How to Manage an Increasingly Complex Business Environment
There is no doubt that we are in the midst of intense global change, whether we consider politics, economics, climate change, resource scarcity, technological advancement or dozens of other areas. And as the business environment changes, it’s becoming increasingly clear that organisations unable to keep pace with this accelerated change are stagnating and failing over time.
So how are decision makers supposed to make sense of this complex landscape and ensure long-term success for their companies?
The answer is that it is very difficult, if not impossible, for a business leader to comprehend the entire system from a single vantage point, and even more so when you consider the highly diverse array of interconnected elements and layers within an organisational ecosystem.
Many executives believe they can take in and make sense of the massive amount of information bombarding them every day, but in reality, a lot of senior managers often act prematurely, making major decisions without fully comprehending the potential consequences for the organisational system.
However, history has proven time and time again that great leaders have a keen ability to quickly understand the current business climate and the rules governing everything, enabling them to make effective decisions to change their organisation for the better.
How do they achieve this?
There is no bulletproof recipe for becoming a great leader, but trying to understand your organisation and employees inside out is a great start for developing those key leadership capabilities needed to succeed in the complex and dynamic world we live in today.
Before making any drastic changes or deploying sophisticated development strategies leaders need to fully map out what is happening in their organisation. In a complex environment, even small decisions can have surprising effects.
What are the company’s strengths and opportunities? Why are some teams not functioning? Why are some customers loyal and others leaving? Why are some operations not as successful as they should be? These are the crucial questions any senior executive should seek to find answers to in order to be able to fully leverage the company’s assets and opportunities and also improve areas that are not performing as expected.
Making sense of uncertainty
The process that helps leaders to better understand all this information, make better decisions and manage novel, unexpected or confusing events is called organisational sensemaking.
Organisational sensemaking has been studied for several decades by scientists who are aiming to help leaders to get a better grasp of a challenging environment and facilitate other leadership activities like strategic thinking, long-term planning and innovation.
In the wider business landscape organisational sensemaking can mean learning about shifting markets, customer migration or new technologies. It can mean learning about the culture, politics and structure of a new venture, or about a problem that you haven’t seen before. It can mean figuring out why a previously successful business model is no longer working.
At an organisational level, the core question behind sensemaking is ‘If you don’t understand the mechanics of the thing you’re trying to change, how can you hope to achieve the change you want?’
Organisational sensemaking helps leaders to create a map that eliminates confusion and brings coherence, enabling more effective action and higher performance.
With a clear image of where they are and where they’re going, senior executives can create a common purpose and shared values at all organisational levels to rally everyone behind a common goal.
Most business models are shifting from ‘command and control’ management styles to collaboration and teamwork. Nowadays, successful organisations want better collaboration, better analytics capabilities, and they want to be agile.
And organisational sensemaking is crucial for achieving these targets because it enables senior executives to understand both the big picture and the finer details through data collection, experience, conversation and action.
There are still many traditional CEOs that are spending significant amounts of time and money with old style consultancies that need six months to offer stuffy reports on internal and external factors that are influencing the company’s development. And that’s their choice.
Nowadays, thanks to technological advances, progressive senior executives can use new, quicker and more cost effective tools that automate the whole process and deliver razor sharp insights in a matter of minutes.
Collective understanding
Once you get a better grasp of what is happening inside and outside the company through organisational sensemaking you can confidently map out the goals you want to achieve.
Remember, organisational sensemaking is a collective process and it is not effective unless you understand the true state of affairs within the organisation.
Asking for and valuing divergent views and staying open to a wide variety of inputs from employees can only help in achieving a much coveted 360 degree view over the business. Furthermore, employees will feel appreciated and inspired to bring their best ideas to the table.
A common vision for high performance
A high performance team and organisation need to have a common vision to enable shared action. And with a better understanding of the people with whom you work, communication and collaboration are much more effective.
But leaders should never forget that organisational sensemaking is not a one-time activity. Operating in a complex and uncertain environment means needing to correct the course quickly when things need adjusting. You need to be able to detect, contain, and bounce back from any unpredicted circumstances with speed. As such, enhancing organisational sensemaking enables you to detect, adjust and subsequently deliver concrete business outcomes, more quickly and more accurately.
The secret to long-term success is to improvise solutions to problems as they appear rather than letting them escalate and get out of hand.
In conclusion, senior executives need to understand not only the increasingly complex world with unpredictable events and shifting political, economic, environmental and social conditions but also the impact of the changes and strategies they are promoting within the organisation they’re leading.
And promoting organisational sensemaking as a core individual, team, and organisational capability will help you drive high performance even in the face of complexity and uncertainty, whatever scenario you face.
Mike Roe, CEO
