Peter Fryer, managing director of Humberside TEC, is a keen advocate of the concept of Complex Adaptive Systems. Here he looks at how this concept can affect the way we plan.
A few years ago I attended a Strategic Planning course run mainly for the oil industry and one incident sticks out very firmly in my mind. All those on the course who worked in the oil industry were asked to write down on a card what they thought the price of oil would be in five years time. They all revealed their cards at the same time and they all had near enough the same price. They were then asked to put in a pile in front of them their wallets, cash, jewelry and any other valuables. The tutor asked: "how many of you are prepared to bet that pile of precious possessions in front of you on the price you wrote on the card actually coming true?" No one would, so the tutor asked them to write down on a new card what price they would be prepared to bet on and they all came out with prices which were very close to each other but totally different to the first one they gave.
"So why did you do that?" asked the tutor and the answer was very revealing. The first answer was the one that could be justified to the board of the company. Its rationale could be explained in terms of trends, economic forecasts and political analyses. The second answer they could give no rationale for, but taking into account all the myriad things, and their interconnectivities, which could affect the price it just 'felt right'.
Since that day I have been a convert to intuitive planning, and going with what feels right. Also on occasions I have asked people to bet on their forecasts and, although this approach to planning is far from perfect, we get much nearer the mark than Humberside TEC did before.
This is an example of complex adaptive systems at work in our organisations. The traditional approach to planning produces the first figure for the price of oil. It sees the world as a linear place where we can predict outcomes and identify the consequences of possible courses of action. This leads us to making plans such as "to increase market share to 40% in five years" whereas in reality we cannot know what size the market will be, what our competitors will be doing, what the economy will be or, perhaps more importantly, whether our market may collapse because someone has come up with a completely new concept.
The second figure for the price of oil is based on a complexity approach. In other words, in every system there are a large number of players where action and connections are generally unpredictable, but that patterns form and feedback on the system. Because the world is full of such systems people intuitively read these patterns and use them to inform their behaviour. This is why at work we are so often uncomfortable in following the 'scientific management approach'. So if 'planning' as we know it doesn't work then what should we do? Well there are three things:
· First of
all we have to get our organisations fit. We have to develop the competences
of our organisations and our people, to think, to learn to spot patterns,
and to be ready to act in the best interest of our organisation.
This is all illustrated by a boxer. Even the best boxer cannot plan his fight in detail, because his actions are partly dependent on the other boxer. Therefore he ensures that he is fit, that he is very clear about his goal and that he has a range of tactics or skills to employ to meet developing situations. The world of business is even more complex than boxing because there are many more players in our environment. So simple planning will not do, we need to be very fit and very clear what we are about.