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.TRANSCRIPT
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Building the Confident Organisation
LBS Alumni Reunion 18th May 2012 Professor Richard Jolly
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148 Dunbar’s Number
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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
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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.
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“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
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The ‘Fog of War’
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"There is always an easy solution to every human problem – neat, plausible,
and wrong.” H.L. Mencken, 1917, “The Divine Afflatus"
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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
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The Rise of Super-Confident Specialists
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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
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This Leads to ‘Risk Compensation’
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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
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An Attack on Rationality
“It is hard to overstate the damage recently done by leaders who thought they knew more about the world than they did – the managers and financiers who destroyed great businesses in the pursuit of shareholder value; the architects and planners who believed that cities could be drawn on a blank sheet of paper; and the politicians who believed they could improve public services by the imposition of targets. They failed to acknowledge of the complexity of the systems for which they were responsible and the multiple needs of the individuals who operated them.”
(John Kay, FT, 20th March 2010)
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The ‘Confidence Trick’ Has Been Exposed
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Disease is spreading through our organisations…
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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…
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Push ‘door close’ buttons on elevators
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“When you’re fighting off the alligators, it’s hard to
remember you were trying to drain the swamp.”
It’s Harder to Think in Complex Environments
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Two Delusional States
Over-confidence – Arrogance – Hubris – Grandiosity – Intimidation
“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.”
Mark Twain (1835-1910)
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Over-Confidence
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Over-Confidence
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Two Delusional States
Under-confidence – Learned helplessness – Victim of circumstances – Bystander Effect – ‘Downtown Calcutta in mid-summer’
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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
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A Confidence Spectrum
Under-Confident Confident Over-
Confident
“What matters is not age but the trained ability to look at the realities of life with an unsparing gaze, to bear those
realities and be a match for them inwardly.” Max Weber
Able to deal with reality as it is Able to handle uncertainty
Can cope with the unexpected – agile Resilient
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What are the behaviours of confident organisations?
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Communicate – Ask Questions and Listen
“The wise man doesn’t give the right answers, he poses
the right questions.” Claude Lévi-Strauss 1908 - 2009
The 7 ‘C’s – Behaviours of Confident Organisations
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The 7 ‘C’s – Behaviours of Confident Organisations
Communicate – Ask Questions and Listen Control the Right Things – Empower the Rest
Collaborate – Shared Tasks Courage to Take Wise Risks
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The 7 ‘C’s – Behaviours of Confident Organisations
Communicate – Ask Questions and Listen Control 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