Building the Confident Organisation - LBS Professor Richard Jolly

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Organisations are operating in more complex, inter-dependent environments. Therefore it is increasingly hard to be ‘universally’ confident. London Business School Professor Richard Jolly explained at Alumni Reunion this year the risks of ‘under’ or ‘over’ confidence and the behaviours of confident organisations.

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Building the Confident Organisation - LBS Professor Richard Jolly

  1. 1. Building the ConfidentOrganisation LBS Alumni Reunion 18th May 2012 Professor Richard Jolly Page 1
  2. 2. Dunbar’s Number148 Page 2
  3. 3. The Post-Industrial Age “Managers differ in their ability to survive and thrive without bureaucracy. What is an opportunity for some managers, is distress for many others.” (Burt, 1996) In a world where unique human capital is increasingly rare, your ability to get things done through other people becomes critical This involves an increasing ability to handle complexity Page 3
  4. 4. VUCA V = Volatility – The nature and dynamics of change, and the nature and speed of change forces and change catalysts. U = Uncertainty – The lack of predictability, the prospects for surprise, and the sense of awareness and understanding of issues and events. C = Complexity – The multiplex of forces, the confounding of issues and the chaos and confusion that surround an organization. A = Ambiguity – The haziness of reality, the potential for misreads, and the mixed meanings of conditions; cause-and-effect confusion. Page 4
  5. 5. The ‘Fog of War’“The great uncertainty of all data in war is a peculiar difficulty, because all action must, to a certain extent, be planned in a mere twilight, which in addition not infrequently – like the effect of a fog or moonshine – gives to things exaggerated dimensions and unnatural appearance.” Carl von Clausewitz (1780-1831) Prussian General and Military Theorist 5 Page 5
  6. 6. "There is always an easy solution toevery human problem – neat, plausible, and wrong.” H.L. Mencken, 1917, “The Divine Afflatus" 6 Page 6
  7. 7. The ‘Fog of War’ Organisations are operating in more complex, inter-dependent environments – Therefore need more complex strategies and structures – And the rise of specialists to help us navigate a world we increasingly don’t understand – General management increasingly is not trusted – It is specialists who are the trusted heroes Page 7
  8. 8. The Rise of Super-Confident Specialists Page 8
  9. 9. The Fantasy of ‘Universal’ Confidence It is increasingly hard to be ‘universally’ confident when confidence comes from our specialist expertise Confidence is a state of mind, but it is also an ‘attribution’ – We desperately want to believe that things are under control – Other, confident specialists have the answers – Processes and safety mechanisms will protect us Page 9
  10. 10. This Leads to ‘Risk Compensation’ Page 10
  11. 11. More Safety Mechanisms Create the ‘Illusion of Control’The Law of Unintended Consequences • Fermi nuclear plant in 1966 – zirconium filter fitted by Nuclear Regulatory Commission • Piper Alpha oil rig – safety device to prevent seawater pumps triggering automatically • RMBSs – complex legal safety mechanism to alter the distribution of mortgage default risks • CDSs – insurance for banks investing in CDOs against them failing to pay debts Page 11
  12. 12. An Attack on Rationality“It is hard to overstate the damage recently done by leaderswho thought they knew more about the world than they did– the managers and financiers who destroyed greatbusinesses in the pursuit of shareholder value; thearchitects and planners who believed that cities could bedrawn on a blank sheet of paper; and the politicians whobelieved they could improve public services by theimposition of targets. They failed to acknowledge of thecomplexity of the systems for which they were responsibleand the multiple needs of the individuals who operatedthem.” (John Kay, FT, 20th March 2010) Page 12
  13. 13. The ‘Confidence Trick’ Has Been Exposed Page 13
  14. 14. Disease is spreading throughour organisations… Page 14
  15. 15. Hurry Sickness: Do you…? Look for a 30-second task while micro-waving Get a buzz from JUST catching a plane/train Have to do something else when you drive Eat at your desk (whilst also checking your emails) Do something else whilst brushing your teeth Get impatient when waiting in line/traffic Find your mobile phone painfully slow Hate the time it takes to boot up your computer Find yourself interrupting other people frequently Do something else in telephone conferences And finally… Page 15
  16. 16. Push ‘door close’ buttons on elevators Page 16
  17. 17. “When you’re fighting off the alligators, it’s hard toremember you were trying to drain the swamp.” Page 17
  18. 18. It’s Harder to Think in Complex Environments Page 18
  19. 19. Two Delusional States Over-confidence – Arrogance – Hubris – Grandiosity – Intimidation“It aint what you dont know that gets you into trouble. Its what you know for sure that just aint so.” Mark Twain (1835-1910) Page 19
  20. 20. Over-Confidence Page 20
  21. 21. Over-Confidence Page 21
  22. 22. Two Delusional States Under-confidence – Learned helplessness – Victim of circumstances – Bystander Effect – ‘Downtown Calcutta in mid-summer’ Page 22
  23. 23. How Do We Cope with Greater Complexity?‘The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.’ F. Scott Fitzgerald 1896-1940 Page 23
  24. 24. A Confidence Spectrum Under- Over- Confident Confident Confident Able to deal with reality as it is Able to handle uncertainty Can cope with the unexpected – agile Resilient“What matters is not age but the trained ability to look atthe realities of life with an unsparing gaze, to bear those realities and be a match for them inwardly.” Max Weber Page 24
  25. 25. What are the behaviours of confident organisations? Page 25
  26. 26. The 7 ‘C’s – Behaviours of Confident OrganisationsCommunicate – Ask Questions and Listen“The wise man doesn’t give the right answers, he poses the right questions.” Claude Lévi-Strauss 1908 - 2009 Page 26
  27. 27. The 7 ‘C’s – Behaviours of Confident Organisations Communicate – Ask Questions and ListenControl the Right Things – Empower the Rest Collaborate – Shared Tasks Courage to Take Wise Risks Page 27
  28. 28. The 7 ‘C’s – Behaviours of Confident Organisations Communicate – Ask Questions and ListenControl the Right Things – Empower the Rest Collaborate – Shared Tasks Courage to Take Wise Risks Challenge – Difficult Conversations Compete – Hungry to Win Create Confidence in Others – Belief Page 28

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