TEAM TIP

When reflecting on why certain systems behave the way they do, we regularly look for patterns of conflict among strategic resources within the organization. Strategic resources are those resources that management knows are important to the survival and long-term health of the organization. This conflict among strategic resources often seems to be due in great measure to what we call the “global to local paradox” of management practices.

Management and operations rarely communicate effectively because they are seeking opposite results from the same organization.

The global to local paradox reflects the impact of the difference in philosophy in various levels of the organization as to what to do with strategic resources. The global perspective refers to management’s goals and incentives, as defined by their role in getting the overall organization to achieve the goals and incentives of its shareholders. The local perspective refers to the goals and incentives that motivate people within the different areas to do what they do every day in performing the work of the organization.

The Paradox

The global to local paradox is the difference between management’s desire to continually grow global output at increasing rates for the shareholders over time versus operation’s need for local stability to maximize asset use, provide predictable returns from investor’s capital, and continually satisfy worker’s personal needs. Some implications of this unintended conflict are clear.

Management and operations rarely communicate effectively because they are seeking opposite results from the same organization. In response to shareholders’ demands, management pushes operations to take advantage of market opportunities and to grow output exponentially. This is what management gets paid to do. Operations strives to address growth within their capacity and cost constraints, mainly by boosting productivity. This is what they get paid to do. In essence, management is paid to focus on bringing tomorrow to reality, and operations is paid to focus on optimizing today’s reality.

Much focus in current management practice is placed on identifying and implementing methodologies for aligning the global and local goals toward satisfying shareholders. If the organization is not achieving its goals, it is assumed that something is not aligned. Since management’s goals and incentives tend to be identified more directly with those of shareholders, then, by definition, what we are really saying is that the local goals are not aligned with the global goal. This assumption leads to the conclusion that local goals need to be modified and shifted in the global, or shareholder, direction.

GLOBAL TO LOCAL PARADOX

In this example of the “Accidental Adversaries” archetypal structure, managements’ focus on growth (the global perspective) unintentionally undermines operations’ ability to optimize performance (the local perspective). The solution is to map out the organizational dynamics to develop a sustainable set of expectations for the firm as a whole.

In response, management places growth and flexibility demands on operations, requiring much faster turnaround times and internal growth rates than the typical productivity gains operations can deliver from optimization efforts. To solve the problem, management searches for additional capacity, internally or externally. Operations, in turn, is subjected to a constant stream of criticism regarding their inability to keep up the pace. This conflict not only stresses the relationship among the individuals in the firm, but also reduces the potential for achieving results — people spend more and more energy defending themselves from attack. We see this pathology in newspapers everyday.

What Is The Systemic Under-standing of This Paradox?

This paradox is an example of the “Accidental Adversaries” archetypal structure. In “Global to Local Paradox,” the virtuous cycle (loop R1) shows management’s focus on growth. As the organization grows, shareholders exert more and more pressure on management for returns, pushing them to find new opportunities. Over time, increasing the return on investment becomes increasingly difficult, as fewer opportunities are large enough to fill the new expectations. The company either must make more, smaller acquisitions or initiate a major transformation.

While management is looking for a steady ramp up in growth over time (loop R2), additions to internal capacity influence the operations area, or local perspective, in step changes. Each new acquisition presents the same challenge to the people doing the work inside the firm: They must determine which elements from the new acquisition stay and which go, and then they must figure out the best way to optimize the new mix. Operations research literature indicates that this constant adoption of new elements in a world that is trying to optimize creates tremendous tension for the folks doing the work on a daily basis.

Moreover, operations is judged on their ability to keep costs down and optimize the existing asset base. However, to truly do their job well, they need a stable environment in which to focus on optimizing the resources under their control. There is a physical limit to what they can get done at any point in time. This local perspective is seen in loop R3, as operations pushes hard on optimization efforts to achieve their goals. The essence of the global to local paradox is shown in the diagram in the variables:, “Growth Expectations by Management” versus “Optimization Efforts” by the operations team.

What Can We Do?

The most challenging issue facing the people living this conflict is that it crosses the strategic and operational interests of the organization. The folks doing the work do not often have all of the information that those running or financing the firm have. They are paid to look at very different pieces of the organization and rely on very different mental models in evaluating what to do next.

So, what can we do to mitigate the effects of the paradox? As with most systemic issues, awareness that the conflict exists is the best place to start. Developing a systemic view of the conflict with a more detailed causal loop diagram or in some cases stock and flow model is fundamental. This causal map facilitates study of the archetypal pattern of behavior and unravels the roots of the underlying behavior this paradox creates. In addition, the causal map invites the organization to investigate the diverse motivations across functional lines in the organization, which create potential internal conflict (see “Breaking Down the Functional Blinders: A Systemic View of the Organizational Map,” The Systems Thinker, Vol. 10, No. 10, p. 6-7).

In some cases, when the group wishes to test the cause-effect relationships in their map, they build a dynamic business simulator. What is critical is to make explicit the linkages among the key resources, expectations, and incentives that each group holds to be important in a way that shows respect and rigor around each view. One way to do so is to involve the entire team in developing the computer model. Engaging shareholders, management, and operations in discussions around the results of the systemic understanding of the causal map is a highly leveraged method for building communication bridges across the paradox.

Practically, there will be issues that the senior management team cannot share explicitly with a broader audience during these sessions, such as the intent to acquire or sell specific assets. Yet the discussion of what effects such actions may have on the ability to achieve stated goals should be included. By understanding what motivates groups at the local level, management can better understand the effectiveness of the incentives they have put in place in generating desired behavior from the different areas of the firm.

In one case, a large capital equipment manufacturer’s sales were rebounding from a cyclical downturn, yet the firm was not generating the expected improvements in profit.

Systems tools expose many fundamental, unquestioned assumptions.

Management thought the marketing group was doing a fantastic job, while the assembly group was letting the firm down through late deliveries and financial penalties. Looking at the dynamics and incentives in detail, it soon became clear that management had set up the conditions for this underperformance to happen. Marketing was being paid based only on orders placed and did not have to worry about the firm’s ability to deliver on time. The marketing director commented “I know how to fix this, but you pay me to accelerate sales, so I will stick to selling as much as I can.”

Though obvious now, by changing the incentive so that marketing was paid based on orders delivered on time, management ensured that the marketing and assembly groups now worked closely together to sell only those units that could be delivered on time. By relinquishing a bit of market share, they were able to maximize profit and invest in additional capacity. Referring to the diagram, changing the marketing incentive released pressure on the “Additional Growth Demand on Operations” variable, slowing down the need for operations to expedite orders. To do so, management had to realign its “Growth Expectations” with the existing internal capacity.

Finally, systems tools expose many fundamental, unquestioned assumptions around the philosophy of “This is the way things are done here.” In working together, shareholders, management, and operations can minimize the effects of the global to local paradox and develop and achieve a sustainable set of expectations and results for the firm.

The post Managing the Global to Local Paradox appeared first on The Systems Thinker.

From the Bedroom . . .

How might two people who view themselves as “playing for the same team” find themselves acting as adversaries? Consider an example from the homefront. Maria and John have been married for five years. As their relationship matured, their levels of intimacy and trust blossomed (see Trajectory A in “The Ups and Downs”). More recently, however, they havebeen riding an emotional roller coaster ride, as indicated by Trajectory B. What is going on?

As shown in “The Accidental Adversaries Trap” on p. 7, this rollercoaster behavior is caused by shifts in the dominance of two reinforcing processes. During the good times, the “Healthy Relationship” loop (R1) is dominant. John and Maria’s quality of life is high, and each acts in ways that contribute to his or her partner’s well-being. When R1 is in full flight, the quality of the relationship heads upward.

THE UPS AND DOWNS

As a relationship matures, the partners’ levels of intimacy blossom (Trajectory A). However, it is easy to slip into an adversarial relationship leading either to an exhausting roller-coaster ride (Trajectory B) or to a break-up (Trajectory C). Trajectory D represents the wobbly—yet continuous—improvement in the relationship that can result from managing the “Accidental Adversaries” dynamic

From time to time, however, Maria or John takes actions that unintentionally disturb the other party. For instance, when faced with stress at home or in the office, John withdraws because it makes him feel better (B2). Maria then becomes irritated by John’s unwillingness to talk through what is on his mind. She copes with the situation by venting her frustration with periodic bursts of anger or tears (B3). However, her outbursts disturb and confuse John, leaving him to wonder what he did wrong. The couple falls into a vicious cycle that undermines the quality of their relationship—the “Dysfunctional Relationship” loop (R4).

If asked to account for the ups and downs of their relationship, John and Maria are likely to give an eventlevel explanation that focuses on specific incidents. The “Accidental Adversaries” structure highlights what is counter-intuitive to them: that their actions contribute to the behavior that they so dislike in their partner. Although they ultimately work things out, the result of this see-saw pattern of behavior is that John and Maria aren’t as close as they would like to be.

The “Healthy Relationship” loop operates while the pair’s behavior is team-centered. As the “Dysfunctional Relationship” loop takes hold, Maria and John both focus more and more on their own quality of life, becoming increasingly self-centered. If R4 were to remain dominant, the quality of the relationship would be thoroughly undermined (Trajectory C in “The Ups and Downs”): Maria and John would have inadvertently become adversaries. If this situation were to persist, they might eventually split up. But because they value their relationship, they have a pattern of regular “clearing the air” spats. These discussions help them to recognize their own contribution to the miserable situation, and lead them to resolve to act differently in the future. Dominance shifts from R4 back to R1, at least for a time.

. . . to the Boardroom

Chances are that you have seen the same dynamics occurring between groups within organizations. For instance, have you noticed how the human resources function in many companies often finds itself in an adversarial role with the groups that it is attempting to support? This service role should be the basis for strong, trusting relationships—so what goes wrong? To map the structure, you might want to redraw “The Accidental Adversaries Trap” with HR in place of John and your own function in place of Maria (you can compare your diagram to the authors’ version at www.pegasuscom.com/hrloop.html).

In the “Healthy Relationship” loop (R1), HR offers high-quality services that contribute to your group’s success. In response, your group relies more heavily on HR, bringing them success and allowing them to extend the range of services they provide. These new offerings help to boost your department’s productivity.

Too often, though, the internal loops of the “Accidental Adversaries” structure (B2, B3, and R4) shape the relationship. HR responds to breaches of regulations that put the company at risk—and threaten their success— by instituting a policy that restricts your group’s autonomy. Your group may believe that this policy interferes with its ability to conduct business— HR should be supporting your initiatives instead of hampering them! The group might side-step the constraints and continue to do what it wants to do. HR then feels even more threatened by your policy breaches, leading them to step up their restrictions. Soon, your departments are trapped in an ongoing power struggle—to the detriment of the organization as a whole.

Out of Adversity

What lessons does the “Accidental Adversaries” structure hold for those wanting to build strong partnerships? Clearly, it is easy to slip into an adversarial relationship leading to either an exhausting roller-coaster ride (Trajectory B) or a break-up (Trajectory C). The challenge is to strengthen the “Healthy Relationship” loop, allowing it to remain dominant

One way to do so is for the parties in a relationship to avoid acting solely in their own interests, instead doing things that contribute to the other person’s success. This selfless approach would mean that John would learn how to talk openly rather than withdraw, and Maria would learn how to handle her frustrations in new ways.

The risk involved is that one party might take advantage of the other. And in many situations, people or departments cannot give up actions that may bring them into conflict with others. For instance, HR cannot ignore regulatory breaches—it must find ways of maintaining constructive relationships with other groups while protecting the interests of the entire company.

More enduring results can come from both encouraging selflessness in the relationship and weakening key links in the “Dysfunctional Relationship” loop (see the dotted arrows in “The Accidental Adversaries Trap”). Managing the relationship involves each party (1) recognizing that the other is going to do things for themselves from time to time, and (2) learning to observe the consequences without assuming bad intent by their partner. This approach allows for some wobble in the relationship without allowing the “Dysfunctional Relationship” loop to become dominant. Trajectory D in “The Ups and Downs” represents the wobbly—yet continuous—improvement in relationships that can result when partners act with insight into this systemic structure.

Strong partnerships are essential for learning. The “Accidental Adversaries” structure illustrates the need to work at building relationships, rather than letting them fall into adversarial conflict by default

THE ACCIDENTAL ADVERSARIES TRAP

During the good times, John and Maria’s quality of life is high, and each acts in ways that contribute to his or her partner’s well-being (R1). However, when faced with stress, John withdraws because it makes him feel better (B2). Maria becomes irritated and copes with the situation by venting her frustration (B3). The couple falls into a vicious cycle that undermines the quality of their relationship (R4).

The post Wobbling to Success by Managing the “Accidental Adversaries” Dynamic appeared first on The Systems Thinker.

Instead of banding together in the face of this scrutiny, Ford and Bridgestone/Firestone have publicly traded accusations. In the most recent round of barbs, Ford executives laid all of the blame on faulty tires, while Bridgestone/Firestone officials alleged that drivers under inflated their tires based on Ford’s recommendations and that design flaws make the Ford Explorers susceptible to rollovers. The result of this escalating war of words has been negative publicity for both companies, as well as costly litigation.

Covering Your Assets

How did this once productive partnership turn sour? We might view the current crisis as a variation of the, “Accidental Adversaries” structure (see, “Wobbling to Success by Managing the ‘Accidental Adversaries’ Dynamic” in V11N9). When things were going smoothly, the association between the two brands led to success for both parties (R1 in “A Demolition Derby?”). Firestone’s public image as the maker of safe and reliable tires enhanced Ford’s image and vice versa.

A DEMOLITION DERBY?

When things were going smoothly, the association between Ford and Firestone led to success for both parties (R1). But the underlying dynamics caused each firm to take actions that undermined the partnership (B2) and (B3). When problems arose, the only solution seemed to be to blame the other (R4)

But the underlying dynamics between car companies and tire manufacturers caused each firm to take actions that subtly undermined their partnership and perhaps even their customers’ safety. Tires are the only significant part of a new car that the automaker doesn’t warrantee. In this way, they avoid responsibility for tire failures(B2). In turn, tire companies protect their position with auto makers by not sharing information about warrantee claims (B3).

This “cover-your-assets” behavior means that the companies can easily overlook patterns of problems. It also interferes with joint problem solving once difficulties do come to light. At that point, the only solution seems to be to cast the blame elsewhere (R4).

Avoiding the Scrap Heap

How can applying the “Accidental Adversaries” structure help in this situation? One leverage point is realizing that the way the relationship between tire makers and car companies is structured impedes the flow of information and almost guarantees that the parties will act based only on their own self-interest. Partners need to highlight the benefits of mutual success and the dangers of mutual failure and find ways to enhance that success. Doing so involves communicating about potential problems early in the process and seeking joint solutions. Otherwise, they may end up in a destructive demolition derby with both parties destined for the scrap heap.

The post Ford and Firestone Hit a Pothole appeared first on The Systems Thinker.

But being aware of the need for strong connections does not bring them about. If anything, despite our best intentions, we seem to be losing the capacity to build and maintain productive relationships: Marriages are breaking down, teams are falling apart, departments are stuck in conflict, and business partners are spending more time covering their flanks than generating value. Despite the best intentions, time and again, friends become enemies—a dynamic known as “Accidental Adversaries.”

The Dynamics of Breakdown

In any relationship, each party has his or her own purpose. Some of the things you do contribute to my achieving my objectives and others get in my way. Often the “getting in the way” occurs when you inadvertently make my life more difficult while pursuing your own goals. In response, I might set up safeguards for future interactions.

These safeguards end up making your life more difficult. You then take action to protect your interests, unintentionally obstructing me in turn.

In this case, we have fallen into the “Accidental Adversaries” structure—a reinforcing cycle in which we act in our own self-interest and impede one another. But why is it so easy to lose sight of our mutual goals? Writing in The Fifth Discipline, Peter Senge suggests that learning is often disabled by a pattern of thinking he calls “the enemy is out there.” For instance, I can usually find evidence that you are to blame for problems in our relationship. In a work situation, if you miss an agreed-upon deadline for completing your end of a project, I may reproach you for your lack of accountability. Casting the blame on you absolves me of any responsibility for the delay and reduces the possibility that I might act to put things right.

At the same time, because of my reprimand, you may become defensive. Just as I can find ways to blame you for the delay, you can always find ways to blame me—you may believe that my poor instructions made your task more time-consuming than it needed to be. This kind of “tit-for-tat” blaming plays an important role in making relationships go wrong.

Another element that often undermines partnerships is “either/or” thinking. Depending on whether I most often notice the things you do that please me or those that annoy me, I classify you as “good” or “bad,” “trustworthy” or “untrustworthy.” The combination of “tit-for-tat” blaming and “either-or” thinking can undermine even the best-intentioned alliance. We may sense that we should be working together, but we feel that we have little choice but to protect ourselves. After all, we each think that the other is to blame for any difficulties, and our “either/or” thinking prevents us from noticing the good thatwe are also doing for one another.

Bumps in the Road

What lessons can we take from these dynamics? Although it is tempting to think that we can sort out our disagreements by finding out “who started it,” this approach is unlikely to help us break out of the vicious cycle in which we’ve become trapped. The answer to that query is likely shrouded in the mists of time and a perplexing lack of bad motive on anyone’s part. And posing the question merely reinforces the blaming activity.

If we are to resist the tendency to fall into adversarial relationships, we need to accept that, from time to time, we will inadvertently obstruct one another. The good news is that we can choose to focus attention on the benefits that we offer one another, and we can cultivate our capacity to act in selfless rather than self-interested ways. For this to happen, we need to form relationships with those whom we trust to be like-minded. Then, if we do encounter bumps in the road, we can work together to get to our destination without undermining the quality of our relationship or the pleasure we take in the journey.

Philip Ramsey teaches organizational learning and training and development at Massey University in New Zealand. He is the author of several books, including the Billibonk series (Pegasus Communications). Rachel Wells is currently completing her master’s degree in human resource management at Massey University. She is particularly interested in research into the creation of learning environments at work.

The post How Am I Supposed to Work with Her?”: The “Accidental Adversaries” Storyline appeared first on The Systems Thinker.