This article, by John C. Camillus, was originally published in The European Business Review, December 7, 2016.
A firm’s Identity – its core values, enduring aspirations and distinctive competencies – is intended to guide management’s decision making. This article discusses the effective methodologies for translating the values, aspirations and competencies embodied in a firm’s Identity into a decision framework.
Many businesses today find themselves in situations where industries are converging, disintermediating, transforming and dying. Products are ephemeral, markets are transient, and technology is dynamic. Organisation boundaries are unclear and consciously made permeable. Businesses are now facing problems that are so complex, intractable, and threatening to organisations – or entire industries – that they are best described as “wicked”. To the fascination and horror of managers, wicked scenarios are becoming increasingly commonplace.
Wicked problems are different and substantially without precedent. They involve multiple significant stakeholders with conflicting values and priorities. There are many apparent causes of the problem and they are inextricably tangled. It’s impossible to be sure when one has the “right answer” to deal with a wicked problem.
Managers facing wicked problems often lose their strategic bearings. Their long-held strategic vantage points and strategic foundations now rest on quicksand. Conventional strategic analysis seeks to develop “strategy” as the construct or mechanism that harmonises the organisation with its environment. Important tools of strategic analysis focus on the industry in which the business operates. But, for example, to what industry does the ubiquitous “cell phone” belong? Is a “cell phone” a phone, a voice recorder, a messaging system, a GPS device, a data storage device, a music player, a video player, a remote security monitor, a calculator, an organiser, a camera, a video recorder, a mobile internet access device or something else? If you can’t specify the industry how do you conduct a traditional five-forces analysis? And when the organisation’s products are obsolescent, markets are transforming, and disruptive technologies are taking over, how does one conduct a value chain analysis?
So, how can managers caught in this crucible of mutating environments, unsettled organisations, and wicked problems confidently and effectively approach the task of strategy making and strategy implementation? In my book, Wicked Strategies, I develop a framework for creating Wicked Strategies that can handle wicked problems. This framework is comprised of three components. One component is a dynamic Modular Organisation Structure that motivates and embraces transformation. A second component is Feed-Forward – processes that support visioning, and develop and analyse possibility scenarios to identify robust actions and enable a real-options approach. The third and most important component is the organisation’s Identity. It is the question of organisational Identity, and its fundamentally important strategic implications, that I will address here.
In the challenging world of mutating environments and wicked problems, the organisation’s Identity should be designed to serve as a touchstone for strategic decision-making. It should provide stability and consistency of purpose and perspective in the midst of ambiguity and even chaos. It should articulate a vision, and offer a roadmap and compass that guides the organisation toward realisation of the vision. The need for firms to define such an Identity is beyond compelling – it is an absolute necessity.
This article, about how John Camillus is applying Wicked Strategies® in Gujarat, India and Pittsburgh, Pennsylvania, was published on the front page of the Pittsburgh Post-Gazette on Sunday, October 16th. The project is a compelling example of how companies can make money by revolving their businesses around serving those in need.
This article, by John C. Camillus, was originally published in SBNonline.com, August 19, 2016.
In business, some problems are easy, some are hard, and some are so complex, intractable and threatening to organizations — or entire industries — that they are best described as “wicked.” To the horror of managers, wicked scenarios, and the consequent wicked strategy problems that follow in their wake, are becoming increasingly commonplace.
To managers facing a wicked problem, it can feel as if the ground is shifting under their feet; all that is clear is that traditional solutions no longer work. The wicked scenario is made more difficult because the perceived problem keeps changing as different solutions are considered.
How do you know when you are facing a wicked problem? I have identified five key characteristics:
Problems possessing these characteristics are far from amenable to solution by traditional methods. The question then becomes — what approaches will work in the face of such wicked problems? Based on extensive study and consulting, I have determined how to construct “Wicked Strategies” as a means of coping with wicked problems.
To develop Wicked Strategies, I propose a management system that is driven by the organization’s identity— its core values, its enduring aspirations and its distinctive competencies; that employs a Modular Organizational Structure that enables transformation and embraces change and that emphasizes Feed-forward processes that create a desired future — rather than feedback which focuses on lessons from the past.
Wicked Strategies differ fundamentally from classic strategies. For instance, classic strategies endeavor to grow a business by seeking and selecting adjacencies that can be served by a core competency.
Wicked Strategies, by contrast, because they are responsive to disruptions, do not have the luxury of restricting growth to adjacencies. Instead of relying on a core competency Wicked Strategies would seek to constantly develop and add to the existing competencies of the organization.
Classic strategic analysis attempts to predict and respond to an expected future. Wicked Strategies recognize the futility of attempting predictions in the face of extreme uncertainty and attempt to create a desired future, reaching out to new arenas that can be cultivated by a dynamic array of inter-related competencies.
To provide a preliminary taste of what a Wicked Strategy might be, let’s look at an example from a 30,000-foot vantage point. For instance, the difference between a Classic approach and a Wicked-Strategies approach to expanding into fast-growing, large, emerging economies, such as Brazil, China and India, is fundamental.
Classic strategies would tend to:
A Wicked Strategy, in contrast, would:
In a world of uncertainty and complexity, wicked problems abound. It is up to companies to create Wicked Strategies to respond to these unprecedented challenges.
John C. Camillus is the Donald R. Beall Professor of Strategic Management at the University of Pittsburgh. He is the author of Wicked Strategies: How Companies Conquer Complexity and Confound Competitors and has served as consultant on strategic management to more than 100 organizations on four continents, including many Fortune 500 companies.
This article, by John C. Camillus, was originally published in youngupstarts.com and yoshi.today, July 21, 2016.
Complexity and uncertainty are the two fundamental challenges that stand between entrepreneurs and the economic viability of their organizations. In today’s business environment, complexity and uncertainty stare us in the face and provoke paralysis in decision-making.
Traditionally, business owners and managers alike have dealt with complexity by trying to break problems down into smaller problems. But there are degrees and variations of complexity that are not readily amenable to deconstruction. Instead, in the face of what I call these “wicked problems,” managers and leaders must pursue “Wicked Strategies” – and as I will explain momentarily, this demands a new approach to hiring, training, and performance assessment.
While Wicked Strategies have a number of crucial components, one of the keys is a “feed-forward” approach to planning. Feed-forward planning processes work from the future backward, as opposed to the classical, feedback approach, which seeks to draw lessons from the past.
Another critical key to implementing Wicked Strategies is the need for firms to define their identity. In a world that is constantly changing because of myriad forces, including globalization, innovation, and shared value, conventional ways of defining an organization are obsolete or have ephemeral meaning. The construct of identity is intended to capture and articulate what is core, enduring, and distinctive about the firm, and will illuminate and guide decision-making. I believe “values” are core, “aspirations” are enduring, and “competencies” are what make an organization distinctive. Together, values, aspirations and companies constitute an organization’s identity, just as it can be argued to constitute a person’s identity.
Both feed-forward and the enhanced emphasis on identity must play a role in how you handle your company’s people issues. Here are some things to keep in mind in order to enable the successful implementation of Wicked Strategies in your organization:
Recruitment practices have to ensure that the values of the personnel brought into your firm are aligned with its identity. A combination of recruiting the “best athlete” and of recruiting for specific capabilities to address identified weaknesses or lack of capability within the firm needs to be adopted. The human resource system should be designed to grow employees’ capabilities, and so building on a “best athlete” base would be an advantage. At the same time, new competencies may be urgently demanded by new businesses that the firm is entering, which may mean recruiting personnel with specific knowledge and skills.
There has to be more than just a willingness on the part of employees to grow their capabilities. There must be a corresponding ongoing process in the firm to add to the knowledge and skills of employees, which supports new competencies that are required by the new businesses and new business models that the firm will constantly seek to develop. In companies such as Merrill Lynch Credit Corporation, which I studied in depth as part of a benchmarking exercise, managers valued the opportunity to develop new capabilities in anticipation of strategic initiatives and new businesses. The managers saw such development as increasing their worth and contribution to the company. Such a mindset and the flexibility that accompanies it need to be developed and supported. It is important because the dynamic modular structure that is the third component of the feed-forward framework requires that personnel be moved across units to transfer capabilities and develop a firm-wide perspective.
Performance appraisal in a feed-forward context would be used more to support the growth and development of the employees rather than to reward and punish. Personnel whose actions and decisions affirm that their values are aligned with the firm’s should be cherished and thoughtfully supported. Individuals whose performance falls short but whose values are aligned with those of the organization are supported and provided with development opportunities. By contrast, high performers whose values are not those of the corporation are candidates for outplacement, even if their performance is good. Values are at the core of the organization and behavior that is in conflict with espoused values should not be acceptable.
Only with this approach to people issues can an organization effectively implement the Wicked Strategies today’s wicked problems demand.
This article, by John C. Camillus, was originally published in HR.com, July 22, 2016.
In business, some problems are easy, some problems are hard, and some problems are so complex, so intractable, and so threatening to organizations – or entire industries – that they are best described as “wicked.” Based on extensive study and consulting, I have determined how to devise “Wicked Strategies” that will successfully cope with these challenges – and even permit companies to profit from them.
I have also determined that the importance of the human resources function in enabling the effective implementation of Wicked Strategies cannot be overemphasized. After all, competencies reside in personnel. HR is responsible for ensuring that the firm possesses the competencies needed to succeed in new markets by recruiting or developing the right personnel.
The strategic importance of human resources was conveyed to me by Don Beall when he was the chairman and CEO of Rockwell Industries and had gained the reputation of being the most sought-after manager in the aerospace industry. When describing how he was transforming the company, he emphasized that Rockwell’s VP of human resources was as much or more responsible for effecting the transformation of Rockwell as the VP of finance and strategic planning.
Here are the three steps HR must take to enable their organizations to implement Wicked Strategies:
1. Fortify the firm’s values. The firm has to ensure, to the fullest extent possible, that the values articulated in its identity are genuinely subscribed to by all employees. When recruiting personnel, a firm must make alignment with and commitment to its values an essential requirement.
2. Eschew layoffs. In normal circumstances, the only personnel that may be outplaced are those whose values turn out to be unaligned with the firm. Jeffrey Pfeffer’s description of the negative impact of layoffs on the bottom line of the firm has been persuasively presented in both an academic article and in a Newsweek cover story. The impact on morale is deep and long lasting. Personnel remaining in the firm after others are laid off are known to experience survivor’s guilt. Many “survivors” will seek to leave the firm for situations they expect will provide them with more security. And it is inevitable that those finding employment elsewhere will be the best of those that the firm has chosen to retain, resulting in a loss of important capabilities.
3. Ensure shared competencies. The firm has to ensure that competencies are shared across the organization. GE and Rockwell Industries, for instance, are known to transfer personnel from high-tech growth units to less innovative and stable units to rejuvenate them. Sharp Corporation grew and prospered by leveraging counter-conventional niche technologies, and by engaging in a process that the company calls “chemicalization.” This involved moving the top three per cent of researchers to new departments every year. Sharp also engaged in the practice, alien to most Japanese companies, of adding talent drawn from other companies at all levels of the organization, in addition to developing its existing personnel.
Only with the support of human resources can an organization effectively implement the Wicked Strategies for today’s wicked problems demand.
About the Author: John C. Camillus is the author of WICKED STRATEGIES: How Companies Conquer Complexity And Confound Competitors (Rotman – UTP Publishing), and the Donald R. Beall Professor of Strategic Management at the University of Pittsburgh. He has served as consultant on strategic management to over 100 organizations on four continents, including many Fortune 500 companies.
This article, by John C. Camillus, was originally posted on CMSWire.com, July 22, 2016.
Companies embarking on globalization are thrust literally and metaphorically into a world of uncertainty and complexity.
When the power and priorities of multiple and diverse stakeholders interact with the complexities and uncertainties of globalization, the result is a recipe for decision paralysis.
Not only does the firm’s future become difficult to predict, but also the extreme uncertainty and complexity that accompany globalization, when compounded by the different perspectives and priorities of diverse stakeholders, may lead to a chaotic ambiguity where the future is not only unpredictable but essentially unknowable.
Grappling with Uncertainty
Unknowable futures are the reason why firms that employ the best of the traditional planning processes and analytical techniques are sometimes unable to gain any traction.
Traditional tools of strategic analysis are designed to understand and predict competitive industry environments (e.g., five-forces analysis) or develop differentiation maneuvers for an anticipated future (e.g., generic value chains linked with customers’ or supplier’s chains). However, they are patently unsuited for and utterly helpless to deal with an unknowable future.
Additional approaches also fall short.
Conducting strategic planning exercises more frequently, requiring additional analysis, separating strategic thinking from action planning, or using carefully developed return on investment (ROI) projections as a basis for selecting strategies are of little worth when challenged by this degree of uncertainty and complexity.
Traditional Tools Aren't Working
Unknowable futures are no less unambiguous when subjected to more frequent traditional analyses.
A greater degree of analysis is a waste of time and effort if it is predicated on incorrect or questionable assumptions.
Understanding the implications and the implementation challenges of new strategies are next to impossible without simultaneously exploring the feasibility of actions required to fulfil the strategy.
Faced with the probability of incorrect assumptions, unanticipated developments, and undeveloped action plans, employing ROI projections as the criterion for selecting an optimum strategy is dysfunctional at worst and an exercise in futility at best.
What, then, can an organization do in the face of an unknowable future?
Understanding Wicked Problems
A couple of decades ago, in my consulting, I became aware of the ineffectiveness of then available techniques that were intended to delineate or deal with an anticipated future.
I started searching for, researching, designing, and documenting planning processes that could better manage an unknowable future. The result was an article I co-authored with Dr. William Gilmore that deconstructed what we categorized as “wicked” problems, and we recommended processes and techniques that would, we believed, be responsive to these issues.
These processes and techniques are better informed now by the multi-year, multi-country research projects and extensive consulting I have done with more than 100 organizations, ranging from Fortune 500 companies to theological seminaries.
A key component of these processes is a “feed-forward” approach to planning and control.
Solving Wicked Problems
Feed-forward-based planning and control processes work from the future backward, as opposed to the classical, feedback approach, which seeks to draw lessons from the past.
Feed-forward is an important and powerful approach to meeting the challenge of wicked problems. Traditional planning and control systems rely substantially on feedback — which means learning from experience and analyzing actual performance in relation to planned performance.
Disruptive technologies and wicked problems delink the future from the past, making traditional systems inadequate. The new models that result from co-creation of value could make the disconnection even greater.
Feed-forward processes and techniques address the disconnect that exists from the past by guiding management in making choices today by working back from an anticipated or desired future, without necessarily relying on past experience.
Feedback vs. Feed-Forward
Feedback is basically an exercise in remediation: correcting, learning from, and improving upon performance in an existing business.
Feed-forward focuses on fashioning a future — a future that may be unrelated to the past — that the firm wishes to see happen.
Feedback essentially involves performance appraisal and learning, while feed-forward focuses on managing uncertainty and an unknowable future.
Feedback-oriented systems engage in episodic reviews of performance at specified intervals of time — say, monthly, quarterly or yearly, while feed-forward-oriented systems trigger analysis whenever assumptions that have been made appear to be mistaken and new issues are spotted.
Feedback employs databases that collect historical data, while feed-forward works with information and insights derived from possible future scenarios. In short, feedback analyzes the past and feed-forward strives to envision and realize a desired future.
It is important to emphasize that feed-forward often requires a leap of faith. The business model will have to assume cause–effect relationships that have yet to be demonstrated or proven.
It would be unreasonable to expect that every such cause-effect assumption will prove to be valid. Setbacks and failures will occur. Managers and especially the C-suite need to be prepared to take these failures in stride but to also examine whether the logic underlying the assumptions of cause–effect relationships is sound.
Managers, paradoxically, have to commit to an untested cause-effect model to the extent of investing resources and unreserved effort into making it work, but at the same time be actively examining if the cause-effect model is valid.
This is difficult to do, though utterly necessary. Some years ago, when I had the occasion to speak with the top management of Fujitsu, I asked them how and when they determined that a strategic initiative or major project was a failure.
They patiently explained that my question had no meaning in the Fujitsu context. In Fujitsu, when initiatives or projects did not progress as planned, management’s focus was on what needed to be done differently, not on labeling the initiative and the responsible managers as failures.
Similarly, in a feed-forward context, well-planned and thoughtfully implemented initiatives are experiments that provide a better understanding of cause–effect relationships and underlying assumptions.
Feed-forward is inherently inclined to render existing value propositions and business models obsolete.
This is not a bad thing if the firm at the same time strives to keep the existing business going until it is evident that the emerging business model dominates. A flexible and dynamic approach to the firm’s organizational structure will be needed to execute this complex balancing act well.
Title image "Rainy Day Business" (CC BY-ND 2.0) by Tjook
About the Author: John C. Camillus is the Donald R. Beall Professor of Strategic Management at the University of Pittsburgh and the author of Wicked Strategies: How Companies Conquer Complexity and Confound Competitors (Rotman – UTP Publishing).
This article, by John C. Camillus, was originally published on TriplePundit.com, August 3, 2016.
In the roiling cauldron that is the business environment today, a number of mega-forces are responsible for creating wicked problems. Globalization brings complexity and uncertainty, while innovation creates new and unfamiliar realities, unprecedented situations, and potential conflict. And, when the two interact, the result can be disruptive technologies.
Research has suggested that disruptive innovations arise from addressing low-end markets or from the creation of entirely new markets. Globalization creates the context in which low-end markets are found and entirely new markets can be conceived. The resulting disruptive innovations and related technologies in turn create the need and the opportunity for new business models.
I have found that a number of specific practices – which I call “Wicked Strategies” – will enable organizations to transmute disruption and chaos into cash flow. One of these practices is to integrate social responsibility into the business model.
A wonderful example of this can be found in Arvind Limited, a global textile manufacturer based in India that reduced the incidence of cotton farmers committing suicide – a tragedy that is all too common in India.
The farmers who were most at risk worked on non-irrigated land, dependent on monsoon rains. They borrowed money to pay for expensive, genetically-modified, pest-resistant seeds, and for fertilizers and pesticides. If successive monsoon rains failed to occur, the farmers were likely to be unable to pay back the money they borrowed, and their land would be forfeited to the moneylenders. With no ability to make an alternative living, farmers and their families often chose suicide to slow death by starvation.
Arvind, a public limited company, which began as a textile manufacturer, has a fourth-generation scion of the founding family as its CEO. Arvind’s reputation for implementing leading management practices has made it the focus of several case studies that are discussed in management schools in India. Every generation of the family has been recognized for its commitment to social responsibility, a commitment that has seen a progression from personal giving, to corporate giving, to professionally managed philanthropic trusts funded by the company, to the current generation’s innovative and surprisingly profitable incorporation of social responsibility into business models implemented by Arvind.
Motivated by their concern for the farmers, and by the company’s and its major customers’ (including Walmart and Patagonia) avowed commitment to environmental and social sustainability, Arvind’s CEO and senior executives brainstormed a possible response to the farmers’ precarious circumstances. The answer they came up with was to teach and enable the farmers to engage in organic cotton farming.
Organic farming, they believed, would get farmers out of the clutches of moneylenders because organic farming is fertilizer- and pesticide-free. Even the cost of cotton seed was significantly reduced because expensive genetically modified seeds were not employed.
Arvind’s project took enormous commitment, a great deal of courage, some creativity, and rigorous planning and analysis. A detailed business plan was developed. The company recruited 130 agronomists and embedded them in the villages to offer scientific counsel tailored to each farmer’s small plot of land and fundamentally change traditional farming practices. Arvind also assumed control of the value chain surrounding the farmers’ activities, eliminating avaricious and exploitative middlemen.
But in order to achieve this splendid success – and this is the point that warrants emphasis – Arvind’s executives truly had to become one with the farmers. The son of the CEO, a Yale-educated, immensely advantaged fifth-generation scion of the founding family, spent time in the villages. The head of Arvind’s agribusiness also lived in the villages. Through these experiences, they understood the hardships and challenges faced by the local population.
It is impossible for anyone unfamiliar with rural India to understand the resolve it takes for someone used to middle-class levels of comfort, let alone a person of privilege, to endure the conditions of living in a poor village. Arvind took their efforts to understand the local population to extreme lengths.
Beyond helping farmers to protect their lives and livelihoods, Arvind also protected the environment, engaged diverse stakeholders, enhanced its competitive position and standing with major international customers, and added significantly to its coffers. The moral is that Arvind’s leadership became one with the farmers and the resulting tale of disruption, increased economic value added, and social benefit is illuminating and inspirational.
It bears mention that the benefit to Arvind soon extended beyond the organic farming project. Responding to the need to rotate crops to keep the soil fertile, Arvind helped the farmers grow and market food crops, alternating with organic cotton. Observing the profitability of food crops and having agronomists in its employ, Arvind moved swiftly to buy fields, grow food crops and initiate a new agribusiness division, which has become an important and growing element of the corporate portfolio of businesses.
Arvind has committed to and replicated the practice of incorporating social responsibility into business models to create disruptions and innovatively enhance both economic value and social benefit. One of these innovative businesses is real estate development and housing for slum dwellers. Another involves teaching tailoring skills and providing safe and comfortable housing to economically and socially disadvantaged young women, to ease Arvind’s entry into the Indian garmenting industry, which is challenged by highly restrictive labor laws. By offering a socially responsible “learn and earn” program that helped a disadvantaged segment of society, Arvind was able to minimize the contingent liabilities that are characteristic of the volatile, global garment industry.
Often, what appears to be a dire threat to an organization can, with a ton of courage and a modicum of creativity, be alchemized into a powerful and generous source of competitive advantage and added economic value. Incorporating social responsibility into the business model is one important avenue whereby this can be achieved.
John C. Camillus is the author of “WICKED STRATEGIES: How Companies Conquer Complexity And Confound Competitors” (Rotman – UTP Publishing), and the Donald R. Beall Professor of Strategic Management at the University of Pittsburgh. He has served as consultant on strategic management to over 100 organizations on four continents, including many Fortune 500 companies.