We have gone through a forced and turbulent 3 years of global transformation.
And when you had hoped or expected that we would find a ‘new normal’ when the pandemic receded, that is not happening. We have entered a new time with continued turbulence. We continue to have volatility, uncertainty, complexity and ambiguity, we are living in VUCA [1] times.
The pandemic boosted digital transformation, leading globally to a 7-year leap in digital adoption [2]. And now leading companies across sectors and industries are doubling down, increasing investments in software enabled digital transformations. In Omni-Channel for retailers, In Industry 4.0, IoT and SupplyChain for manufacturing in the Metaverse for social media and gaming companies. The list goes on: we are building digital futures.
At the same time, our world is more unpredictable than ever before. We have a climate crisis, a war in Europe, inflation and recession fears and democracy in an existential quandary.
In Building digital futures organisations are making big bets. Executives prefer these bets to deliver solid and predictable outcomes, and benefits that easily outweigh the combination of investments committed and risks incurred. Uncertainty rules and organisations find themselves in uncharted territory whilst deciding and executing on digital initiatives. This puts organisations with leadership conditioned to exert control and aim for predetermined outcomes in deciding on and running these initiatives in a difficult position.
VUCA is here to stay so we need to work with its quirks. That starts with embracing Chaos and accepting the fallacies of executive control. A simple framework allowed me to make some sense of this. Imagine a continuum with Anarchy on the extreme left, Control on the extreme right and Chaos and Order in the middle, like in the image below.
Embracing chaos allows an organisation to acknowledge the quirks of VUCA and respond productively to the unpredictable impact it has on large initiatives. Executives cannot, and should not aim to, control the output of a 3 to 5 year transformation. Decisions on business cases that dictate controlled delivery in largely fixed scope, timelines and budget are based on a mirage. We tend to underestimate the impact of the unknown both in negative and in positive terms.
On Control
Any organisation will aspire to have control over its strategy and a significant portion of their operations. Production processes need to be controlled for predictable volumes of products, their quality and their cost of production, and this applies to lots of operational areas within a business. Also in business transformation initiatives, a complex GoLive of new software will need to be prepared and controlled in detail. For a real business transformation, or significant parts of it, controlled execution is an oxymoron: a transformation aims to fundamentally change the services and/or inner working of an organisation. Executives letting go of control is an essential contribution to the success of a transformation.
On Order
For any digital transformation, Order allows us to establish and maintain general clarity on what the organisation’s strategy is, where it aims to compete and why, and how you govern large transformational initiatives. It provides your teams a stable platform and predictable and useful operational capabilities and tools and technologies to leverage in their work. Order and stability in assignments for your (key) people contributes greatly to their wellbeing, productivity and contribution to your business. Order allow levels of autonomy and breathing spaces for your teams that Control takes away.
On Chaos
Chaos is essential in digital transformation. Allow Chaos to exist for teams to determine how they can best contribute to and execute on the strategy. Send your teams on a mission, not on errands. That way, uncertainty can be incorporated into the way your teams work. This requires hard work and, maybe counterintuitively, very good planning and context awareness from your teams in order build strategic productivity: delivering the best possible outcomes in an uncontrolled environment.
I sometimes hear an argument that given teams work Agile, they do not need to plan ahead (and embrace chaos that way). The contrary is true: to truly deliver the best outcomes possible, teams need to master planning, operations and quality practices in short iterations. This allows them to learn fast and respond productively to unforeseen events, feedback and changes.
On Anarchy
Anarchy is the unproductive, out-of-control nephew of Chaos. It is not possible to coherently execute on a strategy in an Anarchy. Friction losses mount in an Anarchy. Assembling a new team for a new mission can feel like an Anarchy, an organisation in disarray can be an Anarchy. Anarchy can be useful and cannot always be avoided but aim to make it as short lived as possible.
The sweetspot
Consistently steer away from Control and Anarchy. Steering away for Control is more of a challenge for executives and does require a shift in mindset.
Aim to gyrate between Chaos and Order continuously. Challenge yourself, your organisation and your teams to be at your best, perform and learn when surrounded by Chaos. Expand a bit when under pressure and in Chaos and act in alignment with the mission you are on.
Make your teams antifragile by creating and sustaining capabilities to jointly act with focus amid uncertainty and challenge them to contribute to your mission and align to your organisations vision as autonomous as viable [3].
Also within software engineering and delivery, approaches such as ‘Chaos Engineering’ can be deployed to improve reliability [4].
Successful transformation programs live on the edge of Chaos. Embrace it.
I’ll discuss traps and pitfalls in my next blog.
Footnotes:
[1] VUCA’s first use was in the US Army War College in the late eighties and the term was first described in 1985 in ‘Leaders: The strategies for taking charge’ by Warren Bennis and Burt Nanus.
[2] McKinsey & Company, ‘How COVID-19 has pushed companies over the technology tipping point …’October 5, 2020.
[3] ‘Use antifragile hacks to grow your business in uncertain times’, by Dave Aron and Mary Mesaglio published on the Gartner portal July 1, 2022.
[4] On the Gartner portal you can find a ‘Market Guide For Chaos Engineering’ published June 21, 2022.