Posts tagged with ‘ambiguity’
I reviewed some research that demonstrates why creatives don’t wind up in leadership roles, generally, although a majority of CEOs believe that creativity is the key competency for our era:
The cultural bias against creatives as leaders, Stowe Boyd
A 2010 study of 1,500 CEOs by IBM yielded a few large insights. One was that over 60% believed that creativity is the most critical competency for CEOs today.
Creative leaders — they believe — are comfortable with disruptive innovation, both as a stressor impacting the company but also as a tool for competitive advantage. They are willing to refactor operations to produce better outcomes, inventing new ways of delivering value. They tolerate ambiguity well, and are courageous and visionary.
The disconnect is that, in general, people who demonstrate these sorts of capabilities — creatives — are often passed over for management jobs. In particular, we seem to have a cultural bias against creatives. They don’t line up with the typical leadership profile, and the nature of creatives is to introduce ambiguity, which unsettles people looking for certainty. Recent research by Jennifer S. Mueller (University of Pennsylvania), Jack Goncalo (Cornell University), and Dishan Kamdar (Indian School of Business), as reported in Recognizing Creative Leadership: Can Creative Idea Expression Negatively Relate to Perceptions of Leadership Potential?, shows this to be the case.
Go read the whole post.
The business community focuses on managing uncertainty. That’s actually a bit of a canard. In an increasingly turbulent and interconnected world, ambiguity is rising to unprecedented levels. That’s something our current systems can’t handle.
There’s a difference between the kind of problems that companies, institutions, and governments are able to solve and the ones that they need to solve. Most big organizations are good at solving clear but complicated problems. They’re absolutely horrible at solving ambiguous problems — when you don’t know what you don’t know. Faced with ambiguity, their gears grind to a halt.
Uncertainty is when you’ve defined the variable but don’t know its value. Like when you roll a die and you don’t know if it will be a 1, 2, 3, 4, 5, or 6. But ambiguity is when you’re not even sure what the variables are. You don’t know how many dice are even being rolled or how many sides they have or which dice actually count for anything. Businesses that focus on uncertainty actually delude themselves into thinking that they have a handle on things. Ah, ambiguity; it can be such a bitch.
Dev Patnaik, cited by Robert Safian in This Is Generation Flux: Meet The Pioneers Of The New (And Chaotic) Frontier Of Business
We are in the Postnormal now, where volatility, uncertainty, complexity, and ambiguity have reached unparalleled heights. We are constantly in a strategy fog, unable to see very far ahead, to plan, or even think about problems and solutions. We live in a time defined by dilemmas: unsolvable situations that can only be coped with, balanced against.
Like a martial artist who knows she may be attacked at any time, by any opponent, with any weapon, the most productive approach is to practice, speculatively, but remain fluid in mind, and unfocused on any specific techniques.
This is why I counsel speculative design as a discipline. Instead of trying to imagine a future world, instead imagine an imaginary appliance of that future world, and its use by the denizens of that future. Then consider the implications of those interactions. That is the equivalent of a karate-do doing kata: we are sparring with the implications of our speculations.
Venture capital firms are closing, decreasing the size of funds, or dropping partners, as a result of a worsening marketplace for start-ups to get to liquidity. As a result, the VC firms are finding it harder to raise money to invest:
Pui-Wing Tam, Venture Firms Take a New Tack
U.S. venture-capital funds garnered $20.3 billion in 2012, essentially flat from 2011 and down from $39 billion in 2007, according to Dow Jones LP Source.
Overall, there were 842 venture-capital firms in the U.S. in 2011 that raised money in the previous eight years, down 16% from 1,004 in 2007, according to the National Venture Capital Association.
More venture firms “realize that in order to be successful and deliver returns, they need to be focused on smaller groups of people and smaller sets of companies,” said David Hornik, a venture capitalist at August Capital, which in October closed a $300 million fund, compared with $350 million for its previous fund. Six partners are investing out of the new fund, down from seven for the prior fund, he added.
Many venture firms are responding to a higher bar from investors, who have been disenchanted with scant venture returns and are scrutinizing partnerships closely to pick out the stronger versus weaker venture capitalists in a firm.
Investors “have become more selective because their return requirements are higher.” said Tom Gladden, a partner at investment management firm Adams Street Partners, which invests in venture funds. “We’re going to evaluate the [venture firm’s] team to the point of looking at the personal franchises of individual partners.”
What is unsaid in this story is that investors the world over are finding it harder to determine where to invest. Uncertainty and ambiguity make it difficult to pick sectors or investment vehicles — like start-ups — with anything like a dependable return.
Scott Rafer riffs on my recent post, The Biggest If Of All, where I suggest that this time it might be different, this time we may have moved into a new era, a new economy: the postnormal. Rafer says it’s just the same old same old:
@stoweboyd This purely academic question gets asked every business cycle. It was being asked on the upside in the late 90s if you recall. In this (not very) regulated financial environment, investment managers figure out how to play new conditions which makes the answer to your question “No” +/- 20%.
Well, logically, just because someone said X would happen 15 years ago and it didn’t doesn’t mean that someone saying X now is wrong. Those are independent events, at least in principle.
My point is something else entirely. We are living in a time where uncertainty is so great that businesses and investors are finding it increasingly impossible to make judgments about where things are headed. Andrew Ross Sorkin recently wrote about this:
The Election Won’t Solve All Puzzles - Andrew Ross Sorkin via NYTimes.com
“Uncertainty” has become the watchword over the last several years for many chief executives, politicians and economists as an explanation — or perhaps an excuse — for the economy’s slow growth, for the lack of hiring by business and for the volatility in the stock market.
“The claim is that businesses and households are uncertain about future taxes, spending levels, regulations, health care reform and interest rates. In turn, this uncertainty leads them to postpone spending on investment and consumption goods and to slow hiring, impeding the recovery,” a group of professors from Stanford University and the University of Chicago wrote in a study that found “current levels of economic policy uncertainty are at extremely elevated levels compared to recent history.” (The professors have created a Web site, policyuncertainty.com, where you can track the “uncertainty” levels.)
If you go look at the other charts — like the European Policy Uncertainty Index — economic uncertainty has been steadily rising since 2007.
We are moving from a world of problems, which demand speed, analysis, and elimination of uncertainty to solve, to a world of dilemmas, which demand patience, sense-making, and an engagement of uncertainty. - Denise CaronSo my point is different. Investors and other business people will find it harder to reason about possible futures because we have moved onto shifting ground. It’s a VUCA world, characterized as increased volatility, uncertainty, complexity, and ambiguity.
As I wrote in July, regarding our blindness regarding the postnormal climate we’ve made for ourselves,
The biggest problem is that people’s thinking patterns are stuck in the old days, and I don’t just mean their expectations about ‘normal’ weather. No, even worse is that people can’t accept the reality that in the post-normal we will never have the luxury of time to assess and then adapt. Linear problem-solving approaches will simply not work anymore.
But this is not a call for more old world leadership, characterized by moving fast, and looking for permanent ‘solutions’ to well-defined and researched ‘problems’. Instead, we need leaders demonstrating the ‘VUCA Prime’ characteristics, as Bob Johansen has styled it.
Denise Caron makes the break between the old world and the new one very clear:
We are moving from a world of problems, which demand speed, analysis, and elimination of uncertainty to solve, to a world of dilemmas, which demand patience, sense-making, and an engagement of uncertainty.
So, in this context, there is no ‘solution’ to infrastructure stress and failure based on more violent weather. We are stuck in a problem space which is fundamentally unsolvable, but we have to try to make sense of this in the context of the larger world.
For example: the financial constraints of our weakened economy mean that we may not be able to repair the interstate highway system, but we might extend and maintain the train system for people moving. Do we have the foresight to disinvest in the highway system? Can we shift from a truck-based logistics system to boats, trains, and airships for long-distance hauling?
We are just as trapped in our thinking as we are in a rapidly changing global weather system, and without leaders with the mindset and skillset geared for the post-normal world, we will never find our way out.
The analysis about weather is paralleled by our inability to logically untangle the financial mess the world is in. And it’s not that we need to get smarter, do more analysis, put more brilliant minds on it: the system is so large, interconnected, and complex that it cannot be understood. It is a complex non-linear system, barreling along as fast as we can fuel it, and it cannot be neatly reduced to a set of smaller, more easily understood parts, unless we actually start disconnecting the parts.
But are we taking steps to disconnect the world’s financial markets? To raise trade barriers, and diminish global supply chains? To require companies to only do business in one country, and to only compete in a single marketplace? To break up vertically integrated multinationals? No. And leaving aside whether this would be a ‘good’ thing in some moral or ideological sense, we aren’t doing it. If anything, the world is growing more interconnected and complex.
At the macroeconomic level, this poses astonishing policy issues, the first of which is seeing the forest for the trees: that we’ve moved into new territory and we have no map. At the microeconomic level, the investor or business leader has a set of tools that used to work, a map that used to show the way, a compass that found north. But they don’t work anymore. They no longer point the way, or suggest that all ways forward are equally uncertain of success.
Specifically with regard to investments in tech, David Lee at SV Angel recently said ‘It has never been easier to start a company, and never harder to build one’, regarding the structural issues in the tech funding world. VC’s don’t see a clear path for a real return on investments in commerce 2.0, games, or apps that rely on Facebook, Twitter, or other platforms. And the result of that uncertainty is being reflected in a decreased amount of later stage investments. This is an echo of the international fund managers I wrote about in the first installment of The Biggest If Of All, many of whom state that uncertainty has never been greater, or of more import in the investment world. So they, like tech VC’s, are holding back, and waiting for a return to normalcy.
But what if it never comes?
We know that the changes we’ve already made to our ecological world will take at least hundreds of years to reverse. Perhaps we’ve turned a similar curve in the economic and policy world. And we don’t know what the world will look like in a hundred years or so, and perhaps there is simply no way to figure out what is going to happen in the next five years, either.