Decision-making under VUCA conditions

VUCA

I was recently asked if there is a decision making approach that’s designed specifically for situations characterized by volatility, uncertainty, complexity, and ambiguity (VUCA). I don’t know of a one-size-fits-all solution, but I can speak to what’s needed to optimize decisions made in VUCA conditions. Here are the main ingredients:

Agility

  1. Acrobatic-catThe ability to adjust one’s decision-making approach to meet the demands of a particular problem: For example, some problems must be addressed immediately and autocratically, others are best addressed more collaboratively and with a greater focus on data collection and perspective seeking.
  2. The ability to make high-quality autocratic decisions: By setting up systems that keep stakeholders continuously appraised of one another’s perspectives and data, we can improve the quality of autocratic decisions by ensuring that there are fewer surprises and that rapid decisions are informed decisions.
  3. Dynamic steering: Every leader in an organization should be constantly cultivating this skill. It increases the agility of teams and organizations by building skill for efficient decision-making and timely adjustment.

The most complete information possible (under conditions in which complete information is impossible), which requires:

  1. Collaborative capacity: highly complex problems, by definition, are beyond the comprehension of even the most developed individuals. Collaborative skills ensure that leaders can effectively leverage key perspectives.
  2. Systems and structures that foster ongoing two-way communication up and down the organizational hierarchy, across departments, divisions, and teams, and between internal and external stakeholders.
  3. Systems and structures that cultivate excellent perspective-taking and -seeking skills. These include…
    • Building in opportunities for collaborative decision-making,  
    • “Double linking”—the formal inclusion, in high-stakes or policy decision-making, of representatives from lower and higher levels in the organizational hierarchy or from cross-disciplinary teams, and
    • Embedding virtuous cycles to ensure that all processes are continuously moving toward higher functioning states, and that employees are constantly building knowledge and skills.

Where appropriate, technologies for constructing models of highly complex problems:

  • For a comprehensive overview of options, see Decision Making Under Uncertainty: Theory and Application, by Mykel J. Kochenderfer.

Our flagship adult assessment, the Leadership Decision-Making Assessment (LDMA), was designed for the US government to document and assess the level of sophistication individuals and teams demonstrate on key skills for making optimal decisions in VUCA conditions.

 

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Virtuous cycles and complexity in the workplace

Conventional top-down project planning and decision making approaches, in combination with systems and structures that enforce conventional hierarchical relationships work pretty well in the absence of volatility, uncertainty, and change. But the same structures that enforce order and help mitigate risk under relatively stable conditions also reduce adaptivity, which means that in our current highly complex and volatile marketplace, many conventionally structured organizations are struggling to adapt.

Several specific needs have been identified, including:

  1. Employees who embrace change and lifelong learning (especially with respect to their capacity to work with increasing complexity),
  2. Organizational cultures characterized by continuous learning & development, innovation, engagement, and collaboration within and across teams,
  3. Decision-making processes, planning processes, people development processes, and governance structures that actively support 1 & 2.

Most change processes address 1 and 2, but there has been less attention to 3. Until recently.

VCoLMany of the change processes that address number 3 involve the creative use of intentional virtuous cycles—like the one that’s at the core of our learning model (VCoL+7). Virtuous cycles like VCoL, scrum, dynamic steering, and design thinking are now being implemented in large organizations to increase agility, innovation, collaboration, learning, and engagement. And when it comes to managing complexity, they may well be the most effective tools available.

Map of Google's organizational structureAs an example, Google, which works with agile & scrum as well as other virtuous cycles, is well known for it’s culture of collaboration, continuous learning, and innovation. And its organizational structure, which eliminates silos and is sustained by cross-team collaboration, is part of what keeps that culture alive.

VCoL, like other virtuous cycles, can be embedded in organizational systems to help foster a learning culture. The classic, The fifth discipline: The art & practice of the learning organization (Peter Senge), and the more accessible, An everyone culture: Becoming a deliberately developmental organization (Robert Kegan, Lisa Laskow Lahey) describe two approaches that involve VCoLs. Lectical Assessments are designed to support approaches like these—improving performance by fostering optimal learning and development, and supporting dynamic steering by measuring program effectiveness.

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Jaques’ Strata and Lectical Levels

We often receive queries about the relation between Lectical Levels the Strata defined by Jaques. The following table shows the relation between Lectical Levels and Strata as they were defined by Jaques in Requisite Organization. These relations were determined by using the Lectical Assessment System to score Jaques’ definitions. We have not yet had an opportunity to compare the results of scoring the same material with the Lectical Assessment System and any scoring system based on Jaques’ definitions as we have done with other comparisons of scoring systems. Our interpretation of Jaques’ Strata definitions may differ from the interpretations of other researchers, leading to differences between theoretical and actual comparisons.

Strata by Lectical Level

References

Jaques, E. (1996). Requisite organization (2 ed.). Arlington, VA: Cason Hall.

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Vertical development & leadership skills

What is vertical development?

In our view, learning involves two interrelated processes—the accumulation of knowledge and the organization of that knowledge into mental maps and the neural nets that support them. Over time, if we engage in activities that promote development, our mental maps become increasingly complex. More complex mental maps allow for more complex thinking. This increasing capacity to handle complexity is sometimes called vertical development.

Vertical development and leadership

As leaders move into more senior positions, the task demands of their role increase in complexity. They must juggle more (and more complex) perspectives, cope with more ambiguity, and make an increasing number of adaptive decisions. It's no surprise that more complex thinkers are more likely to rise into senior management roles.

For 15 years, we've been building learning tools that support vertical development by diagnosing leaders' current capabilities and making targeted learning recommendations. The first step in this process is measuring the developmental level of leaders' skills on the Lectical® Scale. The figure below shows how the performances of lower-level (n=1108) and senior managers (n=222) on the LDMA (our decision making assessment)are distributed on this scale. As you can see, the distribution of senior managers is higher on the Lectical Scale than the distribution of lower-level managers. In fact senior leaders, on average, are several years ahead of lower-level managers in their vertical development. This means they are considerably better at working with complexity.

management level by Lectical Level

Lectical Assessments are designed to advance vertical development—to help build the capacity of individuals and teams to meet the demands of an increasingly complex world. In the hands of competent coaches, mentors, and educators, Lectical Assessments double the rate of vertical development that typically occurs in effective leadership programs. This is possible because they support the natural learning cycle by providing learning suggestions that are "just right."

To learn more about the relation between vertical development and job complexity see the post: Task demands and capabilities.

To learn more about the way we think about learning and assessment, listen to this interview with Dr. Dawson: The ideal relationship between learning and assessment.

To learn more about the research with Lectical Assessments, visit our Validity and reliability page.

Source: 2014_0339_all_LDMA_scores.xlsx

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Mental development in organizations

Aside

Mental development involves the dynamic integration of thoughts and feelings through interactions with the social and physical environment. It takes place in “virtuous” cycles of learning, application, and reflection that are accompanied by natural learning emotions like eager anticipation, mild frustration, and satisfaction. When components of the cycle are missing or the natural learning emotions are replaced with negative emotions like dread, severe frustration, anger, or fear—virtuous cycles of learning are disrupted and mental growth stalls. An organization that wants to create a learning culture needs policies and programs that support virtuous cycles of learning.

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Task demands and capabilities (the complexity gap)

For decades, my colleagues and I have been working with and refining a developmental assessment system called the Lectical Assessment System (now also an electronic scoring system called CLAS). It can be used to score (a) the complexity level of people’s arguments and (b) the complexity level—“task demands”—of specific situations or roles. For example, we have analyzed the task demands of levels of work in large organizations and assessed the complexity level of employees’ thinking in several skill areas — including reflective judgment/critical thinking and leadership decision-making.

The figure on the left shows the relation between the task demands of 7 management levels and the complexity level scores received on an assessment of decision making skills taken by leaders occupying these positions. The task demands of most positions increase in a linear fashion, spanning levels 10–13 (a.k.a. 1000–1399).

After work level 2 (entry level management), the capabilities of leaders do not, for the most part, rise to these task demands.

This pattern is pervasive—we see it everywhere we look—and it reflects a hard truth. None of us is capable of meeting the task demands of the most complex situations in today's world. I've come to believe that in many situations our best hope for meeting these demands is to (1) recognize our human limitations, (2) work strategically on the development of our own skills and knowledge, (3) learn to work closely with others who represent a wide range of perspectives and areas of expertise, and (4) use the best tools available to scaffold our thinking.


We aren't alone. Others have observed and remarked upon this pattern:

Jaques, E. (1976). A general theory of bureaucracy. London: Heinemann Educational.

Habermas, J. (1975). Legitimation crisis (T. McCarthy, Trans.). Boston: Beacon Press.

Kegan, R. (1994). In over our heads: The mental demands of modern life. Cambridge, MA: Harvard University Press.

Bell, D. (1973) The coming of post-industrial society. New York: Basic Books

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