CAM HIL M4U1 Notes.pdf

MODULE 4 UNIT 1 Leading through complexity: Disruptions, wicked problems and ambiguity © 2018 University of Cambridge All Rights Reserved cam.ac.uk Table of contents 1. Introduction 3 2. Systems thinking 3 3. The VUCA world 3.1 Disruptions 3.2 Wicked problems in business 5 7 9 4. Leading t...

MODULE 4 UNIT 1 Leading through complexity: Disruptions, wicked problems and ambiguity © 2018 University of Cambridge All Rights Reserved cam.ac.uk Table of contents 1. Introduction 3 2. Systems thinking 3 3. The VUCA world 3.1 Disruptions 3.2 Wicked problems in business 5 7 9 4. Leading towards the desired future 11 5. Conclusion 13 6. Bibliography 14 © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 2 of 15 cam.ac.uk Learning outcomes: LO1: Recall the concepts of systems thinking within the business context. LO2: Identify disruptions that can affect leadership in a volatile, uncertain, complex and ambiguous world. LO3: Illustrate different types of wicked problems that affect business. 1. Introduction What does the future of leadership look like? Given the systemic pressures around the world, leadership can no longer be viewed as the preserve of just a few individuals. Already, some businesses are developing the leadership needed today to create a better future tomorrow. This set of notes expands on the topic of the systemic pressures and disruptions that affect leaders. It starts by defining the concept of systems thinking within the business context, thereby emphasising the importance of incorporating it into leadership thinking frameworks and practices. It also continues on from the previous modules’ discussion of the rapidly changing world, by outlining the VUCA (volatile, uncertain, complex and ambiguous) nature of the world, specifically through the lens of disruptions and wicked problems that affect business. Finally, it explores the importance of leading towards the future. 2. Systems thinking As discussed in Module 2, global trends and complex systems can have a significant impact on leadership. The rapid spread of globalisation means that nations and individuals are more connected than ever before, and this results in social systems that grow in increasingly complex ways. Similarly, major technological advancements, international trade and policy changes also stimulate the development of new systems and ways of organising business. The relationships between such systems are more complex than before, and this necessitates leaders who are capable of systems thinking (Arnold & Wade, 2015: 669-70). Essentially, systems thinking is about relationships. As defined by Behl and Ferreira (2014:104), systems thinking: …is the ability to think about a system as a whole, rather than only considering the parts individually. It perceives the world as a complex system and supports the understanding of its interconnectedness and interrelationships. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 3 of 15 cam.ac.uk In other words, systems thinking views the world as a complex system that is best understood through its interconnectedness and interrelationships. This is a holistic approach that considers systems as greater than the sum of their parts. In contrast, the more traditional reductionist view breaks systems down and deals with each component separately. When systems thinking is related back to the context of high impact leadership, understanding the components, relationships and resulting actions that comprise a system is crucial for a high impact leader to effect positive change (Behl & Ferreira, 2014:105). You may be interested to read about some examples of systems thinking in business. In order to be successful, contemporary leaders need to consider different ways of thinking and approaching problems that are both internal and external to an organisation. Reed (2006:10) notes that “although times and circumstances may change, systems tend to endure” and individuals “seem to be better at creating new systems than changing or eliminating existing ones”. As such, when evaluating systems, leaders can impact change by determining which systems are no longer functioning optimally or have outlived their usefulness. This could also systems that are still functional, but no longer work towards the organisation’s overall purpose (Reed, 2006). There are a number of benefits associated with systems thinking, as shown in Figure 1. Figure 1: The benefits of systems thinking. In particular, systems thinking promotes a view of systems as interconnected. By incorporating such a view into organisational strategies, leaders are better able to plan and act. Systems thinking also involves considering how businesses exist within multiple contexts. The larger the organisation, the more systems within systems there will be. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 4 of 15 cam.ac.uk Considering the rapid speed of globalisation, leaders need to adapt their leadership approaches in order to navigate the increasingly complex set of systems. Using systems thinking allows leaders to “better understand the deep roots of...complex behaviours in order to better predict them and, ultimately, adjust their outcomes” (Arnold & Wade, 2015:670). As explained by Fritjof Capra (quoted by Kelly, 2004), a leading systems thinker, systems thinking: …helps us to understand how all the problems we confront are interconnected. There are no isolated solutions. We need interconnected solutions. The problem of energy cannot be solved by finding cheaper sources of energy. If we had hydrogen fusion right now, or some new energy source that was cheap and safe, all our other problems would only get worse. If you fuel a system that is out of balance, you just have the same system but on steroids. We would damage the rainforests, deplete the ecosphere, pollute the air, and increase health problems. In other words, the energy problem is also a health problem and a food problem and a water problem, and it needs to be addressed as such. Therefore, systems thinking is a way of understanding that problems and their solutions are not isolated. By adapting a broader perspective of how problems are related, leaders are able to expand the number of solutions. However, this approach requires leaders to be open to new ways of thinking and approaching problems and solutions. Thus, a good systems thinker will need to practise “curiosity, clarity, compassion, choice, and courage” (Goodman, n.d.). Further exploration: Learn more about what it means to be a systems thinker and how you can apply this to your leadership approach. If you are keen to further explore systems thinking, consider using a tool to enhance your learning. There are a number of systems thinking tools, such as causal loop diagrams, that can be adapted to your own context. 3. The VUCA world The importance of systems thinking is particularly relevant when considering the nature of the VUCA context and how it affects business. Understanding the challenges represented by VUCA is incredibly beneficial to developing a systems thinking perspective. The acronym “VUCA” originated in the military to describe the volatility, uncertainty, complexity and ambiguity of the global context following the Cold War. Since then, the term has been used across a wide range of disciplines – including risk management, strategic decision-making and leadership – “to characterize the current environment and the leadership required to navigate it successfully” (Giles, 2018). © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 5 of 15 cam.ac.uk After the financial crisis of 2008–2009, the term VUCA has been used more and more to describe the socio-economic challenges faced by societies, companies and organisations across the world (Schick, Hobson & Ibisch, 2017). In terms of leadership and skills development, VUCA describes the types of challenges that high impact leaders need to consider when rewiring their approaches to leadership. Although the challenges represented by four aspects of VUCA are connected, it is crucial not to conflate them. Volatility, uncertainty, complexity and ambiguity represent four different challenges, each requiring its own distinct leadership response (Bennet & Lemoine, 2014). Figure 2: The characteristics of VUCA. (Adapted from: Bennett & Lemoine, 2014) Reflection: Contemporary approaches to leadership need to account for the VUCA context and the types of disruptions and problems this entails. To better equip yourself to lead in these complex times, learn how to maximise your leadership impact in a VUCA world and consider some of the strategies for success. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 6 of 15 cam.ac.uk 3.1 Disruptions Today’s global context poses many challenges that high impact leaders need to respond to and navigate effectively. Having explored the characteristics of VUCA challenges, you will now learn about the kinds of disruptions in this context. Currently, the world is experiencing a Fourth Industrial Revolution. This revolution is characterised by innovations in business models, products and processes, as well as the unprecedented changes driven by new technologies. Every day, more and more people can connect in ways that didn’t exist 20 years ago. For instance, in 2012 it was recorded that the number of mobile phones produced already outnumbered the world’s population. Although these developments pose challenges for leaders, they also result in opportunities for innovation. At the same time, there are also pressing social and environmental challenges. As you have learnt from Will Day’s video in Module 2, these range from climate change to population displacement and wealth inequality, and present fundamental risks to the stability and well-being of society. In particular, there is a growing need for resources to keep up with a rapidly growing global population. Currently, 1 in 7 people worldwide go hungry, and this number is expected to increase over the next two decades. By 2040, the global population will have expanded to 9 billion people, which will result in major consumption increases. Figure 3 highlights the anticipated needs of 2040’s population. Figure 3: Prediction of resources required by 2040. (Source: Organisation for Economic Cooperation and Development, 2016) © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 7 of 15 cam.ac.uk This need for additional resources is aggravated by the drastic effects of climate change. Based on current trends, it is predicted that by the end of the century: • Global temperatures will increase by 2.6–4.8°C; • Sea levels will be 0.45–0.82m higher than present; and • Carbon uptake will increase ocean acidification significantly. (Intergovernmental Panel on Climate Change [IPCC], 2013) Climate change will also drastically disrupt weather patterns, causing: • More hot days and fewer cold days globally; • Longer and more frequent heat waves; and • Drier dry areas and wetter wet areas. (IPCC, 2013) But why are climate change and carbon emissions priorities in terms of leadership? Because communities will need strong leadership to face the kinds of challenges that rising temperatures will bring. According to Nicholas Stern (2006), as temperatures rise, the following will occur: • Failing crop yields will diminish food sources. • Glaciers will disappear, decreasing the availability of water. • Rising sea levels will threaten major coastal cities. • Many non-human ecosystems will be impacted (for example, coral reefs will be damaged) and a rising number of species will face extinction. • There will be an increase in dangerous weather events, such as storms, forest fires, droughts, flooding and heatwaves. • There is the risk of irreversible, large-scale climatic shifts. As you might imagine, communities will require strong leadership to empower them to face these challenges. In addition to climate change, another big-picture trend impacting leadership is globalisation. The complexity of globalisation can be seen in the increasingly migratory patterns of humans. Numerous countries are experiencing population displacement due to persecution, conflict, violence and human rights violations, as well as environmental and economic factors. As a result, developed countries are seeing a major increase in refugees seeking protection. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 8 of 15 cam.ac.uk According to the UN Refugee Agency, communities are seeing the highest levels of displacement on record, with 65.6 million individuals currently forcibly displaced. This number is made up of: • 22.5 million refugees; • 40.3 million internally displaced people; and • 2.8 million asylum seekers. This displacement of individuals has a significant impact on the economy and social fabric of numerous countries. Strong leadership is required to lead through this change and find viable solutions to problems. Finally, one of the biggest and most complex global challenges to tackle is the disruption of jobs and skills caused by the rapid change in technology. While technological innovation is driving many positive outcomes for society, it also poses new challenges for the workforce, as an increase in automation means that future employees will require very different skill sets. 3.2 Wicked problems in business Within this VUCA context, leaders may encounter problems that are difficult to classify. These so-called “wicked problems” are issues that do not have single, easy-to-identify root causes and, similarly, do not have “easy solutions”. According to Jon Kolko (2012), a wicked problem is: …a social or cultural problem that is difficult or impossible to solve for as many as four reasons: incomplete or contradictory knowledge, the number of people and opinions involved, the large economic burden, and the interconnected nature of these problems with other problems. Wicked problems are problems complicated by a variety of factors, meaning that there are no easy, straight-forward solutions. For instance, the problem of poverty is connected to issues of education, nutrition, policy and economy. The complex relationship between these factors requires complex problem-solving strategies. First coined by Horst Rittel and Melvin Webber (1973), the term “wicked problem” was originally used in relation to policy theory, but has since expanded in use to describe issues that arise in the economy, environment and politics. Figure 4 lists the characteristics of wicked problems. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 9 of 15 cam.ac.uk Figure 4: The characteristics of wicked problems. (Adapted from: Rittel & Webber, 1973) Wicked problems often arise for leaders and their organisations due to constant change or unprecedented challenges. These problems often arise in social contexts and “it’s the social complexity of wicked problems as much as their technical difficulties that make them tough to manage” (Camillus, 2008). You may be interested to learn more about the kinds of wicked problems and how this affects business. How do leaders navigate through such a complex context? In Video 1, Professor Deanna Kemp discusses leading through complexity and ambiguity. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 10 of 15 cam.ac.uk Video 1: Leading through complexity and ambiguity. As discussed in Video 1, leaders wishing to effect high impact change need to consider how business disruptions, the VUCA context and wicked problems complicate leadership approaches. Kemp also mentions that complexity can be managed by refining your leadership capabilities. A high impact leader must be willing to ask questions, listen to others and be open to new ideas. At times, this may be uncomfortable, but being humble and self-reflective will help you navigate complex or uncertain situations. Addressing wicked problems in business: Although wicked problems pose challenges for business, there are a number of mitigating approaches. You might be interested to learn about wicked strategies or want to read more about how the coffee industry is tackling environmental and societal concerns. 4. Leading towards the desired future Having explored systems thinking, disruptions and wicked problems, these notes now turn to the type of leadership that enables you to reframe these challenges as you navigate this context. Given the rapid pace of change and the evolving role of business in society, leadership development is being reframed with terms such as “future fit leaders”, “leading in complexity”, “leadership in a changing world” and “leading for change” (CISL, 2018). As already discussed, global issues such as wealth inequality, climate change and technological innovation are rapidly changing the context of leadership. Ultimately, this means that today’s leaders need to plan their leadership approaches in order to build the necessary leadership for long-term business success and societal change. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 11 of 15 cam.ac.uk In this volatile, uncertain, complex and ambiguous time, leaders who remain unaware of these global trends are likely to find themselves falling behind. While these changes may sound daunting, there are opportunities for leaders who are willing to embrace the challenges ahead – if they focus their attention on the big picture. Taking stock of these challenges is the first step in unlocking solutions to globally experienced problems. Big-picture thinking: Big-picture thinking is a vital skill for high impact leaders who wish to tackle global problems. One initiative taking a big-picture perspective is the UN’s Sustainable Development Goals. One of the key motivators for high impact leaders is an acknowledgement that purpose should “align commercial success with delivering positive outcomes for society” (CISL, 2018). Frequently, traditional leadership approaches are focused on “succeeding within current economic and social systems, rather than on transforming these systems” (CISL, 2018). As such, these approaches do not truly acknowledge the scope of global challenges and fail to equip leaders to navigate them. Ultimately, these global challenges should prompt leaders to focus on developing skills such as: • Complex problem-solving; • Critical thinking; • Creativity; • Stakeholder engagement; • Emotional intelligence; and • Cognitive flexibility. (CISL, 2018) Furthermore, this context necessitates rewiring the focus of leadership development programmes, as shown in Figure 5. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 12 of 15 cam.ac.uk Figure 5: Rewiring leadership development programmes. (Source: CISL, 2018) In order to navigate the types of disruptions and problems outlined in these notes, leaders need to be equipped with a clear sense of purpose, as well as with the necessary values, thinking tools, knowledge, attitudes and skills to deliver change at the pace and scale required. This is covered in further detail in Module 5. 5. Conclusion As the world grows increasingly more connected, a number of opportunities and challenges arise. In this volatile, uncertain, complex and ambiguous context, there is a need for leaders to develop new ways of thinking and new ways of approaching challenges. One enabler of leadership is the approach of systems thinking. By considering the interconnected relationships that systems are made up of, leaders are able to understand the complexity of change and identify the factors that drive this change. This, in turn, leads to greater awareness of the disruptions and wicked problems that leaders will encounter and work towards solving. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 13 of 15 cam.ac.uk 6. Bibliography Albrecht, D. 2017. Amplify your leadership effectiveness: apply systems thinking. Available: https://www.forbes.com/sites/forbeshumanresourcescouncil/2017/10/30/amplifyyour-leadership-effectiveness-apply-systems-thinking/#395c6590265e [2018, July 16]. Arnold, R.D. & Wade, J.P. 2015. A definition of systems thinking: a systems approach. Procedia Computer Science. 44: 669-678. DOI: https://doi.org/10.1016/j.procs.2015.03.050. Behl, D.V. & Ferreira, S. 2014. Systems thinking: an analysis of key factors and relationships. Procedia Computer Science. 36: 104-109. DOI: https://doi.org/10.1016/j.procs.2014.09.045. Bennett, N. & Lemoine, G.J. 2014. What VUCA really means for you. Harvard Business Review. January-February 2014. Available: https://hbr.org/2014/01/what-vucareally-means-for-you [2018, July 16]. Camillus, J.C. 2008. Strategy as a wicked problem. Harvard Business Review. May 2008. Available: https://hbr.org/2008/05/strategy-as-a-wicked-problem [2018, July 20]. Cousins, B. 2018. Design thinking: organizational learning in VUCA environments. Academy of Strategic Management Journal. 17(2): 1-18. Giles, S. 2018. How VUCA is reshaping the business environment, and what it means for innovation. Available: https://www.forbes.com/sites/sunniegiles/2018/05/09/howvuca-is-reshaping-the-business-environment-and-what-it-means-forinnovation/#7dbabc62eb8d [2018, July 16]. Goodman, M. n.d. Systems thinking: what, why, when, where, and how? Available: https://thesystemsthinker.com/systems-thinking-what-why-when-where-and-how/ [2018, July 16]. Intergovernmental Panel on Climate Change. 2013. Climate change 2013: the physical science basis. Cambridge, United Kingdom and New York, NY, USA: Cambridge University Press. Kelly, M. 2014. Systems thinking and system change: interview with Fritjof Capra. Available: https://www.greattransition.org/publication/systems-thinking-andsystem-change [2018, July 16]. Kolko, J. 2012. Wicked problems: problems worth solving. Stanford Social Innovation Review. Available: https://ssir.org/articles/entry/wicked_problems_problems_worth_solving [2018, July 16]. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 14 of 15 cam.ac.uk Organisation for Economic Co-operation and Development. 2016. OECD science, technology and innovation outlook 2016. Available: https://www.oecd.org/sti/Megatrends%20affecting%20science,%20technology%2 0and%20innovation.pdf [2018, July 20]. Reed, G.E. 2006. Leadership and systems thinking. Defense AT&L. May-June 2006. Available: http://www.au.af.mil/au/awc/awcgate/dau/ree_mj06.pdf [2018, July 16]. Rittel, H.W.J. & Webber, M.M. 1973. Dilemmas in a general theory of planning. Policy Sciences. 4(2):155-169. Schick, A., Hobson, P.R. & Ibisch, P.L. 2017. Conservation and sustainable development in a VUCA world: the need for a systemic and ecosystem-based approach. Ecosystem Health and Sustainability. 3(4): 1-12. DOI: https://doi.org/10.1002/ehs2.1267. Stern, Nicholas. 2006. The Stern review of the economics of climate change. Cambridge, UK: Cambridge University Press. University of Cambridge Institute for Sustainability Leadership. 2018. Rewiring leadership: the future we want, the leadership we need. Cambridge, UK: University of Cambridge Institute for Sustainability Leadership. United Nations Refugee Agency. 2018. Refugee statistics. Available: https://www.unrefugees.org/refugee-facts/statistics/ [2018, July 20]. © 2018 University of Cambridge All Rights Reserved Tel: +44 203 457 5774 | Email: [email protected] | Website: getsmarter.com Page 15 of 15