Knowledge Exchange for better risk and opportunity management

risk-icon2In the current complexity era, it’s dangerous to ignore noise at the fringes of social or operational distribution curves because noise is a critical aspect of complex, emergent systems. Innovations and solutions often spring from areas that appear at first to be undifferentiated noise. Ignore or underestimate noise and all its anomalous analogs and there is little hope of adapting to complex uncertainty and non-linear change.

Simple linear success stories that ignore noise, complexity and uncertainty… these are the working tools of traditional planners who believe that goals must always originate top-down from experts and senior executives in a hierarchy of company purpose that  marginalizes diverse grassroots networks and peer-to-peer effects. A senior enterprise process improvement maven sums up the widely held belief that goals and requirements are best crafted top down:

“An enterprise is a purposeful system designed to create value, typically expressed in an abstract, high level vision statement, which is decomposed into increasingly concrete and detailed missions, goals and achievable objectives.” (Marshall, 2000).

In spite of this view, complex projects and business initiatives are more productive if traditional top-down, command-and-control methods are supplemented by bottom up influences. The command hierarchy is not going away but it must be deployed in combination with peer structures and emergent networks. Complexity requires that managers “think with the network” not (just) their golf partners.

Corporate planners often miss the opportunity to use bottom up network effects, but the U.S. military has a long history of original thinking about distributed command-and-control structures. From a National War College paper:

“The Marine Corps’ Sea Dragon initiate envisions a radically new, decentralized system of command and control. Hallmarks of this concept are command by influence through mission orders, reliance on the initiative of subordinates, based on local situational awareness, and more self-contained units capable of semi-autonomous action on a distributed battlefield. [Units] are less likely to be effective at learning and adapting to a chaotic environment when their behavior is governed by top-down rules.” (Gore, 1996)

Organizations generally benefit from some sort of shared goals but top-down purpose hierarchies tend to suppress the noisy, bottom-up aspects of value creation that are hallmarks of the complexity era. According to Weick’s requisite diversity philosophy: “People are better able to get complex assignments done when given more discretion within a framework of common values.” (Geirland, 1996). Other examples:

  • A provocative study in the consumer goods industry found that companies reap a higher return on investment and better success rate when product innovations (and hence company direction) come “bottom up” from customers, and not from cloistered executives or R&D scientists (Shah, 2008).
  • Cisco Systems became more competitive after radically decentralizing its management structure to allow strategic decision making in a large peer community of over 500 managers (McGirt, 2008).
  • The Mozilla Firefox browser is a robust commercial product built by harnessing complex, emergent social network effects and peer network productivity (Bell, 2009).

Knowledge exchange platforms can support a seamless cross-discipline team of domain experts and managers who can think together through complex problems in a highly virtualized, efficient manner. 

Posted in Blogs, Risk Management, Virtual Communities, Workflow and Process

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