Making sense of entrepreneurship – a conversation with Craig Brown

KA: My guest for this instalment of my “sensemaker” series of interviews is Craig Brown. I have known Craig since about 2009 when he was a project and program manager. He has since transitioned to running his own software development company, Everest Engineering. So, welcome Craig, let me begin by asking you to introduce yourself and talk a little bit about your journey that got you to where you are now.

CB: Thanks Kailash. How far back do you want me to go? Would you like me to start right at the beginning or just the last few years?

KA: Mostly the transition from project and program management to entrepreneurship. What made you do it? What drove it?

CB: OK. Well, early in my career I worked at different companies and corporations, as many of us do. I even did a very small stint in consulting.  These experiences were interesting because I learned a lot about how things happen in organisations – what works and what doesn’t.  Early last decade, I started working at a SaaS company in a general management role. That was interesting because the culture in those places, the way they operate, is very different from the established corporate world. You’re much closer to “life or death” issues on a month-to-month basis. As a result, you’re much more invested in delivering customer outcomes and value than in compliance, rules and process. That was refreshing and super interesting because I had never been in that situation before.

Anyway, then the day came when it was time to leave that organisation. One of the guys that I worked with, Ranganathan, used to manage part of the team in India while I managed the team in Australia. The two of us decided we would start a software product development agency together, and so began Everest Engineering.

The switch from working for someone to working on your own business is a big one.   Many of the differences are well-known, entrepreneurs have talked about them: it’s a lot of work, it can be very stressful, you’ve got to be multifaceted, you’ve got to be wherever the business needs you at any particular time. So, being able to switch modes and roles is really important.

As the company has gotten bigger, we’ve hired other people to help manage the business, grow it, support it. Ironically, this next stage is about breaking our old habits of being everywhere all at once, its about learning to delegate authority, share responsibility and all that sort of stuff.  What I think is particularly interesting about what’s happening to us now is that it’s kind of the opposite journey to what large companies are trying to do: i.e. they try to reduce bureaucracy and increase entrepreneurship by giving people autonomy and responsibility. We’re headed the other way, not towards bureaucracy (I hope!), but towards more structure and order from what can be described as chaotic, freewheeling entrepreneurship. Yeah, it’s stressful but a lot of fun.

KA: OK, before we get deeper into the conversation, what does Everest Engineering do and where are you located?

CB: We are a software product development agency. Capability wise, we have software engineers, platform engineers, product people, designers, testers, business analysts etc. Our team members live in about half-half on the east coast of Australia (mostly Melbourne) and India. We also have a few team members in North America and have just started building a development team in Malaysia as well. So, we’re kind of distributed across the globe. At the moment, most of our customers are in Australia but we’re growing the customer base around the world as well.

KA: Hmm, there are a lot of companies in the software product development business. It must have been difficult to get traction. How did you do it?

CB: The traditional story (in software development) is that you either a) find a niche that no one is addressing well and zero in on that or, b) you come in cheap and claw your way to the top. When we started our business, we didn’t want to do either of those things. We also wanted to build a generalist software product company, not focusing on a particular domain or particular skill set as many small outfits do. Our vision is that we become a big global company that can engage with lots of different problems. At the same time, we knew that if we swaggered in to client discussions saying that, no one was going to be interested.

So, what did we do?

We started by focusing on the Melbourne market, primarily because that’s where I live. To get traction we decided that we would be compelling in terms of the match between price and quality. In the world of software, you can rent services from agencies which are poor or average quality on the cheap, or you can pay a lot of money for top shelf quality. What we wanted to do is not be the cheapest in the world, but be reasonably inexpensive while also really focusing on quality. Interestingly, over time the price-quality trade off has become less important, which has enabled us to focus on quality. I’m not sure why this happened but I guess it has to do with a common experience in life: when a piece of work is completed, what’s remembered is the good outcome, not the cost to get there.

There’s a kind of irony about day rates versus outcomes. It’s a weird one. For example, the price of some of our India software development teams might be double or even more than what some of our competitors provide. But the deal is that we’ll get it right the first time, within the timeframe and the budget that you’re asking for. Compare this to having an expensive rework nightmare, which often happens when the upfront focus is on cost. I’m aware that this could be sounding like an ad, but it’s really that focus on delivering a quality, delivering an outcome the first time that is the key. Our customers don’t necessarily understand this upfront because quality is hard to talk about, but it is easy to understand when you see it.  So the deal is that after our customers have worked with us, they begin to appreciate the quality aspect we bring.

Another aspect of our strategy is maintaining relationships and sticking together over the long haul.  It’s really simple to state: win over customers through doing good work and keep them through being compelling in our value proposition. However, it is not easy to do. Indeed, it is work in progress, we’re not perfect. These are aspirational goals, and we’re working our way towards them.

KA: I understand the price-value proposition. However, because it is such a crowded market, your first few gigs must have been hard to get. How did you go about doing that?

CB: Yeah, I think it’s a trust-based decision making process when buying expensive, large services. The customer will not know upfront what the quality is going to be like. Fortunately, over the last two decades, I’ve built good strong relationships with lots of people across our industry. So, a lot of people know me, and I’ve had interactions with them through my work or contributions to our professional community (Kailash’s note: For example, Craig is the founder of Last Conferences). That’s gotten me access to a lot of people.  To add to that, in the early days of Everest, we would straight up give people a money-back guarantee. We could do this with confidence because we knew our team members – we knew they were smart people with a lot of enthusiasm for doing right by everyone around them. That enabled us to say to our customers, “if you don’t like the work, you don’t have to pay for it.”  That combined with my personal connections meant that we were able to cut through and get that first round of trust that enabled us to build the company.

KA: It must be doubly challenging to maintain quality and align expectations with a distributed team. Can you talk us through some of the challenges that you have faced?

CB: Yes, and there some nuances around this. One is that the software labour market in Australia is older, on average, than in India. So, there’s an asynchronicity of experience, and with that comes a misalignment of expectations. A really important aspect of this is that we try to be explicit about expectations from different teams, and this is mostly about managing people’s expectations of what’s going to happen and when. Another aspect is for us to develop a shared understanding of what Agile means to us: things like  transparency, focus on throughput, customer value, responding to feedback etc. Once we agree on what they mean, we have to do those things on a day-to-day basis.

It gets even more complicated when you bring the customer in. As you know, every organization has got its own version of what Agile looks like, and different understanding of what “good” means. So, we try very hard to moderate our version and meet the customers where they’re at. In other words, we co-develop shared Agile practices. A phrase that I think really resonates with the customers we work with is let’s improve together.  When there are cultural differences, we don’t see them as barriers. Instead, we reframe them as strengths. It is like, “right, we see things differently, and that is interesting because I hadn’t thought of it that way.”  These differences aren’t necessarily country to country, they can also be industry to industry or organisation to organisation. Of course, there are things that are cultural too. For example, if we’re doing retail websites, the online retail experience in India is different from one in Australia and, therefore, so are expectations of how things should work. You have to step back and go to first principles of user experience design and product management; you have to slow down and talk about what good looks like, and how we’re going to get there.  

Lastly, there’s the issue of managing timezone differences. To be honest,  we don’t find this a problem. The overlap between Australia and India is sufficient, and can lead to some good patterns where there’s like a half a day of focus time and a half a day of collaboration time. But again, this requires planning and preparation. You can’t just turn up to work and go; you have to be thinking ahead about what you are going to do.  As long as you’re able to level up your planning you can take advantage of this.  This also has general positive downstream effects: if everyone’s more organised, there’s less waste, better decisions are made better, and so on. However, it does take effort to get there.

KA: You used a phrase, “let’s improve together with our customers.” Can yougive me some sense of how this works in practice?

CB: The examples are quite mundane to be honest.  When a bunch of people come together to work on a new project, there is some learning required on how you are going to work together. As I had mentioned before, patterns and practices will differ between organisations.   For example, should you focus on Continuous Delivery and DevOps stuff. or should you focus on better product management or sensemaking and design work? The answer is: it depends. We (the customer and us) bring different strengths to the table, so we look at the situation in front of us and decide how to work together.

First of all, we agree on how we communicate, how our day and week runs – all that kind of normal sprint cycle stuff. Then we can get into specifics such as, how do we optimize (our ways of working) around the product that we’re working on?  What is a good outcome? What are the constraints?  In addition, we will have patterns and practices that we can kind of share with each other and learn together.  This is not about telling people about your practices like you have some special access to the truth. Instead, we slow down and go, “Alright, cool. I see this problem here. Do you see it too?” And then you might go, “Yes, I do.” Or you might go, “huh, I see a slightly different problem.” Or you might even go, “I don’t see a problem.”  That opens a dialogue and, before you know it, we’re solving the problem together instead of telling each other what to do. How that manifests could be as simple as changing how you run stand-ups, or set up sprint plans, good coding standards, or the emphasis you put on product design versus shipping a product. These are mundane, well-known things but the trick lies in how you customize them to the context of a specific relationship.

KA: Interesting. So, when you actually hire and get people in, you’d be hiring for technical smarts on the one hand, but you’d also be looking for, a kind of propensity to collaborate. Is that right?

CB: I hire certain kind of certain roles but the bulk of the workforce hiring is done by other people so I’m not actually close to the details. However, I do know that the notion of culture fit is taken pretty seriously in the recruiting process. From this perspective it is mainly about managing the tension between being an individual contributor and a team member. On a team, you will be an individual contributor so you do need to master your craft, be good at the job and all that sort of stuff. However, you also have to think about where your ego is. Do you have this deep need to be the hero, telling everyone what to do and being the master programmer.  Or do you deploy value through a collective effort?  By doing good work, but also looking around, seeing your teammates, recognizing their work and supporting them when needed. We draw these kinds of things out in interviews through storytelling, by asking for examples.

KA: When I look at what you’ve done, it seems like, such a simple idea: to not go on price or quality alone, but somehow marry the two. It’s like you saw a gap in the market, an anomaly that nobody else noticed – or if they did, they did not think it worth pursuing. I find that really interesting.

CB: Yeah, it is kind of like that. There  are a bunch of software agencies that I used to work with, here in Melbourne, they are full of great people. They are also what you would call the premium software agencies in Melbourne or in Australia – quality is top shelf but so is price.  Then at the other end, you’ve got these big factory warehouses of people who are lowly paid and not well supported.  And then there’s this place in the middle that’s almost unseen. What we thought we should do is compete on the one hand, at the quality end, and then also come in cheaper by leveraging the cost differential between the two countries.

You might say we are reinventing the outsourcing experience by maintaining the connections and relationships like small agencies but being able to do things at scale by having the staff, skills and experience commonly found only in much larger outsourcers.

KA: Right, and the interesting thing is that you grew the business in some pretty challenging times. Could you tell us about how you handled the challenges thrown at you by Covid, for example?

CB: Yes, there’s been a few things right, there’s been the COVID pandemic and now we’re on the cusp of another economic crisis. Indeed, the pandemic hit right after we got started. One of the things that I think enabled us to be resilient has been spreading our bets. So rather than chasing after a handful of big customers, what we’ve done is pursue a relatively even spread of customers in different segments, sizes and organisations types. So, as these crises ripple through different parts of the world economy, it hits us at different times rather than all at once. Don’t get me wrong, the middle of 2020 was really tough, but the fact that we had our spread was what got us what got us through that. I’m not sure if I’m using the term antifragile, properly, but it kind of leans into that. By spreading your bets, you discover all these new people, markets and domains that can grow into opportunities.

KA: That makes good sense. So, what next for Everest?

CB: We’ve been fortunate to have attracted these really interesting and diverse bunch of people to work for us. Equally, we’ve attracted an interesting and diverse bunch of companies that work with us as customers.  We’re only a few years old – four years this November – so we’re still focusing on our core business which is software development. I think in a year or two ahead, I think we will start to see that antifragility or diversity blossom into new opportunities. For example, we definitely want to work in the data space.  We’ve got data engineers and some people who have done projects, with machine learning and so forth, but we don’t actually have it as a practice. It’s kind of ad hoc at the moment. So, maturing these things into proper business units that have got sustained impact on the world will be something for us to do. And then there are other things we’re looking at – for example how product management works in the industry. Specifically, the patterns and the strengths and weaknesses in the product management industry and whether there are ways in which we can contribute to that community.

At heart we are a bunch of explorers and experimenters still…and hope we will remain so. We are on a journey through adjacent possibles. It is the only way to stay fresh and ensure that we don’t get pigeonholed.

KA: So, you’re continually scanning the periphery and horizon to see what new things you can do by adapting what you have. That’s brilliant!

CB: A lot of it comes through the diverse talents and interests of the people we work with, right? We’ve ended up attracting quite interesting people to work with us. Interesting people have – well –  interesting interests! So, for sure, the key thing is to get work done and ship products in time. But another important thing is to make the mental space so that you can actually invest time and energy into the things that you’re curious about. Ultimately that’s what spawns new ideas and new opportunities.

KA: That’s a nice place to close our conversation. But, before we do that I want to ask you one final question: what advice would you give someone who wants to start doing their own software development (or any other) business?

CB: The advice you hear from people that study new businesses is generally something along the lines of: it’s going to be harder than you think; it’s going to take longer than you think; you’re going to get very stressed and have these moments where you wonder why you’re doing it. But at the end of it, you’ll look back and love the fact that you’re doing it. And I think that’s actually true, right.  That said, I think that embracing the chaos and uncertainty isn’t for everyone. Like, here I am, I grew up poor, in a single parent family in regional New South Wales. In my late 20s, early 30s, I started working in corporate Australia in tech. All along I have been burdened by the usual mortgages and lifestyle costs and all that sort of stuff. And I haven’t climbed out of that yet: I’ve still got a mortgage I can’t afford. But yeah, it took me a while to get started on the entrepreneurship thing.  I was 48 when we started Everest, and it was driven partly by events outside my control. As I said at the start, the company I was working for got acquired and that gave me the push I needed to do my own thing. So, there you go. It’s not for everyone and, yes, the right circumstances have to be in place for you. But once you start, I think you’ll embrace it.

KA: That’s an inspiring story and some great advice Craig, particularly for older people who want to start doing their own thing.  You were driven to entrepreneurship in a way but you stuck to it and made it your own. Brilliant stuff, thanks so much for making the time to have a chat.

CB: Thanks Kailash, always a pleasure.

Making sense of management – a conversation with Richard Claydon

KA 

Hi there. I’m restarting a series of conversations that I’d kicked off in 2014 but discontinued a year later for a variety of reasons. At that time, I’d interviewed a few interesting people who have a somewhat heretical view on things managers tend to take for granted. I thought there’s no better way to restart the series than to speak with Dr. Richard Claydon, who I have known for a few years.  Richard calls himself a management ironist and organisational misbehaviorist. Instead of going on and risking misrepresenting what he does, let me get him to jump in and tell you himself.

Welcome Richard, tell us a bit about what you do.

RC  

I position myself as having a pragmatic, realistic take on management. Most business schools have a very positivistic take on the subject, a “do A and get B” approach. On the other hand, you have a minority of academics – the critical theorists – who say, well actually if you do A, you might get B, but you also get C, D, E, F, G.  This is actually a more realistic take. However, critical management theory is full of jargon and deep theory so it’s very complex to understand. I try to position myself in the middle, between the two perspectives, because real life is actually messier than either side would like to admit.

I like to call myself a misbehaviourist because the mess in the middle is largely about misbehaviours – real but more often, perceived. Indeed, good behaviours are often misperceived as bad and bad behaviours misperceived as good. I should emphasise that my work is not about getting rid of the bad apples or performance managing people. Rather it’s about working out what people are doing and more importantly, why. And from that, probing the system and seeing if one can start effecting changes in behaviours and outcomes.

KA 

Interesting! What kind of reception do you get? In particular, is there an appetite for this kind of work – open ended with no guarantee of a results?

RC 

Six of one half a dozen or the other. I’ve noticed a greater appetite for what I do now than there was six or seven years ago. It might be that I’ve made what I do more digestible and more intelligible to people in the management space. Or it might be that people are actually recognising that what they’re currently doing isn’t working in the complex world we live in today. It’s probably a bit of both.

That said, I definitely think the shift in thinking has been accelerated by the pandemic. It’s sort of, we can’t carry on doing this anymore because it is not really helping us move forward. So, I am finding a larger proportion of people willing to explore new approaches.

KA 

Tell us a bit about the approaches you use.

RC 

As an example, I’ve used narrative analytics –   collecting micro narratives at massive scale across an organisation and then analysing them, akin to the stuff Dave Snowden does.  Basically, we collect stories across the organisation, cluster them using machine learning techniques, and then get a team of people with different perspectives to look at the clusters. This gives us multiple readings on meaning. So, the team could consist of someone with leadership expertise, someone with expertise in mental health and wellbeing, someone with a behavioural background etc.

We also use social network analysis to find how information flows within a organisation. The aim here is to identify three very different types of characters: a) blockers – those who stop information from flowing, b) facilitators of information flow, c) connectors – information hubs, the go-to people in the organisation and d) mavericks, those who are thinking differently. And if you do that, you can start identifying where interesting things are happening, where different thinking is manifesting itself, and who’s carrying that thinking across the organisation.

KA 

Interesting! What sort of scale do you do this at?

RC 

Oh, we can scale to 1000s of people – organisations that have 35000 to 40,000 people – well beyond the scale at which one can wander around and do the ethnography oneself.

KA 

How do you elicit these micro-narratives?

RC 

I’ll give you an example. For a study we did on remote working during COVID we simply wrote, when it comes to working from home in COVID, I like dot dot, dot, I don’t like dot dot, dot, I wish dot dot, dot, I wonder dot dot dot,  plus some metadata to slice and dice – age bands, gender etc.  Essentially, we try to ask a very open set of questions, to get people into a more reflective stance. That’s where you begin to get some really interesting stuff.

KA 

Can you tell us about some of the interesting things you found from this study?  The more, I guess, interesting and surprising things that you’ve seen that are  perhaps not so obvious from a cursory glance,

RC 

The one thing that was very clear from the COVID studies was that the organisation’s perception of work from home was the key to whether it actually worked or not. If management gives the impression that work from home is somehow not quite proper work, then you’re going to get a poor work from home experience for all. If management isn’t trusting a person to work from home, or isn’t trusting a team to work from home then you’ve got a problem with your management, not with your people. The bigger the trust gap, the worse the experience. Employees in such environments feel more overwhelmed, more isolated, and generally more limited and restricted in their lives. That was the really interesting finding that came out of this piece of work. 

KA 

That’s fascinating…but I guess should not be surprising in hindsight. Management attitudes play a large role in determining employee behaviours and attitudes, and one would expect this to be even more the case when there is less face-to-face interaction. This is also a nice segue into another area I’d like to get you to talk about:  the notion of organisational culture.  Could you tell us about your take on the concept?

RC 

How cynical do you want me to be?

KA 

Very, I expect nothing less!

RC 

Well, if you go back into why culture became such a big thing, the first person who talked about culture in organisations was Elliott Jaques, way back in the 50s. But it didn’t really catch on then. It became a thing in the early 80s. And how it did is a very interesting story.

Up until the early 70s, you had – in America at least – a sort of an American Dream being lived underpinned by the illusion of continuous growth.  Then came the challenges of the 70s, the oil crisis and numerous other challenges that resulted in a dramatic loss of confidence in the American system. At the same time, you had the Japanese miracle, where a country that had two nuclear bombs dropped on it thirty years earlier was, by the 1970s, the second biggest economy in the world. And there was this sort of frenzy of interest in what the Japanese were doing to create this economic miracle and, more important, what America could learn from it. There were legions of consultants and academics going back and forth between the two countries.

One of the groups that was trying to learn from the Japanese was McKinsey. But this wasn’t really helping build confidence in the US. On the contrary, this approach seemed to imply that the Japanese were in some way better, which didn’t go down particularly well with the local audience. There was certainly interest in the developments around continuous improvement,  The Toyota Way etc – around getting the workers involved with the innovation of products and processes, as well as the cultural notions around loyalty to the organisation etc.  However, that was not enough to excite an American audience.

The spark came from Peters and Waterman’s  book, In Search of  Excellence, which highlighted examples of American companies that were doing well.  The book summarised eight features that these companies had in common – these were labelled principles of a good culture and that’s where the Mckinsey Seven S model came from. It was a kind of mix of ideas pulled in from Peters/Waterman, the Japanese continuous improvement and culture stuff, all knocked together really quite quickly.  In a fortunate (for Peters and Waterman) coincidence, the US economy turned the corner at around the time that this book was published and sales took off. That said, it’s a very well written book. The first half of In Search of Excellence is stunning. If you read it you’ll see that the questions they asked then are relevant questions even today. Anyway, the book came out at exactly the right time: the economy had turned the corner, McKinsey had a Seven S model to sell and then two universities jumped into the game, Stanford and Harvard… and lo behold, organisational culture became a management buzz-phrase, and  remains so to this day.  Indeed, the idea that special cultures are driving performance has bubbled up again in recent years, especially in the tech sector. In the end, though, the notion of culture  is very much a halo effect, in that the proponents of culture tend to attribute  performance to certain characteristics (i.e. culture). The truth is that success may give rise to a culture, but there is no causal effect the other way round.

KA 

Thanks for that historical perspective. In my experience in large multinationals, I’ve found that the people who talked about culture the most were from HR. And, they were mostly concerned about enforcing a certain uniformity of thought across the organisation.  That was around that time I came across the work of some critical management scholars who you alluded to at the start of this conversation. In particular, Hugh Willmott’s, wonderful critique of organisational culture : strength is ignorance; slavery is freedom. I thought that was a brilliant take on why people tend to push back on HR driven efforts to enforce a culture mindset- the  workshops and stuff that are held to promote it. I’m surprised that people in high places continue to be enamoured by this concept when they really should know better, having come up through the ranks themselves.

RC 

Yea, the question is whether they have come through the ranks themselves. A lot of them have come through MBA programmes or have been parachuted in. This is why, when I teach in the MBA, I try to teach this wider appreciation of culture because I know what the positivists are teaching – they are telling their students that culture is a good lever to get the kind of desirable behaviours that managers want.

KA 

Totally agree, the solution is to teach diverse perspectives instead of the standard positivist party line. I try to do the same in my MBA decision-making class – that is, I challenge the positivistic mindset by drawing students’ attention to the fact that in real life, problems are not given but have to be taken from complex situations (to paraphrase Russell Ackoff). Moreover, how one frames the problem determines the kind of answer one will get. Analytical decision-making tools assume the decision problem is given, but one is never given a problem in real life. So, I spend a lot of time teaching sensemaking approaches that can help students extract problems from complex situations by building context around the situation.

Anyway, we’ve been going for quite a bit, there’s one thing I absolutely must touch upon before we close this conversation – the use of irony in management. I know, your PhD work was around this concept, and it’s kind of an unusual take. I’m sure my readers would be very interested to hear more about your take on irony and why it’s useful in management.

RC 

I think we’ve set the stage quite nicely in terms of the cultural discussion. So what I was looking at in my PhD was a massive cultural change in an Australian company, a steelworks. We had unfettered access to the company for six and a half years, which is kind of unheard of. So anyway, one of the interesting things we noticed during our fieldwork was that everybody was identifying the same group of people as being the ones that were giving them the best information, were the easiest to talk, had the most  useful data sources, etc.

We then noticed that these people seemed to have an ironic sensibility. What does that mean? Well, they poked fun at themselves, their teammates, managers and the organisation…and indeed, even our research, but in very subtle ways. However, these people were also doing their work exceptionally well: they had more knowledge about what the hell was going on than anybody else in the company. Everybody liked them, everybody wanted to work with them, everybody was coming to them as problem solvers. You know, they had all of this interesting stuff happening around them.

So, what does it mean to have an ironic stance or an ironic sensibility in the midst of a shifting culture while doing quite complex work in challenging conditions? Well, there are three elements to it, firstly there’s there’s a perspective that you take, secondly there’s a performance that you give, and thirdly there’s a personality or character you develop.

The ironic perspective is that you see the gap between the rhetoric and reality, you see the gaps that most others do not. Then you’ve got this feeling that maybe it’s only you that sees the gap, and that can be quite scary. Especially if you’re trying to transmit that there’s a gap to powerful people who haven’t seen it,  and may even think everything’s going well.

How do you do this without losing your head?  And I mean that both literally (as in going crazy) and metaphorically as in losing your job.

That’s where the ironic performance comes in  – you say one thing while actually meaning something else. You’re trying to get people to deconstruct your message and work out where the gap is for themselves rather than confronting them with it and saying, “look, here is the gap”. So, this is where all the witticisms and the play on words and the humour come in. These are devices through which this message is transmitted in a way that helps the ironist keep her head – both metaphorically and in terms of her own sanity. These people are critical to the organisation because they call things out in a way that is acceptable. Moreover, since such people also tend to be good at what they do, they tend to have an outsized influence on their peers as well as on management.

So, our argument was that these folks with an ironic sensibility, they’re not just useful to have around they’re absolutely vital, and you should do everything you can to find them and look after them in the contemporary organisation.

KA 

So, there’s a clear distinction between a cynical and an ironic personality, because the cynic will call it out quite bluntly, in a way that puts people off. The ironists get away with it because they call it out in a very subtle way that could be even construed as not calling it out. It requires a certain skill and talent to do that.

RC 

Yes, and there’s a different emotional response as well. The cynic calls it out and hates it; the ironist expects it and takes joy in its absurdity.

KA 

So, the ironist is a bit like the court jester of yore: given licence to call out bullshit in palatable, even entertaining ways.

RC 

I like that. The original ironist was Socrates – pretending to be this bumbling fool but actually ridiculously sharp. The pretence is aimed at exposing an inconsistency in the others’ thinking, and to start a dialogue about it. That’s the role the ironist plays in achieving change.

KA 

That’s fascinating because it ties in with something I’ve noticed in my travels through various organisations. I do a lot of dialogic work with groups – trying to use conversations to frame different perspectives on complex situations. When doing so I’ve often found that the people with the most interesting things to say will have this ironic sensibility – they are able to call out bullshit using a memorable one-liner or gentle humour, in a way that doesn’t kill a conversation but actually encourages it.  There is this important dialogic element to irony.

RC 

It’s what they call the soft irony of Socrates – the witticisms and the elegance that keeps a difficult conversation going for long enough to surface different perspectives. The thing is you can keep going because in a complex situation there isn’t a single truth or just one right way of acting.

KA 

It gets to a possible way of acting. In complex situations there are multiple viable paths and the aim of dialogue is to open up different perspectives so that these different paths become apparent. I see that irony can be used to draw attention to these in a memorable way.  These ironists are revolutionaries of sorts, they have a gift of the gab, they’re charismatic, they are fun to talk to. People open up to them and engage with them, in contrast to cynics whose bitterness tends to shut down dialogue completely.

RC 

Yeah, and the conversation can continue even when the ironists depart. As an extreme example, Socrates chose to die in the final, ironic act of his life. Sure he was old and his time was coming anyway, but the way he chose to go highlighted the gap between principles and practice in Athens in an emphatic way. So emphatic that we talk about it now, millenia later.   

The roll call is long:  Socrates drank hemlock, Cicero was murdered, Voltaire was exiled, Oscar Wilde went to jail, Jonathan Swift was sent to a parish in the middle of Ireland – and so on. All were silenced so that they wouldn’t cause any more trouble. So there’s always a risk that however witty, however elegant your rhetoric, and however hard you try to keep these conversations going and get people to see the gap, there’s always a risk that a sword will be plunged into your abdomen.

KA 

The system will get you in the end, but the conversation will continue! I think that’s a great note on which to conclude our chat.  Thanks very much for your time, Richard.  I really enjoyed the conversation and learnt a few things, as I always do when chatting with you.

RC 

It’s been a pleasure, always wonderful to talk to you.

Making sense of organizational change – a conversation with Neil Preston

In this instalment of my sensemakers series, I chat with Dr. Neil Preston, an Organisational Psychologist  based in Perth, about the very topical issue of organizational change. In a wide-ranging conversation, Neil draws interesting connections between myths that are deeply embedded in Western thought and the way we think about and implement change…and also how we could do it so much better.

KA: Hi Neil, thanks for being a guest on my ongoing series of interviews with sensemakers. You and I have corresponded for at least a year now via email, so it’s a real pleasure to finally meet you, albeit virtually. I’d like to kick things off by asking you to say a bit about yourself and your work.

NP: Well, I’m Dr. Neil Preston. I’m an organizational psychologist…what that means is that I’m specially registered in the area of organizational psychology, much like a clinical psychologist. My background professionally is that I originally worked in mental health, as a senior research psychologist. I’ve published 30 to 40 peer-reviewed papers in psychiatry, mental health and psychometrics,  so I know my way around empirical psychology.  My real love, however, has always been in organizational and industrial psychology, so in 2006 I decided to leave the Health Department of Western Australia and move into full time consulting.

Consulting work has led me mainly into infrastructure projects-  these are very large, complex projects where organisations from both the private and public sector have to get together and create alliances in order to get the work done. My job on these projects – as I often put it to people – is to make the Addams Family look like the Brady Bunch [laughter]. The idea is to get different value systems and organizational cultures to align, with the aim of getting to a shared understanding of project goals and a shared commitment to achieving them.

My original approach was very diagnostic – which is the way psychologists are taught their trade – but as problems have become more complex, I’ve had to resort to dialogical (rather than diagnostic) approaches. As you well know, dialogue is more commensurate with complexity than diagnosis, so dialogical approaches are more appropriate for so-called wicked problems. This approach then led me to complex systems theory which in turn led to an area of work that Paul Culmsee, I and yourself are looking into: emergent design practices. (Editor’s note: This refers to a method of problem solving in which solutions are not imposed up front but emerge from dialogue between various stakeholders.)

KA: OK, so could you tell us a bit about the kinds of problems you get called in to tackle?

NP: Very broadly speaking, I’m generally called in when organisations have goals that are incommensurate with each other. For example: a billion dollar road that has to be on time and on budget…but, by the way, the alignment of the road also takes out a nesting site of a Carnaby White Tailed Cockatoo which triggers the environmental biodiversity protection act which in turn triggers issues with local councils and so on.

Complexity in projects often arises from situations like these,  where the issue is not just about delivering on time and on budget, but also creating a sustainable habitat and ensuring alignment with local governments etc.

KA:  So very broadly, I guess one could say that your work deals with the problems associated with change. The reason I put it in this way is that change is something that most people who work in organisations would have had to deal with – either as executives who initiate the change, managers who are charged with implementing it or employees who are on the receiving end of it.  The one thing I’ve noticed through experience –initially as a consultant and then working in big organisations – is that change is formulated and implemented in a very prescriptive way.  However, the end results are often less than satisfactory because there are many unintended consequences (loss of morale, drop in productivity etc.) – much like the unintended consequences of large infrastructure projects.  I’ve long wondered about this is so: why, after decades of research and experience do we still get it so wrong?

NP:  Let me give you an answer from a psychologist’s perspective. There are a couple of sub-disciplines of psychology called depth and archetypal psychology that look at myth.  The kind of change management programs that we enact are driven by a (predominantly) Western myth of heroic intervention.

James Hillman, an archetypal psychologist once said that a myth is what is real. This is somewhat contrary to the usual sense in which the word is used because we usually think of a myth as being something that is not real. However, Hillman is right because a myth is really an archetype – an overarching way of seeing the world in a way that we believe to be true. The myth of the hero – the good guy overcoming all adversity to slay the bad guy – is essentially an interventionist one. It is based on the Graeco-Roman notion of the exercise of individual will. Does that make sense so far?

KA: Yeah absolutely. Please go on.

NP: OK, so this myth is dominant in the Western imagination. For example, any movie that a kid might go to see like, say, Star Wars is really about the exercise of the individual will. In much the same way, the paradigm in which your typical change management program operates is very much (individual) action and intervention oriented. Even going back to Homeric times – the Iliad and Odyssey are essentially stories about individuals exercising authority, power…and excellence is another word that crops up often too. The objective of all this of course is to effect dramatic, full-frontal change.

However, there is a problem with this myth, and it is that it assumes that things are not complex. It assumes that simple linear, cause-effect explanations hold – that if you do A then B will happen (if you restructure you will save costs, for example). Such models are convenient because they seem rational on the surface, perhaps because they are easy to understand. However, they overlook the little details that often trip things up. As a result, such change often has unforeseen consequences.

Unfortunately, much of the stuff that comes out of the Big 4 consultancies is based on this myth.  The thing to note is that they do it not because it works but because it is in tune with the dominant myth of the Western business world.

KA: What you are saying definitely strikes a chord. What’s strange to me, however, is that there have been people challenging this for quite a while now. You mentioned the predominantly linear approach – A causes B sort of thinking – that change management practitioners tend to adopt. Now, as you well know, systems theorists and cyberneticists have proposed alternate approaches that are more cognizant of the multifaceted nature of change, and they have done so over fifty years ago! What happened to all that? When I read some of the papers, I see that they really speak to the problems we face now, but they seem to have been all but forgotten (Editor’s note: see this post that draws on work by the prominent cyberneticist,  Heinz von Foerster, for example). One can’t help but wonder why that is so….

NP: Well that’s because myths are incredibly sticky. We are talking about  an ancient myth of the exercise of the individual human will.  And, by the way, it’s a very Western thing: I remember once hearing on the radio that the Western notion of the “squeaky wheel getting the grease” has an Eastern counterpart that goes something like, “the loudest goose is first to lose his head.”  The point is, the two cultures have a very different way of looking at the world.  That myth – the hero myth – is very much brought into the way we tell stories about organisations.

Now, why does that matter? Well, JR Hackman, an organizational psychologist said it quite brilliantly. He called our fixation on the hero myth (in the context of change) the leadership attribution error – he argues that we tend to over-attribute the success of a change process to the salient things that we can see – which is (usually) the leader. As a result we tend to overlook the hidden factors which give rise to the actual performance of the organization.  These factors usually relate to the latent conditions present in the organization rather than specific causes like a leader’s actions.

So there are two types of change: planned change and emergent change.  Planned change is the way organisations usually think about change. It is a causal view in which certain actions give rise to certain outcomes. But here is the problem: the causal approach focuses primarily on salient features, ignoring all the other things that might be going on.

Now, cybernetics and systems theory do a better job of taking into account features that are hidden. However, as you mentioned, they have not had much uptake.  I think the reason for this is that myths are incredibly sticky…that is the best answer I can give.

KA: Hmm that’s interesting…I’d never thought of it that way – the stickiness of myths as blinding us to other viewpoints.   Is there something in the nature of human thought or human minds that make us latch on to over-simplified explanations?

NP: Well, there’s this notion of cognitive bias – persistent biases in human perception or judgement   (Editors’ Note: also see this post on the role of cognitive bias in project failure). The leadership attribution error is precisely such a bias. I should point out that these biases aren’t necessarily a problem;  they just happen to be the way humans think. And there are good evolutionary reasons for the existence of biases: we can’t process every little bit of information that comes to us through our senses, and these biases offer a means to filter out what is unimportant. Unfortunately, sometimes they cause us to overlook what is important. They are heuristics and, like all heuristics, they don’t always work.

So in the case of leadership attribution bias – yes leadership does have an effect, but it is not as much as what people think. In fact, work done by Wageman (who worked with Hackman) shows that what is more important for team performance are the conditions in which the teams work rather than the qualities or abilities of the leader.

KA: From experience I would have to say that rings true: conditions trump causes any day as far as team performance is concerned.

NP: Yeah and there’s a good reason for it; and it is so simple that we often overlook it. Take the example of sending a rocket to the moon. If you set up the right conditions for the rocket – the right amount of fuel, the right load and so forth, then everything that is necessary for the performance of the rocket is already set up. The person who actually steers the rocket is not as critical to the performance as the conditions are. And the conditions are already present when the rocket is in flight.

Similarly, In the case of organizational change, we should not be looking for causes – be it leadership or planned actions or whatever– but the conditions that might give rise to emergent change.

KA: Yeah, but conditions are causes too, aren’t they.

NP: Yes they are, but the point is that they aren’t salient ones – that is, they aren’t immediately obvious. Moreover, and this is the important point: you do not know the exact outcomes of those causes except that they will in general be positive if the conditions are right and negative if they aren’t.

KA: That makes sense. Now I’d like to ask you about a related matter. When dealing with change or anything else, organisations invariably seem to operate at the limits of their capacity.  Leaders always talk about “pushing ourselves” or “pushing the envelope” and so on.  On the other hand, there’s also a great deal of talk about flexibility and the capacity for change, but we never seem to build this into our organisations. Is there a way one can do this?

NP: Yes, you can actually build in resilience. Organisations generally like to keep their systems and processes tightly coupled – that is, highly dependent on each other. This tends to make them fragile or prone to breakdown. So, one of the things organisations can do to build resilience is to keep systems and processes loosely coupled. (Editor’s note: for example, devolve decision-making authority to the lowest possible level in the organization. This increases flexibility and responsiveness while having the added benefit of reducing management overhead).

Conditions also play a role here. One of the things that organisations like to talk about is innovation. The point is you can’t put in place processes for innovation but you can create conditions that might foster it.  You can’t ask people whether they “did their 15 minutes of innovation today” but you can give them the discretionary freedom to do things that have nothing to do with their work…and they just might do something that goes above and beyond their regular jobs. But of course what underpins all this is trust. Without trust you simply cannot build in flexibility or resilience.

KA: This really strikes a chord and let me tell you why.  I read Taleb’s book a while ago. As you probably know, the book is about antifragility, which he defines as the ability to benefit from uncertainty rather than just being resilient to it. After I read the book I wrote a post on what an antifragile IT strategy might look like…and in an uncanny resonance with what you just said, I made the claim that trust would be the single important element of the strategy [laughter].

NP: Yeah, and trust is not something you receive as much as you give. So as a psychologist I know why it is so damaging to people. You know, “Et tu Brutus” – Caesar’s famous line – it was the betrayal of trust that was so damaging. Once trust is gone there’s nothing left.

KA: Indeed, I sometimes feel that the key job of a manager is to develop trust-based relationships with his or her peers and subordinates. However, what I see in the workplace is often (though definitely not always) the opposite: people simply do not trust their managers because managers are quick to pass the blame down (or  even across) the hierarchy rather than absorbing it…which arguably, and ethically, is their job. They should be taking the heat so that people can get on with actual work. Unfortunately managers who do this are not as common as they should be.

NP: We’re getting into a complex area here, and it is one that I deal with at length in my masterclass on collaborative maturity and leadership. This is the old scapegoating mechanism at work,  and it is related to the leadership attribution error and the hero myth. If the attribution is back to the individual, then the blame must also be attributable to an individual. In fact, I have this slide in one of my presentations that goes, “a scapegoat is almost as useful as the solution to a problem.” [laughter]

Now, there are two questions here. “The scapegoat” is the answer to the question “Who is responsible?” However, it is more important to look at conditions rather than causes, so the real question is, “How did this situation come about?” When you look at “Who” questions, you are immediately going into questions of character. It elicits responses like “Yeah, it’s Kailash’s fault because he is that kind of a guy…he is an INTP or whatever.” What’s happening here is that the problem is explained away because it is attributed to Kailash’s character. You see what is going on…and why it is so dangerous?

KA: Yeah, that’s really interesting.

NP: And you see, then they’ll say something like, “…so let’s take Kailash out and put Neil in”…but the point is that if the conditions remain the same, Neil will fall down the same hole.

KA: It’s interesting the way you tie both things back to the individual – the individual as hero and the individual as scapegoat.

NP:  Yes, it’s two sides of the same coin. Followership acquiesces to leadership: Kailash will follow Neil, say, to the Promised Land. If we get there, Neil gets the credit but if we don’t, he gets the blame.

KA: Very interesting, but this brings up another question. Managers and leaders might turn around and say, “It’s all very well to criticize the way we operate, but the fact is that it is impossible to involve all stakeholders in determining, say, a strategy. So in a sense, we are forced to take on the role of “heroes,” as you put it.”

So my question is: are there some ways in which org are some of the ways in which organisations can address the difficulties associated with of collective decision-making?

NP: Of course, it is often impossible to include all stakeholders in a decision-making process, particularly around matters such as organisational strategy. What you have to do first is figure out who needs to be involved so that all interests are fairly represented. Second, I’m attracted to the whole idea of divergent (open-ended) and convergent (decisive) thinking. For example, if a problem is wicked or complex, there is no point attempting to use expert knowledge or analysis exclusively (Editor’s note: because no single expert holds the answers and there isn’t enough information for a sensible, unbiased analysis). Instead, one has to use collective intelligence or the wisdom of the crowd by seeking opinions from all groups of stakeholders who have a stake in the problem. This is divergent thinking.

However, there comes a time when one has to “make an incision in reality” – i.e. stop consultation and make the best possible decision based on data and ethics. – one has to use both IQ and EQ.  This is the convergent side of the coin.

Another problem is that one often has the data one needs to make the right decision, but the decision does not get made for reasons of ideology. Then it becomes a question of power rather than collective intelligence: a solution is imposed rather than allowed to emerge.

KA: Well that happens often enough – this “short-circuiting” of the decision-making process by those in positions of power.

NP:  Yes, and it is why I think deliberative decision-making which comes from the Western notion of deliberative democracy – i.e. decision-making based on dialogue and consultation is the best way forward but it can be a challenge to implement. Democracy is slow, but it is generally more accurate…

KA: Yes, that’s true, but it can also meander.

NP: Sure, everything is bound by certain limitations (like time)  and that’s why you have to know when to intervene. One of the important things for a leader to have in this connection is negative capability – which is not “negative” in the usual sense of the word, but rather the ability to know how to be comfortable with ambiguity and be able to intervene in ambiguous situations in a way that gets some kind of useful outcome.

Of course, acting in such situations also means that one has to have good feedback mechanisms in place; one must know how things are actually working on the ground so that one can take corrective actions if needed.  But, in the end, the success of this way of working depends critically on having the right conditions in place.  If you don’t set up the right conditions, any intervention can have catastrophic consequences.

If I may talk politically for a minute – the current situation in the Middle East is a classic example of a planned intervention:  direct, frontal, dramatic, causal, linear and supposedly rational.  However, if the right conditions are not in place, such interventions can have unforeseen consequences that completely overshadow the alleged benefits. And that is exactly what we have seen.

In general I would say that emergent change is more likely to succeed than large-scale, direct, planned change. The example one hears all the time is that of continuous improvement – where small changes are put in place and then adjusted based on feedback on how they are working.

KA: This is a matter of some frustration for me: in general people will agree that collaboration and collective decision-making are good, but when the time comes, they revert to their old, top-down ways of working.

NP: Yes, well when I go into a consulting engagement on collaborative maturity, one of the first things I ask people is whether they want to use the collaborative process to inform people or to influence them.  Often I find that they only want to use it to inform people. There is a big difference between the two: influencing is emergent, informing isn’t.

KA: This begs a question: say you walk into an organization where people say that they want to use collaborative processes to influence rather than inform, but you see that the culture is all wrong and it isn’t going to work. Do you actually tell them, “hey, this is not going to work in your organization?”

NP: Well if people don’t feel safe to speak their truth then it isn’t going to work. That’s why I’m so interested in Hackman’s work on conditions over causes. Coming to your question I don’t necessarily tell people that it’s not going to work because I believe it is more productive to invite them to explore the implications of doing things in a certain way. That way, they get to see for themselves how some of the things they are doing might actually be improved. One doesn’t preach but one hands things back to them.

In psychology there are these terms, transference and countertransference. In this context transference would be where a consultant thinks, “I’m a consultant so I’m going to assume a consultant persona  by acting and behaving like I have all the answers”, and countertransference would be where the client reinforces this by saying something like, “you are the expert and you have all the answers.”  Handing back stops this transference-countertransference cycle. So what we do is to get people to explore the consequences of their actions and thus see things that might have been hidden from their view. It is not to say “I told you so,” but rather “what are the implications of going down this path.” The idea is to appeal to the ethical or good side in human beings…and I believe that human beings are fundamentally good rather than not.

KA: I like your use of the word “ethical” here. I think that is really important and is what is often missing. One hears a lot about ethics in business these days, but it is most often taught and talked about in a very superficial way. The reality, however, is that the resolution of most wicked problems involves ethical considerations rather than logic and rationality…and this is something that many people do not understand. It isn’t about doing things right, rather it is about doing the right things.

NP: Yes, and this is related to what I call “meaning over motivation” – the idea being is that instead of attempting to motivate people to do something, try providing them with meaning. When you do this you will often find that change comes for free.  And it is worth noting that meaning has both an emotional and rational component – or, put a little bit differently, an ethical and logical one. In one of his books, Daniel Pink makes the point that uncoupling ethics from profit can have catastrophic consequences…and we have good examples of that in recent history.

The broad lesson here is that if the conditions aren’t right then it is inevitable that unethical behavior will dominate.

KA: Yeah well human nature will ensure that won’t it?

NP: [laughs] Yeah, and you don’t need a psychologist to tell you that.

KA: [laughs] Indeed…and I think that would be a good note on which to bring this conversation to a close. Neil, thanks so much for your time and insights. It’s been a pleasure to chat with you  and I look forward to catching up with you again…hopefully in person, in the not too distant future.

NP: Yeah, Singapore and Perth are not that far apart…