Recently I have become involved in a number of conversations to do with transformation. It has become clear to me that when most people talk about transformation it is actually the last thing they mean.
The term is invariably appropriated to bring gravitas to a topic that remains firmly grounded in fairly ordinary kinds of first-order (incremental) change, or to fit within the modern management lexicon where everything that can be aggrandised is.
In this world, for example, by a directive from the business schools and large consulting firms, management has morphed into leadership. It matters not that those two ideas are diametrically opposed. But it does make things considerably more confusing.
Change in organisations is mostly of a transitional nature. Change management is the perfectly logical process of transitioning the enterprise from one state to another, better able to accomplish its mission, usually from a mix of simplification, automation, standard operating improvements, and re-engineered processes.
But this is not transformation. Indeed transformation is rare in organisations because it entails a fundamental metamorphosis from one set of operating conditions to another. The kinds of second-order, or structural changes, that occur during some mergers and acquisitions, can lead to transformation – particularly if new senior staff are brought in, a different brand and business model is installed, and new business directives result in a fresh look and feel.
Another misunderstood and frequently misapplied term in the management lexicon is leverage. Leverage is a mechanical construct – commonly understood to be the exertion of force, by means of a lever on an object, to get that object to move. Leverage requires effort. For this reason it is most effective when applied with precision in engineering environments.
More recently, of course, the analogy of leverage has been appropriated for use in other contexts – such as finance and management. But by using the notion of leverage in these situations we can run into trouble. It is especially difficult to adapt to a methodology like strategic navigation, for example, where circumstances change all the time, and where constant adaptation is necessary, or when coordinating and inspiring people is involved.
When leverage is attempted in any complex system, like an organisation for example, the effort entailed can run counter to the desired intentions, derailing plans and inadvertently harming one or more component parts – including people of course.
It can also lead to a number of unforeseen consequences unless, that is, a profound knowledge of the system prevails. In these circumstances, higher order leverage points are a wiser alternative.
Donella Meadows observes: The idea of higher order leverage is not unique to change in large systems — it is embedded in legend. The silver bullet, the trimtab, the miracle cure, the magic password, the single hero who turns the tide of history. The nearly effortless way to cut through or leap over huge obstacles. We not only want to believe that there are leverage points, we want to know where they are and how to get our hands on them. Leverage points are points of power.
Higher order leverage points are locations within an ecosystem (an organisation, living body, economy, or a city, for example) where a small shift in one element can produce substantial desired changes across many other parts of the ecosystem. Generally, far less effort is required from higher order leverage points – like the appointment of a new CEO of Board Chair for example. Changes resulting from such leverage can still be uncertain, even volatile, requiring a refined sense of monitoring and a navigational agility in order to ensure that the resulting outcomes are what was intended.
Practitioners who acquire expertise using higher order leverage points begin to develop an instinct for where to intervene in any ecosystem, given a number of factors, including, most importantly, prevailing external conditions, internal dynamics and the current state, feedback loops, adaptive and emergent properties, for example. Sometimes there can be such a wide range of leveragable options that more than one point can, or may need to be, activated, concurrently or in a particular sequence, in order to ensure success.
This becomes most likely in the case of vivisystems, such as the geopolitical muddle in the Middle East, for example, where orders of complexity prevent any individual, or group of like-minded individuals, comprehending the whole impenetrable mess or, indeed, being able to fathom particular elements. In order to discover suitable leverage options in such situations we would need to understand and be monitoring the system’s current state and performance, reinforcing and balancing loops, information flows, the structure of material stocks and flows, local rules, degree of aoutopoiesis, lengths of delays relative to the rate of change in the system, power structures, and the nature of any deliberate intentions to block or impede change.
An additional factor, in evidence accumulated over decades, suggests the most effective higher order leverage points are likely to be counterintuitive, conflict with the prevailing myths, and oppose the imperatives of at least one, or possibly more, interest groups. This can mean a period of inevitable disruption following implementation of leverage.
Sometimes higher order leverage points are commonly understood and acknowledged, and yet existing habits persuade everyone to push in the wrong direction. An oft-quoted example is economic growth. Politicians around the world are correctly fixated on growth as the solution to many of the problems we face today. Unfortunately, in their ignorance of complex systems, they are usually pushing with all their might in the wrong direction: that is more growth at any cost!
In 1971 Jay Forrester, a professor of engineering and systems science at MIT’s Sloan School of Management, showed that many of the most critical global issues, including malnutrition, environmental devastation, poverty, resource depletion, and urban decay, for example, were not just related, but a direct result of our belief that all growth is good. He was able to show that the pursuit of unbridled growth, in terms both of population and finance, within the orthodoxy of modern capitalism, can often make a situation far worse. Where policies are more nuanced – designed to flatten, reduce, or even usher in a period of negative growth – many undesired outcomes can be avoided. This runs counter to popular belief, but happens to be true. So where does this leave us?
Studying forces and dynamics in human-centered ecosystems can help us identify a class of higher order leverage points that require more imagination but less effort to activate – through the application of more concentrated self-organising energy to the meridians in the organisational structure. I call these systemic acupuncture points for three very good reasons. They have a similar effect to acupuncture on the human body to restore balance and optimise energy flows, with similar degrees of predictive accuracy, and with the same lack of invasiveness.
Compared with conventional leverage (examples such as downsizing, ‘cultural change’ programs, and process re-engineering, can be found in the playbook of every major management consulting firm), based on analysis of quantitative data communicated and argued via charts and decks, systemic acupuncture is far less of an intrusion.
It certainly does far less damage to people, is more inclusive, appreciative of factors other than data, more benign, and less disruptive. Indeed, even the slightest nudge to the system, as long as that nudge is applied wisely, can be effective. This is because, unlike leverage, systemic acupuncture rides on the emotional energy flows coursing through the nerves of the ecosystem.
As a general rule, systemic acupuncture points might include the authority to add, evolve, or self-organise organisation-wide structures; the faculty to craft new narratives; directing the unique mindsets out of which the system can evolve; and inspiring ways to transcend the current paradigm within which the ecosystem functions.
The role of narrative in particular, can never be underestimated in expressing purpose. Indeed the dominant narrative is often far superior to the system’s own capacity for self-organisation. If the dominant narrative, and the intentions behind that story, are strong, credible, and align with the tacit inclinations of the majority of players within the system, everything else will be twisted to conform accordingly.
In 1931, a little-known leader seized control of the German Nazi Party, enunciated a new story, and swung millions of otherwise rational and intelligent people off in an improbable direction. From ancient epics to modern novels, some narratives have altered history and influenced the mindsets of generations.
This is also an illustration of paradigmatic power – the deepest, most implicit, set of beliefs within the mind of a society about how the world does, or should, work. Paradigms inspire information flows and social movements across the entire system. What is more they can do it instantly. These worldviews are also the source of the current state of the system – the shared social agreements about the nature of reality.
When leaders have the power to control the current paradigm, transcending it at whim or twisting the dominant narratives to their own ends, we witness the most powerful form of systemic acupuncture: the dynamics within the entire system become open to all forms of transformation – and manipulation.
I realise that all of this can sound quite obscure, and probably for that reason I am often asked to describe how systemic acupuncture works in practise by a sceptical audience.
While there are probably many answers to that question, the process I use is a relatively straightforward and unobtrusive method of liberating deliberate, precisely calibrated, changes, with the least amount of resources and effort. It is my transformational tool of choice in situations where apparently unresolvable dilemmas persist and where the situation is too slippery to pin down for any length of time.
Time after time it can be shown that a predictable change outcome does not have to be difficult, costly, or protracted. Yet it rarely stems from the more engineered approaches to planned leverage and change that the large consulting firms still use. Their mistake is not to recognise one very simple fact: that while many issues can produce seemingly identical conditions and consequences, the change impulse demanded in each case is unique and subtle. In other words, prior experience is irrelevant, while elegance of design becomes critical for success.
In systemic acupuncture desired change is precisely crafted by finding the most relevant meridians in the system and changing those factors that are causing the current situation to be the only one possible.
The process is a curated experience of deep design and non-invasive action. It combines an intimate, polyocular understanding of the situation, and its evolution, with other expertise, in management cybernetics, neuropsychology and viable systems for example.
First, all the evidence must be subjected to a deep forensic interrogation. Starting, where possible, with computer-generated visualizations of the dynamic patterns existing within the system under investigation, potentially distracting information is set aside, possible constraints detected, and different hypotheses proposed. Now a range of uncommon questions expose reasons for the current state of the ecosystem, including any factors built into it that makes that current state, along with the dynamics indentified, inevitable.
We then attempt to explain the situation and dominant patterns in the finest granularity, as well as the overall impact the situation is having on any larger context of which the system is a part. We illustrate specific impacts of the situation on local conditions, all the while looking for incongruities, and identify any balancing loops and factors that might be causing the current situation to manifest. After that we articulate a desired state, together with criteria and conditions that would prevail if the problem(s) could be eliminated. This kind of deep inquiry, as you will already appreciate, is a world away from relying just on the analysis of available data.
This forensic interrogation is then repeated several times. Each reiteration brings a more profound analysis to the fore. This allows a further stripping away of invalid assumptions so that new links between those factors limiting the emergence of alternative possibilities can be observed. Greater granularity is achieved by using proprietary algorithms to scan literally hundreds of millions of unstructured data, from which an array of latent options can be constructed. Alternative intervention points, previously unseen, or obscured by irrelevant assumptions, now become visible.
Follow-up conversations between the concerned parties, of similar duration and intensity to the original investigations, focus on the scripting of a single communication, action, or suite of low-profile and precisely detailed procedures, that can be deployed instantly and with little or no marginal cost. Because solutions are designed to be low-key, aligning as closely as possible to what is currently being done, risk is greatly diminished.
Thus, purposeful change can be guided in a manner where the desired outcomes are achieved with a high degree of certainty. If, for any reason, the original intervention is off-target it is unlikely any undesirable effects will accrue, which allows for a further, more elegant, refinement of the solution(s) to be deployed.
As can be appreciated from this description, the success of the process hinges on three components: the visualization of complexity, forensic analysis, and collaborative dialogue.
Even then I am frequently asked how we are able to achieve the desired results so quickly and with such precision. This is no mystery: success comes from amplifying what is known about the ecosystem in order to generate a profound knowledge for change.
Within the framework of dynamically evolving human systems, questions that surface the deeper design are key. Questions such as:
- Which uncertainties must we take into account (because of their possible future impact) and which can we safely ignore? How can we be sure?
- What is it about the current situation that makes it the only possible one?
- How is that which is currently happening being allowed to happen?
- Which assumptions are obscuring clarity concerning this situation?
- What specific set of constraints exists within the current system that prevents different outcomes from manifesting?
- Which constraints, if removed, altered or replaced by others, would enable a transformational shift to the state of the system?
- What alternative options are most and least desired?
- What is the smallest intervention (or set of actions) that would remove any constraints limiting alternative options?
- How should we craft this intervention to be minimally non-invasive?
The results from this intensive interrogation of the situation are then used to identify the most effective acupuncture points and craft in precise detail the action (or set of actions) that must be implemented.
After using systemic acupuncture for over a quarter of a century it is clear that by applying this approach, organisations can avoid solving the wrong problem, thus averting undue costs as well as exorbitant amounts of time and effort wasted trying to get the wrong solution to work. Here are just three examples from a casebook of over 100 assignments.
Case Study One – Professional Services
A prominent professional services firm comprising 1,200 partners was struggling. Over several years it had lost significant market share and had slipped from 2nd to 7th in national rankings based on earnings. Larger, more prominent, accounts would regularly flow to competitors, in spite of our client having an excellent reputation in the market.
Many partners lacked the capability or interest to maintain robust personal networks. Even senior partners were openly shy about attending elite functions where major deals would be negotiated.
A monthly in-house catered luncheon for potential clients (mostly ministers and CEOs or directors of publicly-listed corporations) was instituted at a cost of £45 per head. Within six months the firm had landed three of the largest accounts in the firm’s history and by the end of the year had regained their 2nd place in the rankings – a position they have retained for the past fourteen years.
Case Study Two – Health Care
A large teaching hospital with an international reputation and a surgical team considered to be one of the most talented in South East Asia had been getting an unacceptable number of serious errors from surgical procedures and a consequent rise in litigation over the course of several years. The hospital was now needing to have a legal department of twelve.
Surgical staff were allocated consulting rooms on an ad-hoc basis, typically arriving just for their shift and leaving immediately after as others of their colleagues were needing the rooms.
Only one action was required. The surgical consulting rooms were relocated into a single suite adjacent to the operating theatres with an expansive common room available for meetings and relaxation at a cost of SGD 710,000. Within the first month the number of recorded errors dropped from an unacceptable 31 per cent to just under 4 per cent. Savings were calculated to be in the region of SGD 180 million annually.
Case Study Three – Energy Sector
The Japanese associate of a large British multinational in the energy sector knew that the lubricants division was underperforming – but they did not know why. Financial returns from the OEM business, in particular, were appalling and getting worse.
They had two discrete sales teams selling two different brands. Both teams were getting an unacceptable increase in complaints coupled with slowly declining sales. Neither team communicated with each other and only saw their own financial results.
After the accounts office shared the balance sheet across the teams everyone could see how a single packaged offer would increase sales and reputation. Within the first quarter client complaints dropped to near zero and sales increased by a massive 28 per cent.