What do you do if you face a problem so complex that it can only be described as wicked?
Is it possible to confound competitors?
How Companies Conquer Complexity and Confound Competitors
John Camilius, author of Wicked Strategies: How Companies Conquer Complexity and Confound Competitors outlines a number of ways that managers can handle the most difficult problems. Camilius is the Donald R. Beall Professor of Strategic Management at the University of Pittsburgh.
“We shape our buildings; thereafter they shape us.” -Winston Churchill
For those who don’t know your work, what is a wicked problem?
In the early seventies, Horst Rittel and Melvin Webber, two professors of design and urban planning, recognized that there are certain problems that are not amenable to resolution by traditional, accepted problem-solving techniques. They evocatively labeled these problems as “wicked” and identified ten distinguishing characteristics. Ten characteristics are difficult to remember, and over the years, I have whittled them down to just five. If a problem displays these five criteria, you can be pretty sure you are facing a wicked problem.
The first characteristic is deceptively simple and requires some thought: Is the problem one that is substantially without precedent, something that you have not encountered before?
Second, are there multiple significant stakeholders with conflicting values and priorities? You need to go beyond the traditional big three stakeholders—employees, customers and shareholders. Non-government organizations, multiple layers of government, creditors, communities in which you are located, political parties in power and out of power are all becoming more significant and demanding.
Third, are there several causes and are they interactive and tangled? For instance, the future of social media is driven by a complex brew of technology advancements in hardware and apps, changing demographics, evolving social and cultural mores, government regulations, privacy expectations, geopolitical developments, educational practices, disposable income, and economic and social mobility.
“If we don’t change direction soon, we’ll end up where we’re going.” -Irwin Corey
Fourth, there is no sure way of knowing you have the right answer. Another way of phrasing this is that there is no stopping rule—you can continue searching indefinitely for a “better” answer.
Fifth, the understanding of what the “problem” is changes depending on the “solution” being considered. In other words, the problem and the solution are interactive. For instance, entry into a country that does not permit foreign multi-brand retailers might be accomplished by creating a cash-and-carry model for small retailers or by being a minority partner with a local retailer or by entering an entirely new business employing a distinctive competency such as logistics. Each of these responses to the wicked problem of accessing the huge purchasing power of emerging economies’ populations creates a wholly different set of issues.
A note of warning may be in order. In the public policy arena, the wickedness of problems is hard to overlook. Problems such as immigration policy, violence against women, religious fundamentalism, and public education are overtly wicked. In the business world, however, the thing about wicked problems is that though they can show up anywhere, they are likely to be perceived as “tame” problems.
Wicked problems are certainly more common than most managers realize. Not recognizing that they were facing wicked problems, I believe, led to the dissolution of Westinghouse, the demise of Polaroid, and the decline of Kodak, RadioShack and Atari. Though wicked problems can occur anywhere, it is more likely than not that you will encounter wicked problems if you are a public company, operate globally, and are in a technology-driven business.
“Every threat to the status quo is an opportunity in disguise.” -Jay Samit
3 Megaforces Challenging Business
You talk about 3 megaforces that are challenging business. How do these trends help create wicked problems?
While there are a variety of forces and environmental factors that can create wicked problems, over the years I’ve identified three forces that are widely experienced which, in concert, are a major source of wicked problems. They are: the inevitability of globalization, the imperative of innovation, and the importance of shared value. The first two forces are well understood. Shared value, which has been brought to the attention of the managerial world by Michael Porter, is the notion that social benefit and economic value are synergistic. It also raises the issue of the appropriate sharing of value across diverse stakeholders.
The interactions of these three forces create strategic challenges that combine to create wicked problems. For instance, innovating to meet the needs of unserved, low-income customers across the world results—as the guru of disruptive innovation Clayton Christensen has affirmed—in disruptive technologies that can upend industries. Innovation also creates changes that differentially impact stakeholders, creating the likelihood of conflict between stakeholders as the organization transforms. The extreme complexity and uncertainty embodied in the global economy coupled with the conflicting priorities of multiple stakeholders creates unknowable futures. This roiling cauldron of disruptive technologies, conflicted stakeholders and unknowable futures is what spawns wicked problems.
I like to illustrate the interaction of these forces in a Venn diagram.
Three Mega-Forces and their Strategic Challenge
These three forces can interact to create wicked problems in any context. Of course, other environmental forces can also breed wicked problems, but I have chosen to focus on these three because they are so ubiquitous and powerful.
I believe there are business contexts or “industries” that will be breeding grounds for wicked problems. Health, software, information technology, fossil fuels, water, automobiles, and public transportation are prime examples. Technological innovation, drastically changing regulations, geopolitical developments, and changing notions of social responsibility make these industries particularly prone to encountering wicked problems that demand that firms develop and deploy wicked strategies.
“The human spirit is to grow strong by conflict.” -William Ellery Channing
How to Deal With Uncertainty
How do you help new leaders understand and get comfortable with increasing uncertainty?
The very first thing to do is to alert leaders to the often overlooked reality that there are very different types of uncertainty. Most of us think of uncertainty as volatility; the inability to precisely identify the value of a variable—such as sales, profits, exchange rates and GDP—in the future. But there are are other types of uncertainty like the possibility of multiple alternative futures and chaotic ambiguity where the techniques that are used to better forecast the future value of a variable are totally useless.
So, once having described these very different kinds of uncertainty, I share, with examples, how special techniques such as generating possibility scenarios, identifying robust actions, employing a real options approach, visioning and related enablers can respond to the different kinds of uncertainty. I also show how the Feed-Forward Framework, which I discuss in my book, can generate wicked strategies that can tame wicked problems.
To elaborate on this approach, when working for the first time with a senior leadership team, at the stage in a strategic planning process where we have developed an inventory of issues, I facilitate the team’s processing of these issues through two filters. First, we employ a criticality-urgency matrix to identify the high-priority issues. Second, we use a matrix that has complexity on one dimension and uncertainty on the other. I use two states on the complexity dimension—are the causes of the issue clear-cut and explicit or are they multiple and tangled? On the uncertainty dimension I use three states—is the uncertainty that clouds the issue one of volatility, the possibility of multiple alternative futures, or chaotic ambiguity? The issues that end up in the cell that embodies chaotic ambiguity and multiple, entangled causes are the ones that are likely to be wicked.
On examination, if it is found that one of these issues has not been experienced before, defies easy definition, raises different expectations from diverse stakeholders, and makes it difficult to identify a “right” answer, it is easy to demonstrate that the classic problem-solving approach is ineffective. The leadership team is then primed to go through the rigorous process of developing wicked strategies for managing wicked problems.
You cannot truly and definitively solve a wicked problem. The problem morphs because it interacts with the response, so there is always something more that needs to be done. Resolving a wicked problem is an ongoing process. It requires a management system that generates, supports and implements what I call “wicked strategies.”
Returning to the Feed-Forward Framework I mentioned above, I visualize it as an interactive system of three components—Identity, Modular Structure and Feed-Forward Processes.
The Feed-Forward Framework for Developing Wicked Strategies
The first component of the Feed-Forward Framework is the organization’s “identity,” which defines what is core, enduring and distinctive about the organization. It is comprised of the core values, the enduring aspirations, and the distinctive competencies of the organization. Values serve as the anchor that ensures the necessary consistency in decisions in a world where products are transient, markets are ephemeral and technology is dynamic. Aspirations serve as the beacon toward which the organization progresses, and its distinctive competencies offer the compass and roadmap that guides the organization’s decision-making.
The second component is a modular organizational structure that motivates and embraces transformation, while at the same time enabling a fierce focus on the continued competitiveness of existing businesses. New ventures and existing businesses are managed with equal fervor and élan by employing a combination of skunk works and conventional strategic business units. The role of the corporate headquarters that I propose differs from the approach that is conventionally employed: It focuses intensely on human resources and competency development.
The third component consists of management processes and systems that emphasize feed-forward at least as much, if not to a greater extent than, feedback. Visioning, transformational scenarios, possibility scenarios, robust actions that work in multiple scenarios, and a real options mindset are all elements of this third component.
Taken together, the Feed-Forward Framework creates and deploys wicked strategies that transmute the challenges of disruptive technologies, conflicted stakeholders and unknowable futures into innovative business models, co-creation of value and desired futures.
Converting Strategic Challenges to Strategic Advantage
You reframe dire threats as opportunities. Would you share an example of a threat that turned out to be an opportunity like this?
One of my favorite examples that I describe in my book is Arvind, which is headquartered in Ahmedabad in India and started out as a textile manufacturer. Just to give you a teaser, let me say that this amazing company chose to address the wicked problem of suppliers who were marginal cotton farmers in non-irrigated lands committing suicide because of the failure of the life-giving monsoon rains. Employing the kind of approach that is proposed in the book, Arvind succeeded in eliminating farmers committing suicide in the area on which they focused, improved the environmental situation and soil conditions, engaged corporate partners and the government in their endeavors, became one of the leading and profitable producers of organic cotton denim in the world, became the preferred fabric supplier to global companies that emphasize sustainability, and developed a new agribusiness profit center growing food crops.
“You can’t force creatives into a box. If you try, they’ll no longer be creative. And no one will want your box.” -Ryan Lilly
How does your framework for wicked strategies give rise to sustained competitive advantage over rivals?
The Feed-Forward Framework that I propose requires and supports a constantly growing array of inter-related competencies. New competencies are new sources of competitive advantage, and when they are synergistically linked with existing competencies, they contribute exponentially to the organization’s ability to compete.
This emphasis on an array of inter-related competencies is quite different from the conventional emphasis on developing and utilizing a core competency. An array of competencies enables a firm to go beyond adjacent products or markets in the search for growth and increased profits. An array of competencies offers more points of leverage for growing existing businesses and for entering new markets which contribute to profitable growth. A tongue-in-cheek argument can be made that the core competency needed to address wicked problems is the ability to develop or acquire new, synergistic competencies.
Related to growing and developing competencies is the approach to human resources and organizational structure that are part of the Feed-Forward Framework. Employees are the embodiment of the organization’s competencies. Alignment of values and achieving a balance of “best athletes” and individuals with specific needed competencies are important in recruiting. Retaining, developing and nurturing employees are key. This is one of the most important lessons that emerged from global benchmarking studies in which I was involved. Job rotation, carefully identified assignments across disciplines, functions and locations, support for continuing education, job security and mentoring are important tools. The prime focus of the corporate headquarters should be to grow, enhance and share competencies across the organization.
The best example of a well-known company exemplifying this approach to sustained competitive advantage that I can think of is General Electric. The company constantly develops synergistic new competencies that are motivated by the leadership team. Developing human capital has been the focus of top management for decades. The current CEO, Jeffrey Immelt, has chosen to address the needs of emerging markets in a conscious attempt to generate reverse innovation—the process of developing products and technologies in emerging economies and then taking them to the developed economies—and embrace disruptive technologies.
“Without leaps of imagination or dreaming, we lose the excitement of possibilities.” -Gloria Steinem
Apply Feed Forward to Improve Your Strategy
Tell us about “feed forward” and how it is applied to strategy.
“Feed-forward” focuses on fashioning a future — a future that may be unrelated to the past — that the firm wishes to see happen. Traditionally, firms emphasize “feedback,” which essentially involves performance appraisal and learning. Instead, feed-forward focuses on managing uncertainty and an unknowable future.
Feedback-oriented systems engage in episodic reviews of performance at specified intervals of time — say, monthly, quarterly or yearly, while feed-forward-oriented systems trigger analysis whenever assumptions that have been made appear to be mistaken and new issues are spotted.
Feedback employs databases that collect historical data, while feed-forward works with information and insights derived from possible future scenarios. In short, feedback analyzes the past, and feed-forward strives to envision and realize a desired future.
It is important to emphasize that feed-forward often requires a leap of faith. The business model will have to assume cause–effect relationships that have yet to be demonstrated or proven. It would be unreasonable to expect that every such cause–effect assumption will prove to be valid. Setbacks and failures will occur. Managers, and especially the C-suite, need to be prepared not only to take these failures in stride but also to examine whether the logic underlying the assumptions of cause–effect relationships is sound.
Managers, paradoxically, have to commit to an untested cause-effect model to the extent of investing resources and unreserved effort into making it work, but at the same time be actively examining if the cause-effect model is valid. This is difficult to do, though utterly necessary.
“The trouble with our times is that the future is not what it used to be.” -Paul Valery
Some years ago, when I had the occasion to speak with the top management of Fujitsu, I asked them how and when they determined that a strategic initiative or major project was a failure. They patiently explained that my question had no meaning in the Fujitsu context. In Fujitsu, when initiatives or projects did not progress as planned, management’s primary focus was on what needed to be done differently, not on labeling the initiative and the responsible managers as failures.
Similarly, in a feed-forward context, well-planned and thoughtfully implemented initiatives are experiments that provide a better understanding of cause–effect relationships and underlying assumptions.
Feed-forward is inherently inclined to render existing value propositions and business models obsolete. This is not a bad thing if the firm at the same time strives to keep the existing business going until it is evident that the emerging business model dominates. A flexible and dynamic approach to the firm’s organizational structure will be needed to execute this complex balancing act well.
To provide a preliminary taste of what a feed-forward based strategy might be, let’s look at an example from a 30,000-foot vantage point. For instance, the difference between a feedback-based approach and a feed-forward approach to expanding into fast-growing, large, emerging economies, such as Brazil, China, and India, is fundamental.
Feed-Forward and Feedback Based Strategies
Feedback-based strategies would tend to:
- “glocalize” existing products by marginally modifying existing products in developed economies for the emerging markets, and emphasizing sustaining innovations; then
- target the small, upper-income segments—the apex of the pyramid—in emerging markets; and
- focus primarily, if not solely, on economic value added.
A feed-forward-based strategy, in contrast, would:
- focus on the special needs of the vast populations at the bottom of the pyramid and the tens of millions of people entering the middle class in emerging economies to identify novel value propositions;
- generate relevant disruptive technologies and products, through customer insight and frugal engineering, to meet the needs and price-point expectations of low-income customers; and
- seek the potential synergy, or the mutual enhancement, of economic value and social benefit.
In a world of great uncertainty and extreme complexity, wicked problems abound. Wicked strategies that are based on feed-forward are a powerful way to respond to these unprecedented challenges.
“Life isn’t about finding yourself. Life is about creating yourself.” -George Bernard Shaw
Wicked Strategies: How Companies Conquer Complexity and Confound Competitors