between which a

tensed relationship

exists that can hardly

,or even impossibly,

be combined.

Examples of dilemma’s

Business:• Should say goodbye to my

biggest customer?• Do I really want this merger

or alliance?• Will my son take over the

business?• Do I have the guts to re-design

the main process?• Do I have the guts to change?

(between the ears)

Personal:• Should I keep this job or take

the other?• Do I want to start my own

business?• Which of the kids will be

general manager?• Study or work?• Do I have a life of my own?• Am I connected?

Elements of Chaos Thinking

CONCEPTS

Self-organizationand planning

Intuition and embodiedknowledge

Coincidence

Profoundunderstanding

Richenvironment

Paradigm andinternal zapping

CONTEXTFactors

(McDonaldisation)and Actors

3/4

1/2

V ?

3/4

H/V

H

H/V

1/2

Paradigm A set of pre-assumptions, built up in our history, which we use in every

new situation we have to deal with.

A lens which we use to look at the world and that determines what we see and experience.

A (personal) set of assumptions and pre-occupations about life and the world, most of the time under the level of our consciousness and thus seldom discussed.

The result of shared experiences in the past, recognized in our behavior, with what we automatically (without thinking) do complex tasks.

Prahalad:‘The dominant logic’

Aspects of “Organizational intelligence”

DATA Reinforced

behavior

Measures ofperformance

Values &Expectations

Competitivestrategy

Analytics and dominant

logic

Aspects of “Organizational learning”

Complexity at the dinner table

About settingthe table

About eating

About chaos

About taste

Aboutorganizing

About daily work

About change

About patterns

About strategyAbout shopping

What can we learn from that?

Chaos = lots of short stories, that have a hidden structure and influence each other. So, everything is connected with

everything. Behavior is unpredictable, but not

random Renewal starts with letting existing

structures (also between the ears) go.

Learning points homevideo(self-organization) Big changes start small Fundamental changes are not designed upfront, but appear to be good

strategies afterwards In the details you recognize the big The idea (intuition) goes ahead of thinking Change is a different way of looking (internal zapping, choosing a

context) The future has already started (self-organization)

Evolution

Golf I:

Golf II:

Level and characterof growth and change

Time

window ofstarting points

Changing phasesIt’s a bit of luck and choosing the right context

Co-creation & evolution

Golf I:

Golf II:

Level ofsystemfunctionality

TimeCTSCTSSS FFSFFS TCTC

dilemma

Golf I:

Golf II:

Character and levelof growth and change;Level of systemfunctionality

Time

I II

III IV

(best practices)

Window of starting points

(self-organization)

1.Define the axes with the

dominant and the weak underlying values

2.Name the windows

- Horizontal = acting: . Left = stay

. Right = move- Vertical = thinking . Up = current thinking . Under = new thinking

Old acting

New thinking

Old thinking

New acting

Defining the underlying values in the window of starting points

From scenario’s to strategy

Scenario 1 Scenario 2 Scenario 3 Scenario 4

NewStrategy

Consequences1

Consequences2

Consequences3

Consequences4

Strategyevaluation

Consequences for the control cycle

Measuring with two measures

Wrap up(Co-creation)

Contexts

Thinking

Live

Contexts

Thinking

Live

Conclusion of our little research Right: the design school Left: the chaos school

Definition of Strategy according to methe (learning of) re-formulating Here & Now