Understanding your Business Environment

Introducing the Cynefin Framework for sense-making, policy-making and strategy

 

In matters of strategy and decision-making it is important to have a clear and true picture of the reality of our business environment. Our assumptions of that reality should not obscure reality itself. Assumptions can help us fill in the gaps in our information landscape, but they can also lead us to false interpretations and to wrong decisions or strategies. Thus we should always strive to scrutinize our assumptions about our business environment.

In their paper “The new dynamics of strategy: Sense-making in a complex and complicated world”, Kurtz and Snowden challenge to universality of three basic assumptions that are prevalent in strategy and decision support. These three are the assumption of order, the assumption of rational choice, and the assumption of intentional capability. The scrutinize these three assumptions from the perspective of the Cynefin Framework which they also developed. In the aforementioned paper they describe it as: “a program of disruptive action research using the methods of narrative and complexity theory to address critical business issues. Action research has been defined as grounding theory in contextual exploration, emphasizing participation, and embracing change.”

The assumption of order

This is the assumption that interactions between (groups of) humans are driven by cause and effect, which can be discovered, known and empirically verified. As a consequence, models can be developed that prescribe and predict future developments and behavior. Understanding causality in past behavior allows for a formulation of best practice for future behavior. All this also implies that there is a right way and a wrong way of doing things.

The assumption of rational choice

This is the assumption that given a choice between alternatives, people will make a rational decision based on minimizing pain or maximizing pleasure. Consequentially, their individual and collective behavior can be managed by means of manipulating pain and pleasure as an outcome. Through education these consequences can be made evident.

The assumption of intentional capability

This is the assumption that the acquisition of capability indicates an intention to use that capability. And actions from competitors, groups, communities, nation states, populations etc. are the result of intentional behavior. In every action we assume that there is an intention that ask for a corresponding reaction. While we know that we often do things by accident or from an instinctive impulse, we assume that others always act deliberately.

The paper goes on discussing these assumptions from the perspective of complexity science, emergent order, and contextual complexity. It shows that while these assumed patterns are an essential tool for human endeavors, helping us make sense of the world around us, it can also lead to pattern entrainment and thus to errors.

To aid in the sense-making process the Cynefin framework is introduced. The Cynefin framework identifies four named domains, which are, the known, the knowable, the complex, and chaos.

The Obvious

This is characterized by known cause-and-effect relations. This domain is repeatable, perceivable and predictable. Best practices are a legitimate way of solving problems. Standard procedures can be used. It’s the domain of process re-engineering in which knowledge is captured and embedded in structured processes to ensure consistency. The way to proceed is sense-categorize-respond.

The Complicated

This is characterized by cause-and-effect relations which are knowable, but may be separated over space and time from yourself. Time and resources determine whether you can move to the known domain. This domain requires an analytical and reductionist approach to problem solving. Experiment, expert opinion, fact-finding, and scenario-planning are appropriate. While expert advice is needed, entrained patterns are most dangerous in this domain. The way to proceed is sense-analyze-respond.

The Complex

This is characterized by cause-and-effect relations which are only knowable coherently in retrospect. This relations do not repeat themselves in a predictable manner. It is characterized by retrospective coherence, meaning that patterns are emergent, but can not be predicted. Understanding the complex domain requires us to gain multiple perspectives on the nature of the system. Our approach to complexity should be adaptive. The way to proceed is probe-sense-respond.

Chaos

This is characterized by absence of perceivable cause and effect relations. This system is turbulent and there is no time to investigate change. It is probably misplaced best practices that led to chaos. In chaotic space best practices or best process is pointless since there is no system to be worked. The primary focus should be on creating stability in order to manage the crisis. The way to proceed is act-sense-respond.

 

There are situations in which it is unclear what domain you’re in. The framework refers to this area as ‘disorder’, not to be confused with the chaos domain. A thorough understanding of each of these domains enables an organization to manage a situation, gain control over it, and with increasing knowledge even to move from one quadrant to another.

In a next article I will provide a more detailed overview of the way in which the Cynefin framework can be used to make sense of your business environment and how to deal with it.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s