Introduction : Leadership for Dealing with Complex Changes

7 Leading Change in a Complex World: Transdisciplinary Perspectives Introduction: Leadership for Dealing with Complex Changes CHAPTER 1 Introduction: Leadership for Dealing with Complex Changes ANNI KANGAS, JOHANNA KUJALA, ANTTI LÖNNQVIST, ANNA HEIKKINEN & HARRI LAIHONEN T he world is changing rapidly. Many contemporary change processes are increasingly complex. The effects of climate change, urbanisation, ageing societies, the dynamics of global security, or creation of sustainable conditions for business development are all phenomena that cannot be made to fit any simple model. They have a number of boundary-spanning components and are dynamic and open to their environments. This means that leaders must possess new kinds of knowledge and skills to understand and deal with such complex phenomena. To respond to the needs of various kinds of leaders operating in these complex environments, this book develops a framework for leading change. This approach is here called the Leadership for Change (LFC) framework and it builds on the following three ideas: 1. Many contemporary change processes are complex and systemic. J This highlights the capacity to think across traditional institutional boundaries and the ability to see patterns and structures beyond specific elements and events. 2. Issues and problems crossing traditional institutional boundaries cannot be resolved by a single actor or sector. Governments, businesses, civil society actors, citizens and consumers must work together, negotiate, and agree on novel ways of doing things. J This stresses the need to understand how different societal sectors and actors function and make sense of the world, and how they can work together. 3. Complex environments are marked by ambiguity and uncertainty. J This emphasises the capacity to embrace uncertainty and use various sources of information and knowledge to create a shared understanding of the situation at hand. 8 Leading Change in a Complex World: Transdisciplinary Perspectives Introduction: Leadership for Dealing with Complex Changes With the growing complexity and ambiguity of leadership contexts, leadership functions have become dispersed. Leading change in a complex world is often a collective effort taking place both with and without formal leaders. This book is aimed at leaders as well as analysts of leadership examining contemporary change processes from various positions. The book is not confined to what is known as leadership studies. It instead examines leadership from a transdisciplinary perspective. Transdisciplinarity means taking a holistic approach to leadership; it not only uses knowledge from different disciplines but displaces disciplinary thinking in its examination of leadership and change (e.g., Aalto, 2012, 16–19). The transdisciplinary approach is developed here by examining and analysing various phenomena crossing the traditional fields of business and management, public administration, and politics. Instead of taking disciplinary discussions as the point of departure, the chapters presented in this book are united by a set of concepts which provide a framework for enacting and analysing leadership: complex world, relational leadership, and dynamic change (see Figure 1). Complex world refers to the idea that the issues and systems comprising society can be placed along a continuum from simple to complex. Relational leadership points to the idea that leadership cannot be confined to simple leader-follower relationships. It is not restricted to a single formal leader or small group of leaders. Relationality also appreciates the wider social and environmental context in which leadership is enacted. In contrast to planned change, which is linear, organised, and efficient, dynamic change appreciates the non-linear, trans-scalar, and less predictable features of change. The LFC framework is first and foremost an analytical prism. As illustrated by Figure 1, topics and issues can be placed differently along the continuum ranging from simple to complicated and further to complex societal problems. Although the world appears increasingly complex, some organisational and leadership issues remain relatively straight-forward and routine. The same applies to leadership and its relationalities. Despite the obvious tendency toward plural, flexible and even leaderless organising, many leadership settings are hierarchical and leader-centric. As Arja Ropo reminds in the afterword chapter of this book (Ropo, Chapter 18), in times of chaotic change, heroic and charismatic leadership is often sought for. The chapters of 9 Leading Change in a Complex World: Transdisciplinary Perspectives Introduction: Leadership for Dealing with Complex Changes the book examine not only relational, but also more leader-centric or entitybased, leadership settings. For example, leadership exercised by the heads of states or companies’ boards of directors is closer to the leader-centric end of the spectrum while stakeholder cooperation or customer value creation display relational features of leadership. The contributions to the book also differ in their understanding of change. The practices of consumer citizens in reducing food waste, societal transitions towards the circular economy, and the emergence of new power blocs in the international system are all change processes. However, they are underpinned by a different conceptualisation of change. Some change processes can be planned, at least to an extent. In FIGURE 1. The Leadership for Change framework for analysing leadership in a complex world ENTITY LEADERSHIP EMERGENT CHANGE COMPLEX PROBLEMS RELATIONAL LEADERSHIP PLANNED CHANGE SIMPLE PROBLEMS 10 Leading Change in a Complex World: Transdisciplinary Perspectives Introduction: Leadership for Dealing with Complex Changes other cases, change is more emergent. Read together, book concretises the LFC framework for understanding the leading of change in a complex world. It thus invites leaders and analysts of change and leadership to consider how the specific process of change they are dealing with situates along the three dimensions of simple vs complex problems, entity-based vs relational leadership, and planned vs emergent change. The following sections explicate what these dimensions entail. Complex World Complexity refers to systemic, interconnected, and unpredictable tasks and operating environments (Nason, 2017). “Complex” is different from “complicated”, as the latter involves many tricky, technical challenges. For example, building a computer or an aeroplane is a highly complicated task requiring much technical skill, the right components, machinery, instructions, etc. However, despite these difficulties, it is possible to repeat the process exactly the same way thousands of times in various locations. As Herbert Simon notes, even going to the moon was complex only in the sense that it challenged our technical capabilities: “It was achieved in an exceedingly cooperative environment, employing a single new organization, NASA, that was charged with a single, highly operational goal. With enormous resources” (Simon, 1996, p. 139). In contrast to “complicated”, “complex” refers to the interconnectedness and interdependence of various factors. When a factory producing clothes for global markets collapses in Bangladesh killing hundreds of workers, this may seem like an accident. However, if we make sense of the event through the idea of complexity, we are prompted to see it in a more multidimensional way: we can see that people work in these conditions because of a shortage of other jobs. This links the disaster to local employment dynamics and the regulatory framework that enabled a factory to operate in an unsafe building. We can further connect the disaster to the dynamics of global trade in which the Bangladeshi garment industry can only survive by offering the lowest overheads. We can also see the link to consumption practices and habits of consumers in Western markets. Nevertheless, it is not possible to 11 Leading Change in a Complex World: Transdisciplinary Perspectives Introduction: Leadership for Dealing with Complex Changes identify a linear path of cause and effect from one event to another. Instead, the relationships are complex, multidimensional, and interrelated. There are various ways to refer to complex and interacting societal challenges. They may be called “messes” (Ackoff, 1999), “grand challenges” (Ferraro, Etzion & Gehman, 2017), or “commons problems” (Ostrom, 1990). A well-known concept used to describe particularly complex and tricky leadership and management contexts is the concept of the “wicked problem” (Rittel & Webber, 1973; Weber & Khademian, 2008). Wicked problems are simultaneously unstructured, cross-cutting, and relentless. For example, the ageing workforce, which Hanna Salminen analyses in her chapter in this book can be considered a wicked problem (Salminen, Chapter 5). It is relentless because it is unlikely to ever be solved permanently. The problem is unstructured in the sense that the ageing workforce is connected to many other factors, such as the business environment, regulation, the skill level of the workforce, global economic cycles, etc. These all have an impact on employment policies and human resource management practices. The ageing of workforce is also cross-cutting, as it relates to many stakeholders with differing perspectives and potentially conflicting views. Another good example of ambiguous and unpredictable social developments are changes caused by digitalisation, which several chapters in this book discuss. Digitalisation is a “megatrend” which currently affects – and will continue to affect – many sectors of society. No part of society is left unaffected by digitalisation, as Martti Nieminen argues in this book. Nieminen analyses the ways in which digitalisation and the associated transformations of the global economy have rendered the existing principles of international tax system outdated (Nieminen, Chapter 6). This volume also shows that some business sectors and industries, such as banking and insurance scrutinised by Raimo Voutilainen and Lasse Koskinen (Chapter 17), are facing major changes due to digitalisation. The interface between company and customer is moving to the Internet, and the development of digital technologies enables many key tasks to be carried out automatically. This There are various ways to refer to complex and interacting societal challenges. 12 Leading Change in a Complex World: Transdisciplinary Perspectives Introduction: Leadership for Dealing with Complex Changes is likely to make many current employees redundant – while new jobs also emerge. Voutilainen and Koskinen suggest that one of the concrete implications of this for leadership and management is that businesses should invest in developing their employers’ abilities to deal with change. In complex environments, each factor is linked to many other factors, which creates surprising outcomes. Many contextual and extra-contextual factors play a role in change processes, and unpredictable events may occur. Ambiguity and uncertainty are thus an inherent part of the leadership dynamics in complex settings. Moreover, even though we can imagine the directions in which societies, technologies and related opportunities are evolving, the future is uncertain and full of surprises: it is not clear what will happen and when. Therefore, it is not easy for a given actor to foresee the optimal course of action. Changes need to be made, but there is uncertainty regarding the type, direction, and timing of the actions to be undertaken. Tapio Juntunen and Sirpa Virta (Chapter 4) discuss this uncertainty in the context of security governance. They show that resilience politics has emerged as a response to the perceived inability of societies and governments to guarantee security through traditional preventive and proactive security policies in conditions of complexity. Moreover, Juntunen and Virta argue the rise of resilience thinking indicates a crisis or transformation of leadership. One way to manage uncertainty is to build visions and strategies on the best available information, whether that comes from internal or external sources. Leaders also need to provide assurances that the required knowledge, assets, and capabilities are available to enact the change. The chapter by Pasi-Heikki Rannisto and Anna Saloranta expands on this point. Rannisto and Saloranta argue that while leading change effectively requires evaluation, few organisations actually evaluate their change projects. The authors also point out some ways in which evaluation can be embedded in organisational change processes (Rannisto & Saloranta, Chapter 10). This book also draws inspiration from the work of scholars who have introduced frameworks that enable us to make sense of events and changes taking place in complex environments. One such example is the VUCA framework, which is used to describe complex and challenging leadership contexts (Bennett & Lemoine, 2014; Elkington, van der Steege, 13 Leading Change in a Complex World: Transdisciplinary Perspectives Introduction: Leadership for Dealing with Complex Changes Glick-Smith & Moss Breen, 2017; Mack, Khare, Krämer & Burgartz, 2016). VUCA stands for volatility, uncertainty, complexity and ambiguity: Volatility – There is a likelihood of sudden and unexpected changes� For example, there may be rapid changes in the cost of resources due to unpredictable events� Uncertainty – Something important may (or may not) happen – for example, due to some key stakeholders’ decisions – but these events are hard to predict� Complexity – The process includes many interconnected actors and variables, so it is difficult to foresee the outcome of events� Ambiguity – When dealing with new situations – for example, when entering an entirely new market – it may be difficult to understand the logic of how things work� The four VUCA characteristics are nowadays quite commonly utilised in the work of leaders and managers, as there are many uncertainties and the world seems to change quickly. A VUCA type of environment can be considered an extreme context for leadership and management. It is complex, fast changing, and unpredictable. In such an environment, it is very difficult to know what is likely to happen and what would be the right step to take. The chapter by Mika Yrjölä, Hannu Kuusela, Elina Närvänen, Timo Rintamäki and Hannu Saarijärvi (Chapter 8) expounds on this point. The authors suggest that in the VUCA environment, leaders and managers need simplifying heuristics to refer to in complex decision-making situations. This argument is concretised with the help of the customer value framework. This can be used to ensure that in the midst of changes, the organisation remains relevant to customers – one of its main stakeholders. Relational Leadership One of the key arguments of this book is that in a complex world, reductionist approaches to leadership are not sufficient. In contexts where multiple actors are involved, no single actor holds all the power, capability, 14 Leading Change in a Complex World: Transdisciplinary Perspectives Introduction: Leadership for Dealing with Complex Changes or competence to make decisions on behalf of others. Instead of top-down, hierarchical management processes, the LFC framework highlights the leadership roles of a variety of actors. Many chapters in this book examine how actors such as frontline employees, customers, or other stakeholders enact leadership. It further examines how cross-sector collaboration can create a greater collective capacity to address wicked problems and complex issues such as global sustainability challenges. In their chapter, Anna Heikkinen, Jere Nieminen, Johanna Kujala, Hannele Mäkelä, Ari Jokinen and Outi Lehtonen (Chapter 2) develop this point in the context of stakeholder engagement. Examining urban ecosystem services – parks, recreational forests, urban gardens – the authors characterise stakeholder engagement as an open and participatory dialogue between various human – and also non-human –stakeholders. Complex settings can be characterised by diverse and potentially conflicting interests, objectives, and perspectives. This has implications for leadership. When multiple stakeholders are involved, it is likely that conflicts of interest arise. As a consequence, negotiations, co-operation, and collaboration are needed. The chapter by Paula Rossi develops this point further. Rossi suggests viewing leading change as a reflexive practice where conflicts and clashing perspectives are explored and appreciated (Rossi, Chapter 9). The LFC framework highlights the need to consider leadership in a relational way. This enables co-operation across sectors and the pooling of the strengths of differently positioned individuals and organisations in solving global challenges. It also challenges the status of human beings as central players in change processes, as the chapter by Heikkinen et al. (Chapter 2) shows. However, leadership is usually defined as the human capacity to influence others, or as the ability to guide or direct others. Often, leadership is seen as a personal skill or trait possessed by an individual, or as the capability or competence of a team or organisation. Research often distinguishes between leadership studies at the individual (micro), organisational (meso), and societal (meta) levels. At the individual level, leadership literature examines leadership from various viewpoints, such as leadership roles (e.g., visionary, contributor, tactician, facilitator) or factors (e.g., strategic, communicative, personal, motivational). At the meso level, research often focuses on organisational performance and 15 Leading Change in a Complex World: Transdisciplinary Perspectives Introduction: Leadership for Dealing with Complex Changes seeks to determine how individual attributes, such as communication skills, are turned into organisational competences and outcomes. In addition to organisational results, it is also important to understand the processes leading to them. It is possible in many organisations to distinguish both top-down and bottom-up leadership processes. In the former, top management – such as a company’s board of directors (see Ruohonen, Chapter 13) – outlines the vision and defines the strategies for the organisation to follow. In the latter, strategies are more emergent and allow members of the organisation and societal stakeholders to participate in defining what is seen as important and valuable (see Kujala, Lehtimäki & Freeman, Chapter 7; Yrjölä et al., Chapter 8). At the societal or meta level, the most critical leadership challenge relates to global sustainability. The United Nations have set 17 sustainable development goals (SDGs) that all societies and organisations across the planet should take seriously to ensure the present generation leaves the Earth in a liveable state for future generations: (1) no poverty, (2) zero hunger, (3) good health and well-being, (4) quality education, (5) gender equality, (6) clean water and sanitation, (7) affordable and clean energy, (8) decent work and economic growth, (9) industry, innovation and infrastructure, (10) reduced inequality, (11) sustainable cities and communities, (12) responsible consumption and production, (13) climate action, (14) life below water, (15) life on land, (16) peace, justice and strong institutions, and (17) partnerships for the goals (United Nations, 2015). Meeting the global challenges posed by the SDGs means that leaders of various organisations must think beyond the simplistic economic value so entrenched in our current thinking. Instead, they need to understand the importance of multiple societal and environmental values and seek guidance and representation from a diverse set of organisational and societal stakeholders in their decision-making. Such a collective effort also means moving towards a more shared and relational understanding of leadership in organisations (Ropo, Salovaara, Sauer & De Paoli, 2015). When understood relationally, leadership is a process of influence through which social order (coordination) and change (new values, approaches, attitudes, behaviours) emerge (Uhl-Bien, 2006). While this book focuses on formal leadership, it also argues that in many cases leadership is not limited to a small set of formal leaders. 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