GigaOM

One of our founder-contributors, Matt Rogers of Aroxo, alerted us to a terrific piece in the November issue of the Harvard Business Review. It’s about decision making in the context of business situations that range from simple, to complex, complicated or chaotic. “Wise executives tailor their approach to fit the complexity of the circumstances they face,” the authors write. The piece then walks you through the management styles and skill sets that arerequired to best-handle each.

 

“A Leader’s Framework for Decision Making” was written by David J. Snowden, a founder of a research network based in England called Cognitive Edge, and Mary E. Boone, a consultant with Boone Associates, in Connecticut. The article (at 4,000 words-plus!) is behind HBR’s pay wall, but the download is only $6.50. Buy it.

Meanwhile, we’ve highlighted some key points, and at the end share a terrific diagnostic chart that breaks it all down — including the leader’s job in each context, the danger signals, and appropriate responses. Use it as your crib sheet.

The authors’ have established something they call the “Cynefin framework,” to sort the circumstances you’ll face as a leader into four categories, defined by the nature of the relationship between cause and effect. (Cynefin, pronounced ku-nev-in, is a Welsh word that signifies the multiple factors in our environment and our experience that influence us in ways we can never understand.) There is a fifth category, disorder, but it applies only when it is unclear which of the other four contexts is predominant.

1) Simple Contexts: The Domain of Best Practice

Simple contexts are characterized by stability and clear cause-and-effect relationships that are easily discernible by everyone.

2) Complicated Contexts: The Domain of Experts

Complicated contexts, unlike simple ones, may contain multiple right answers, and though there is a clear relationship between cause and effect, not everyone can see it. This is the realm of “known unknowns.”

3) Complex Contexts: The Domain of Emergence

…at least one right answer exists. In a complex context, however, right answers can’t be ferreted out. It’s like the difference between, say, a Ferrari and the Brazilian rainforest. Ferraris are complicated machines, but an expert mechanic can take one apart and reassemble it without changing a thing. The car is static, and the whole is the sum of its parts. The rainforest, on the other hand, is in constant flux—a species becomes extinct, weather patterns change, an agricultural project reroutes a water source—and the whole is far more than the sum of its parts. This is the realm of “unknown unknowns,” and it is the domain to which much of contemporary business has shifted.

4) Chaotic Contexts: The Domain of Rapid Response

… searching for right answers would be pointless: The relationships between cause and effect are impossible to determine because they shift constantly and no manageable patterns exist—only turbulence. [Here] a leader must first act to establish order, then sense where stability is present and from where it is absent, and then respond by working to transform the situation from chaos to complexity…

5) No Context: Disorder

The very nature [of] disorder makes it particularly difficult to recognize when one is in it… The way out of this realm is to break down the situation into constituent parts and assign each [part] to one of the other four realms.

Decisions in Multiple Contexts: A Leader’s Guide
Effective leaders learn to shift their decision-making styles to match changing business environments. Simple, complicated, complex, and chaotic contexts each call for different managerial responses. By correctly identifying the governing context, staying aware of danger signals, and avoiding inappropriate reactions, managers can lead effectively in a variety of situations.