„We have a clearly agreed implementation timetable – and are now months behind. I’m beginning to ask myself what these guys really want.“
We often listen to frustrated voices like this CEO in our work. Our client wonders why the merger of the outsourced procurement departments of two large corporations into one new organization is progessing so slowly. „First they don’t give me their top people for my top team. Then I cannot fill my vacancies, they do not grant me access to their systems and we’ll have to build everything ourselves. To top it all off, already after nine months, the controllers of our parent companies start to ask where the planned first billion euros in savings are.“
Did the CEO suddenly forget how to perform on his task? No. But he fails to differentiate between „technical“ and „adaptive“ problems – and wants to solve both types of problems with managerial routines. Technical problems are problems following a clear cause-and-effect principle and can be represented in figures, data and facts. They can be very complicated, significant and important. But they are manageable. Here, executives can make use of routine procedures and solve the issues through proven, available and managerial know how.
In these disruptive times, however, senior executives at the top of organizations are increasingly confronted with „adaptive“ problems – diffuse challenges that are ambiguous and not really tangible. Even though many executives have been exposed to high level of complexity for quite a while, their intuition still reacts according to old behavioural patterns. Old habits die hard – learned, proven concepts of problem solving cannot be un-learned quickly.
Complexity to the power of three
Adaptive challenges in the C-suite are highly complex in three dimensions – dynamic, generative and social:
- Problems are characterised by a high degree of dynamic complexity. Cause and effect are not directly and causally linked.
- Top management problems are subject to high generative complexity. They develop in an unusual and hardly predictable way.
- These challenges are also permeated by enormous social complexity. The stakeholders involved usually have very different views of the problem and solution, personal interests, dependencies and success models – conflicts, polarizations and dead ends are thus inevitable.
Adaptive problems arise from different values, beliefs, loyalties and patterns of action. Proven management routines won`t be successful here. Attitudes, motivation, basic beliefs of the stakeholders, uncertainties, risks, resistance of informal networks in the company are part of this problem scenario.
Differentiation before decision
The example of the merger situation illustrates the challenge: Fully committed to his task, the new CEO throws himself into battle – but misses reading and interpreting the situation comprehensively. The merger project is unconsciously over-simplified and the organizational environment is stereotyped and thus misjudged. Convinced of doing the right thing, he applies classic managerial solutions that correspond to his own experience of success. All this is understandable because it saves energy. For many years, the brain of the business leader has trained itself to act quickly this way.
Unfortunately, in the daily business reality, problems aren`t put neatly sorted into “technical” and “adaptive” on the table. We have to work on our problems differently, because we have to work on completely different kind of problems. It was precisely this misjudgement by the CEO – the application of technical solutions to adaptive challenges – that brought the merger of the procurement departments close to failure at the beginning.
Successful leadership doesn’t start with making decisions – it starts with distinguishing between technical problems and adaptive challenges. This reflection-based clarity releases an enormous amount of energy, increases the understanding of processes and obstacles, makes action effective and lets executives do what they really love – leading companies and people to success.
We wish you a reflective day!
Sincerely yours, Anke Houben + Kai W. Dierke
This Article is based on our book „Gemeinsame Spitze. Wie Führung im Top-Team gelingt“, Campus; Completely Revised English edition forthcoming in 2020: „Executive Rivals. How to Build Great Leadership Teams where Collaboration is Hard.”
Dr. Kai Dierke and Dr. Anke Houben are founders of DierkeHouben Leadership Partners – C-suite Coaches and Advisors with more than 17 years of experience in counseling and developing Top Executives and their teams. In addition to their consulting work they offer open enrollment programmes for Senior Executives. As Adjunct Professors they teach Leadership at HHL Graduate School of Management.