During a change project at a car parts supplier a few years ago, a process consulting colleague of mine went off on a rant when he heard that the company had just paid a six figure sum for the months long analysis and report of a strategy consultancy on operational issues in the plant. “Give me full access to talk to managers and employees, and I’ll give you 90% of the information in that report and all of the important decision points in four days!” I believed him, having experienced his pragmatic competence and his uncanny ability to intuit when and where to find the key issues in the improvement process as he worked with the people in the company.
Complicated systems analyses are not only expensive, they often miss the point, as the reality they are applied to is complex and unpredictable and not reducible to the results of linear analysis. Most executives I know are aware of the gulf which exists between what analysts say and the way reality behaves. That is why reports are sometimes commissioned to provide secondary rationalization for decisions executives already want to make, based either on their own experience or motivated by political considerations, and as long as shareholders and supervisory boards share a belief in analytic results, they serve their purpose.
Applying systems analysis to complex environments, however, can also lead to catastrophic failure, as we have seen in financial markets when even honest bankers fall prey to the limits of the assumptions on which their system models are based, or in Japan, in which an unexpectedly strong earthquake turned reactor risk management into a disaster which in hindsight seems to have been waiting to happen, or with the Western military response to terrorism, whose violent interventions have served not to diminish radicalization but to foster it.
But despite awareness of the limits of systems analysis, until recently there doesn’t seem to have been much of an alternative. One that I have just found, and hope will be very fruitful is the work of Dave Snowden at Cognitive Edge. Dave and his colleagues have been working on using complexity theory to translate narrative from any given context through software into objective facts that can be used as a basis for decision making—an approach that promises to close the gap between decision making and reality which our increasingly painful failures in risk management are making obvious.
Some colleagues and I invited Dave for dinner in Frankfurt last week to learn more about his thinking and his software. Dave is taking an open source approach to his services, but in contrast to the prevalent models, the software is proprietary as SaaS, while it is the methodology of complexity theory it is based on which is open source. Dave wants to do for consulting what open source did for software, i.e. to democratize decision making (and make proprietary consulting methodologies and expert approaches within complex environments essentially obsolete!).
There is no better sensor for understanding the complex human systems we make and live in than our own lived experience. That is why an experienced process consultant like my colleague can sense the neuralgic points in the system by listening to the stories people living in the system tell him. Our brains are pattern recognition organisms, not trivial machines. We perceive elements of the systems we experience, and we connect the dots based on patterns we have learned through our evolutionary development and lived experience better than any purportedly objective model we could invent.
At the same time, however, we are limited in our capacity to know what is important through the way in which we connect the dots: Our brains, David explains, do not connect the dots of our perception through a best fit strategy, but rather latch onto the first pattern they come up with. This is where the Cognitive Edge methodology comes into play. Analysis of a system is done by collecting stories about a particular context one wants to understand. Narrative fragments are then indexed to signifiers designed to frame the questions one wants to put to the system. The storytellers themselves index the key words to the signifiers, cutting out the middle men who would normally do the interviews and analysis as consultants, thereby eliminating the first fit distortions introduced by the consultants’ analytic models. Executives who need information on which to base decisions simply click on the signifiers in the user interface in the ongoing report to access the narratives behind the patterns. The software makes vast quantities of information available through the visualization of the valuations of the key words in signifier pairs or triads. The access to experience within the system which the software provides is in real-time. Without the distortions introduced by the experts, executives listen directly to the experience of their people, close the reality gap, and can use their judgement to the greatest possible effect.
Even strong decision makers are doomed to fail when their decisions are based on unrealistic information. What I hope is that the narrative-signifier strategy Cognitive Edge has derived from complexity theory can dramatically improve information quality for my clients. This will not save executives with poor judgement or a political agenda from running us off further cliffs. But a potential side-effect of a narrative information strategy is that bad judgement and its effects will themselves be reflected in the ongoing collection of narratives in real time, so that poor executives will have less places to hide from the consequences of their actions.
For consultants, this means a radical departure from past business models, if we are to have a productive role in future projects. The expert systems approach to consulting looks like it will be coming to an end. For enablers of complexity strategies, on the other hand, there is a world of challenges ahead of us. I’ll be attending the next European workshop offered by Cognitive Edge in Amsterdam from May 31st-June2nd, and will report on my insights.