Systems Thinking in Public Sector -has the time for application finally come?

It started with the Stefan Stern article in the Financial Times ‘Change the way you work’. However, failure of large systems, whether in financial services, public sector or industry, is not big news any more. Yet, little has been said about practical and long lasting ways to deal with this global and endemic problem. So, it is refreshing to read the following:

“Systems thinking requires a profound shift in … the design and management of work,…reversing current norms to go from ‘push’ to ‘pull’, and placing the development of workers, individually and collectively, at its heart.”

If companies want to get better at what they do, then their people have to be able to learn. …
Working within a rigid framework that is designed to achieve imposed targets makes it almost impossible for employees to learn.

Then today The Times has article ‘New way’ thinker John Seddon aims at council targets’
While ‘systems thinking’ here is an interpreted version, the approach is clearly catching attention and strikes at the core of some burning issues by:

Mr Seddon advocates what he calls “systems thinking” — designing services entirely to meet the demands of local customers. …

Mr Seddon rejects the term “best practice”, replacing it with “better practice” because, he says, each problem requires its own solution. He believes that the focus on best practice has caused “the worst ideas from the private sector to be copied in the public”. …

“… I’m in the business of helping people to think,” he says bluntly.

In reply, Norman Strauss wrote the following comment also published in The Times:

Mr Seddon is right to champion systems thinking. The customer’s
appreciation systems ( my phrase ) are indeed the ultimate and proper
masters and arbiters of public services, their design, systems, processes,
products, people, costs and delivery.

However, care must be taken to ensure that learning systems, innovation
systems and service ecosystems are not driven by public opinion ab initio;
or nothing strikingly new will ever be envisioned, created, tested,
developed and produced again.

Major improvements and new demand technologies have to be created by
visionaries, made to work, and their purpose explained effectively, before
they can be best appreciated and needed by customers.

Progress does not come easily.

Simplistic targets can indeed prevent creativity, design and change. They
can kill commitment.

Researching present and future customer needs/demands cannot be done by
focus groups or surveys alone.

Customers cannot create major technological, scientific or industrial
breakthroughs. They can only comment on them once they have been
developed, communicated and used to create new demands.

The phrase alternative demand technologies says it all.

What all three items show is that the time of real application of systems thinking has come. The expertise needed to make this happen is not widely spread in spite of a growing number of knowledge workers in the workforce.

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If you see what is required in good time why is it so difficult to open minds of opinion formers?

Those with the classical education know about the fate of Cassandra. For others suffice to say that by telling truth to power got her into deep trouble. This may not be so dangerous in our times, yet it is certainly not appreciated and most likely totally ignored.

Just follow the controversy brewing about Sir Gus O’Donnell’s comments reported in the Financial Times about the vacuum at the top of US Treasury civil service in times of real crisis. We can add to this the thoughtful follow up by Willem Buiter in his Maverecon blog post To the victor go the spoils: who answers the phone in the US Treasury? in the same paper who points out the costs The price of the US spoils system: the emasculation of US macroecononomic policy making. However, only two days earlier in the same paper two eminent USA professors have declared about the same situation that When a house is on fire, you put all your initial effort into putting it out.

Lets turn to the economic situation in UK. A day earlier in the same paper we have an article where Gillian Tett in Lost through destructive creation starts off with:

Six years ago, Ron den Braber was working at Royal Bank of Scotland in London when he became worried that the bank’s models were underestimating the risk of credit products. But when the Dutch statistical expert alerted his bosses to the problem, he faced so much disapproval that he eventually left.

“I started off saying things gently . . . but no one wanted to listen,” Mr den Braber recalls. The reason, he believes, lay in “groupthink . . . and pressure to get business done” – as well as a sheer lack of understanding about how the models worked.

Tales of that nature go some way to explaining how the west’s big banks brought themselves to their present plight and tipped the world into recession.

Now remember, this is the paper that has twice ignored the attempts by Norman Strauss to point out how these issues can be addressed at the fundamental level first in Q3 2008 and then in December 2008. Yet the Editors are willing to give space to the contributions like the most recent An unruly phenomenon in constant need of social control.

Let Cassandras have their say! Otherwise we will be indeed stuck with the closed circle of Future of Capitalism Top 50 leaders with no new face from another discipline, a young thinker or an old rebel among them framing the debate about all our futures!

PS I have just spotted a letter that fits some of the contrarian criteria Let a few uncomfortable truths appear on your pages, FT by Dr Roman Wolczuk. A case of synchronicity or?

People are noticing we were wrongly led – who and what now?

While various pundit produce a growing number of articles and papers on the causes of the world economic problems, one things is becoming very clear. We were led into the credit crunch and crisis of confidence.

I know this is a bold (!) statement. A very short explanation will suffice for now.

First, while we were led this leadership was not of the kind we currently recognise as such. The leadership was blind through sheer lack of the awareness among those at the top of various organisation. They simply failed to recognise that the multinational corporations they may be running or an ever increasing number of G-type groupings (G8, G20, EU etc) they belong to mean one thing – world is strongly interconnected! This matters far more than anyone has recognised so far. Some commentators are thus calling for systemic solutions or looking for systemic approaches. Surprisingly, these voices are still in great minority. They also seem to be coming from non-anglo-saxon world.

The failure to understand the need for a systemic perspective permeates the regulation as well. Basel I and Basel II are clear examples here from the banking sector.

The second characteristic of the crisis is easily explicable by Darwinian evolution. A growing chorus in the press, including the Financial Times, and in the UK Parliament is bringing up so far un-sayable fact that our corporate Boards are highly inbred and lack vigour, real talent and true diversity. In other words these large companies as they are now are a dying breed as much as dinosaurs were.

Add to this the third circumstance – that of the steadily declining education and bonus systems rewards for failure, and we have truly serious situation. Decisions are being made by people caught in the stampede of the press and TV stations hungry for instant action. Politicians make pronouncements about initiatives and policy changes that take far too long to start. When they are implemented, sheer complexity of the systems to be introduced (IT as well as human) overwhelms the capabilities of those charged to make it happen. Long standing dumbing down of education coupled with lack of transparency of the conditions for progress up the organisational ladders and supported by a totally warped reward system, make for a real witches brew!

However, the solutions proffered by our Governments do not appear to show that the politicians or their advisers have grasped these simple truths. They show little inclination to engage in serious thinking. All the summits in the world are no substitute for taking the strategic leadership stance to explore the situation for what it is – a mess of our own making that requires a different approach and totally different group of people to solve it! Same goes for HR Directors, for all their optimism and expanding role!

We are not talking about the whistleblowers. We are advocating leadership by Mavericks and Contrarians. It is clear that HR Departments and their function are very much behind the times. New skills and approaches that handle paradoxes, dilemmas and dynamic situations as well as people with capabilities to build relationships are needed and yet in very short supply! However, even under the conditions of threat, current powers that be along with those who put them there continue to follow the lemming route of more of the same just bigger.

This is neither desirable nor necessary. We need a new party and people with real courage. What next and how to go about it is the topic of a future post.

The case for live wires in Whitehall- how far has it happened 25 years on?

Above we relate why The case for live wires in Whitehall is relevant today in the financial crisis. Simply, it would appear that little has changed in the Civil Service from those days almost 25 years ago! One needs only read Sue Cameron articles in FT, like Can-do civil servant in a world of wait-a-minute men and Tory cleansing of clipboard men to see that this is still a far of goal.

Yet, we are now in the grip of a crisis that affects UK at large and requires decision making capabilities in the Government and within Civil Service that far exceed those available. We do not have years to get this into place. And external consultants per se would not do. Ray of hope is that some Ministers like Lord Drayson recognise this you can hear his specific suggestions stated at NESTA on 4th December 2008. He emphasised the need for fast decision making, ability to take risks and need for taking responsibility by civil servants working in his Department.

May the real reforms begin.

FT 11th Nov.2008 Leadership Lessons from 55 Years ago_Stephen Stern

Suddenly, history and leadership are being intimately linked.  Whether it is when refering to Barack Obama victory in US elections and looking for parallels with previous presidents or on BBC Radio 4 where Anthony Roberts explores the links between historians and leaders, military in the first program and political in the forthcoming one.

However, the best and simplest is the recent article by Stephen Stern in Financial Times Leadership Lessons from 55 Years ago. Here are a few quotes:

No wonder historians are worried about the disappearance of documentary evidence now that everything is being e-mailed and text-messaged. These typed pages, with all their blotches and imperfections, summoned up the past….

…I have rarely read such clear, purposeful and persuasive thoughts on leadership, delivered in only a few sentences.

Leadership is “the art of influencing a body of people to follow a certain course of action”, the notes state. “The art of controlling them, directing them and getting the best out of them.”…

(skip)

The notes contain a special section on “man management”. Some of this stuff feels quite radical, a) for 1955 and b) for the army. See what you think: “The business of man management takes time and it requires the taking of infinite trouble … you cannot deal with material you know little or nothing about. Your men are your material; you must know all about them …You must give each one individual study and be prepared to make an individual approach to each. You must be something of a psychologist.”

FT 4th June 2008 – Good Leadership is a team sport and that team has to be ‘whole-minded’ says research

FT.com | Management Blog | Column: the myth of the lonely leader

June 3, 2008
by Stefan Stern
Stefan Stern
Column: the myth of the lonely leader

It used to be the Ewings who livened up the boardrooms (and saloon bars) of Dallas, but these days the Rockefellers provide all the dynastic entertainment on offer. At ExxonMobil’s annual shareholders meeting in the Texan city last week, descendants of John D. Rockefeller, the founder of Exxon’s forebear Standard Oil, lobbied hard to force the company to split the joint role of chairman and chief executive – currently held by Rex Tillerson – in two.

Most shareholders demurred. They seemed happy enough with the company’s performance. As well they might be: ExxonMobil had record pre-tax profits of $40bn (£20bn, €26bn) last year, far outstripping all other leading US corporations. The share price, up by 10 per cent in the past 12 months, has shaken off the bearish sentiment that has afflicted other industrial stocks. It has not been a bad time to be in the oil business, of course. But management must be getting something right.

While the dispute over ExxonMobil’s strategic direction centred on the environment, in effect it constituted an attack on the current boss. Now, you might expect a Rockefeller to subscribe to the great man theory of history. But this theory, when applied to the leadership of businesses and organisations, distracts us from what we should really be thinking about. The personality of Mr Tillerson, and whether or not he should combine the roles of chair and CEO, is not the central point. The quality of the leadership team that surrounds him is what counts.

All of us – business people, financiers, analysts, journalists and PRs – are guilty of perpetuating the myth of the lonely leader, struggling single-handedly to drive the business on. I can only speak for my own trade here. As journalists we are taught to “tell the story through people”. So, if we want to report what a company is doing, who else should we write about if not the boss?

But as Lee Scott, chief executive of Wal-Mart, was honest enough to explain to this newspaper earlier this year: “I don’t run the company…as a CEO if you have to get up every morning and tell them what to do, then you’ve got the wrong people in the jobs.” Nor can Mr Tillerson simply over-ride the entire ExxonMobil board: 10 out of the 11 directors elected last week are non-executives.

Now there is new evidence that it is top teams rather than top bosses that matter most. Research commissioned by the UK-based consultancy Cognosis has shown that the effective development and execution of strategy has more to do with what senior executives succeed in conveying to the rest of the organisation than what leaders do and say alone.

Just over 1,000 senior managers from large businesses were asked by the research company YouGov to give their views on the strategic effectiveness of their organisation. Unsurprisingly, perhaps, the verdict was not all that positive. Under half felt that their leaders, leadership teams and organisational culture supported the effective development of strategy.

More surprising was the evidence, drawn from “regression analysis” of the survey findings, that leadership teams were four times as important as leaders in that process of developing strategy. “Leaders have only an indirect influence on creating a more strategically effective culture,” says Richard Brown, managing partner at Cognosis. The leader’s job is to “catalyse and orchestrate his or her top team”. It is then up to that team to influence the rest of the business.

So how, if you are the boss, do you make this process work? Try to build what Cognosis calls a “whole-minded” team around you. That is, balancing four key personality types (and approaches to strategy) as identified in a Myers-Briggs style analysis of your colleagues: those who are predominantly creative, collaborative, rational or practical.

According to the survey data, “whole-minded” teams are seen as significantly more effective. But there is good news for the leader who may be an essentially rational or practical kind of person. “Leaders don’t have to be whole-minded to assemble and lead whole-minded teams,” Mr Brown says. Getting buy-in from the rest of the business will be a lot easier, however, if the top team contains that mix of qualities that will help create a more convincing, and possibly even inspiring strategy.

The alternative is all too familiar: one-dimensional teams of executives all hired in the leader’s image, people who have got on in their careers by trying to be as much like their boss as possible. There is no mystery how this happens. “Leaders do tend to build leadership teams in their own image,” Mr Brown says. But this reinforces narrow-mindedness instead of building the “whole-mindedness” you need.

Do not expect to see any sudden or dramatic changes in the way we talk about business. The glossy magazines will not run out of CEOs eager to be photographed for the front cover. But, with their smart covers, those magazines are really reporting the myth and not the facts about how companies are run. Leadership, it turns out, is a team sport. Its tasks and duties are distributed far and wide among the ranks.

June 3rd, 2008 in Corporate governance, Leadership | Permalink

FT Dec 31, 2007 – Some people have no tolerance of uncertainty

FT.com / Services & tools / Search

LETTERS TO THE EDITOR: Some people have no tolerance of uncertaintyFinancial Times
Published: Dec 31, 2007

From Mr Norman Strauss.

Sir, Paul Mortimer-Lee (Letters, December 24) has perhaps responded to Sir Samuel Brittan from his area of expertise and, no doubt, the practical need to service his clients with forecasts. But in doing so he seems to have missed what to me is Sir Samuel’s critical hinge in his argument; namely, the contrast between the forecasters’ predictions, and the policy decisions flowing from their analysis, with the sense of uneasy foreboding that occurs when those studying the conclusions of this analysis are worried because they feel changes in the air have not been identified, or weak signals signifying their emergence identified and taken into account.

There is no point having a forecast that induces false confidence and delays awareness and understanding of barely emergent elements whose disruptive effects will call for an urgent reversal of policy and lead to a different forecast, analytical paradigm and options set. In such circumstances, surely Alan Greenspan’s desire to find out what is really going on from other indicators closer to the real world and keep his options open – rather than closing them down with a rigidly scoped forecast, whether containing probabilities or not – makes more sense and is closer to the newly evolving position than is an older forecast from a different viewpoint.

Being further up the analysis chain, so as to identify leading edge indicators sooner, must make more sense at any time, but especially at turning points and times of turbulence. This enables imaginative thinkers to be nearer to where the measurements are made, that inform the statistics, that are then analysed, to form hypotheses, to make further forecasts. This is of course not possible with “unknown unknowns” and “black swans” (well discussed by your columnists in previous months), which are not forecast and completely disrupt the old analytical paradigm and require new domains of expertise to emerge in order to embrace their newly formed reality.

Underlying this debate are, I suspect, the psychological variables of human nature, temperament, character, will, commitment, motivation and personality. Some people have no tolerance of ambiguity and uncertainty and try to draw their analysis to premature conclusions in the name of practicality. Others can handle the impractical holding of mutually contradictory viewpoints, strategies, scenarios, theories and intelligence for much longer, and do not need to close down their thinking prematurely in order to try to exert control today on what is going to prove to be uncontrollable tomorrow and will require a completely different competence, mental set, analysis and approach.

Norman Strauss,

Twickenham TW1 4QJ