Thriving in Ambiguity: Lessons from Exploratory Organizations

Thriving in Ambiguity: Lessons from Exploratory Organizations

  • Dev Patnaik Dev Patnaik
  • Lauren Magrisso Lauren Magrisso
  • July 19, 2016

Those who are struggling to deal with ambiguity can learn a lot from organizations that seem to thrive in uncertain environments.

One of our colleagues recently went on a family camping trip to an isolated area along the Alabama-Florida border. The family had never been camping before, and the small children were extremely excited about the adventure that lay ahead. But when they arrived at the campsite, they realized that they had no instructions for building their brand new tent.

As the kids began to pull the many bits and pieces out of the tent’s carrying case, the magnitude of the problem became clear: 50 puzzle pieces, two small children, no instructions, and half of the poles looked identical. One by one, our colleague and her husband started trying to fit pieces together to build the tent frame. As the sun began to set, trial and error paid off: the bag of parts was finally a tent – and not a moment too soon. Just as they sat down to admire their handiwork, the sky opened and the family ducked into the warm, dry tent.

As daunting as this task had seemed at the outset, the family’s collective problem-solving abilities were enough to figure it out. Though lacking instructions, even the kids knew what a tent should look like, and they had all the parts they needed. In other words, the goal was well understood, and all the key variables were readily accessible. Success was simply a matter of connecting the goal to the variables. Many complex problems that today’s leaders face – from supply chain optimization to ingredient sourcing – are a lot like assembling a tent without instructions. No matter how complex the challenge, all the variables and parameters are known, and the desired outcomes are clear.

Another category of complex problems has nothing in common with raising a tent. These problems are a lot more like Lewis and Clark trying to find a path to the Pacific Ocean: they didn’t know how far they were going, which path to take, what they would need along the way, or where they would eventually find themselves. In sum, the parameters were unclear; the variables were incomplete, distorted or unknown; and past experience offered little guidance.

Most organizations are pretty good at solving ‘tent problems’. Specialized departments, internal experts and processes like Six Sigma help to systematically break down and solve even the most challenging tent problem. Lewis and Clark problems, on the other hand, can’t be solved by analysis alone. That’s because they’re ambiguous, ill-defined and more often than not, the question being asked may change mid-course. Often, the same systems that help companies solve tent problems can prevent them from solving more ambiguous problems. Instead, these problems require intuition and emergent thinking to go beyond what is currently known and reveal something new. As often as they require rigorous analytics, ambiguous problems require leaps of faith.

Unfortunately for most organizations, Lewis and Clark problems are exactly the types of challenges they face when they’re trying to enter new markets, develop new businesses and appeal to new customers. In today’s fast-changing marketplace, effectively solving ambiguous problems is a crucial challenge, because these problems are often the source of significant organic growth. In this article we will describe the type of organization that thrives in such an environment: the exploratory organization.

Characteristics of the Exploratory Organization

There is a special class of organization that is uniquely suited to dealing with ambiguous problems. We call them Exploratory Organizations, and while they come in all shapes and sizes, all are comfortable working toward ill-defined objectives and objectives that change over time. Such organizations include Google, Second City Improv, Cirque de Soleil, Pixar, and our own firm, Jump Associates. 

The good news is that you don’t have to overhaul your entire organization to benefit from elements of the exploratory organization. In fact, the ability to tackle ambiguous problems is really only crucial for those responsible for future growth. Though the leaders responsible for this audacious task carry a variety of titles – senior vice president of new business development, chief strategy officer, chief marketing officer or division president – all of them routinely deal with ambiguous problems surrounding the future of their business.

By infusing their teams with some of the best practices of organizations that thrive in ambiguity, leaders can dramatically increase their success at solving their most pressing challenges – the kinds of issues you don’t really want to face but can’t afford to ignore.

We have found that Exploratory Organizations share five basic characteristics:

  • They foster empathy with their customers, which enables them to recognize a good opportunity when they see one.
  • They aren’t afraid to let answers emerge over time.
  • They reward learning, not just results.
  • They create a culture of team players, not individual superstars.
  • They hire hybrid thinkers who can connect the dots between multiple disciplines.

These five characteristics allow Exploratory Organizations to foster a culture that can successfully translate ambiguous problems into action able opportunity.We will discuss each in turn.

1. Foster empathy

With ambiguity surrounding the very questions they’re asking – not to mention the answers they’re developing – it’s incredibly difficult for Exploratory Organizations to know what success looks like. When are they done? What does a good end result look like? And what will their customers, clients, audience members or stakeholders value? To answer these questions, and help navigate the ambiguity of the results, the best Exploratory Organizations cultivate a rich sense of empathy throughout their teams, enabling them to judge their work from the perspective of those who matter most.

In many organizations, time spent with consumers is often a precious commodity that gets put on the back burner in favour of more pressing matters. But empathy is all the more important when it comes to solving ambiguous questions. Getting into new ‘white-space opportunities’ can feel like a risky proposition. Understandably, executives demand data to support the new direction. Sometimes, however, that data simply doesn’t exist. After all, it’s a white space, so by definition, there are no existing products or services to compare it to. In such scenarios, empathy and intuition for a market may be the best sources of ‘data’ available. To get traction for their ideas, new business teams need to help their colleagues and stakeholders develop a strong gut sense for what people really need.

Lululemon, a specialty athletic apparel retailer, embraces empathy throughout its ranks. Founded on the CEO’s personal experience with uncomfortable yoga attire, the company works hard to retain first-hand empathy for its customers, even as it grows. Examples of its practices: every employee must work eight hours per week in retail stores to stay close to customers; the company partners with local yoga instructors to seek input on design; and Lululemon stores themselves host yoga classes. Thanks to this relentless customer focus, the company has sustained massive growth, even as other retailers have faltered.

2. Let answers emerge over time

One of the fundamental benefits of addressing ambiguous problems is unearthing questions that you didn’t even know to ask, which requires a process that is exactly the reverse of the deductive thinking most of us are taught to use. Deductive thinking starts with the major themes and big ideas, and then works to flesh out the support- ing details. Of course, if we knew what those big ideas were from the outset, we wouldn’t have to develop them. With ambiguous problems, the only way around this dilemma is to think in reverse, work- ing with the details to let the big picture emerge over time.

Such ‘emergent thinking’ can reveal new markets and new strategies. On paper, at least, the benefits of emergent thinking are clear, but this inductive, emergent approach challenges long-held habits, and it doesn’t produce answers right away. Rather, teams need time to immerse themselves in a morass of data from multiple sources before patterns will begin to reveal themselves. This non-linearity makes it incredibly hard to support emergent thinking in a corporate environment. As a result, it is crucial that executives nurture this kind of thinking with supportive tools and infrastructure. Cirque du Soleil uses this emergent approach to design new productions: the company finds talent first, then develops a show whose story and elements emerge based on the talents of their new recruits.

Most corporate cultures place a primacy on decisiveness and action. This works well in many situations – except when it comes to dealing with ambiguity. Faced with ambiguous questions, quick answers can actually be counterproductive. But when the CEO asks, executives feel pressure to come up with an answer on the spot. They believe it’s not OK to admit that they don’t know – while in many cases, that is the best answer that they could possibly give. Admitting you don’t know something actually provides the freedom to find the best answer – not just the one that’s easy to find or already known. Dan Rasmus, author of Listening to the Future, finds that scenario planning techniques can be incredibly valuable in shaping strategy, in part because they provide a management methodology for executives to admit they don’t know something.

3. Reward the learning, not just the results

To tackle ambiguous problems, teams need freedom to explore. Just as Lewis and Clark took a number of wrong turns along their journey to the Pacific Ocean, corporate teams need the ability to chase down a few dead-end leads before finding the right answer. This doesn’t mean that executives need to do away with measurement altogether; rather, they can adjust in-process metrics to better suit the nature of the work at hand. Most metrics and performance systems are set up to measure and reward tangible results, not new knowledge. Unfortunately, this model creates pressure to exclusively pursue avenues that are certain to yield results. When dealing with Lewis and Clark problems, that’s a surefire way to never find the Pacific Ocean. Instead, leaders of Exploratory Organizations reward newly-discovered knowledge, support a healthy amount of risk-taking, and acknowledge the fact that the road to new ideas is almost never a straight line.

One crucial in-process metric for an Exploratory Organization is the amount of divergence and learning that occurs throughout an initiative. Since outcomes are inherently uncertain in ambiguous domains, wide exploration is crucial to arriving at answers that reveal new knowledge. The less a team explores, the more likely it is that it will rehash known ideas. Success entails exploring multiple possible answers, learning from each, and starting over again, better informed than before. The more a team is willing to explore, iterate and revise its work, the more likely that it is truly learning something new and getting to better answers. More importantly, they will identify the most important questions to be answered.

Systems that prize efficiency and error reduction stop exploration in its tracks. 3M is built on a history of research, experimentation, and innovation. Several years ago, when CEO James McNerney rolled out a Six Sigma practice across the organization, the initial results were promising: 3M’s stock shot up and a culture of efficiency began to take shape. With the rise of this new corporate discipline, however, came a decline in successful new product launches. This was no coincidence: Six Sigma’s emphasis on error reduction and the elimination of uncertainty squeezed the exploration, risk, and learning out of 3M’s formerly fertile innovation engine. Originally designed to reduce defects in the manufacturing process, Six Sigma had been mistakenly applied to reduce the margin of error in business processes that bore little similarity with manufacturing. Recognizing these effects, 3M has since scaled back its use of Six Sigma.

Google, on the other hand, officially offers its employees time to explore. Patterned after 3M’s famed ‘free time for tinkering’, Google encourages employees to spend 20 per cent of their time on projects outside of their core work. Called ‘Innovation Time Off’, this exploration stimulates new thinking and fosters a culture of learning and exploration. It also produces results: Marissa Mayer, Google’s vice president of search products and user experience, credits this initiative with 50 per cent of Google’s new product launches.

4. Create a culture of team players, not individual superstars

The translation of questions like ‘what’s the future of healthcare?’ ‘how can we build a business model that fights the obesity epidemic?’ and ‘how do I reinvent a flat-lining core business?’ into real business opportunities is far too complex for any one person to tackle alone, no matter how talented they might be. Teams are far more effective in pushing the boundaries of current thinking and bringing multiple perspectives to bear on a problem.

Exploratory teams address these questions incredibly effectively. However, they operate in radically different ways from a typical corporate team. Most notably, members of Exploratory Organizations forego individual stardom in favour of team success. Unlike most firms, Exploratory Organizations tend to favour relatively flat hierarchies. Even where hierarchies do exist, idea development is considered a shared responsibility, and junior team members contribute alongside senior leaders. Ed Catmull, co-founder and president of Pixar, fosters this kind of problem solving and credits his organization’s efforts to “nurture trusting and respectful relationships” with Pixar’s creativity and success.

Second City, the widely-recognized improvisational comedy troupe, is another prime example of an Exploratory Organization. Onstage, troupe members play off of one another to collaboratively develop a scene. Based on just a few audience suggestions, they improvise a plot, characters and events – all while the audience watches. As the scene unfolds, each troupe member responds to the suggestions of his or her teammates, creating relationships and stories that none could have developed on their own. The magic of Second City’s improvisational comedy lies in the ability to collectively and spontaneously create a compelling story.

In an improvisational comedy performance, each player begins the performance with an ill-defined role or no role at all. As the performance unfolds, individuals’ roles develop in response to, and in support of, their teammates. The same is true of most high- performing Exploratory Organizations. Unlike traditional corporate environments, exploratory teams have roles that tend to be unbounded and minimally defined. More often than not, team responsibilities (although usually very broad) are better defined than the zones of responsibility for any one individual on the team. This fluid structure sets a tone of shared responsibility, where each team member supports one another in achieving the team’s objectives. 

Of course, this system couldn’t work without an incentive system that rewards the team’s performance. Exploratory Organizations structure their compensation and recognition systems to incentivize collaboration, cooperation and shared responsibility – and to discourage shirking. This doesn’t mean that leaders should ignore individual contributions, but it does mean that incentive systems should be as strong for teams as for individuals.

Perhaps the most straightforward illustration of incentivizing a team can be found in the restaurant industry. Brasserie Les Halles, home of acclaimed restaurateur Anthony Bourdain, has a strong interest in the collaboration of its staff. After all, the quality of its customers’ experience depends not just on the attentiveness of one waiter, but on a team of bussers, chefs and bartenders. Les Halles pools patrons’ tips and shares the earnings amongst the entire staff, in recognition of the fact that the bus boy supports the server, and the chef can’t deliver his exquisite entrées without the team of wait staff. They’d all be out of a job if they didn’t cooperate to deliver a delightful experience for their customers. This cast of characters operates as a well-oiled team, all working towards a common goal – and is rewarded accordingly.

5. Hire hybrid thinkers who can connect the dots between multiple disciplines.

No matter how robust the metrics, team or approach, one crucial ingredient remains: individual skills and talent. Hybrid people are crucial to the effectiveness of an exploratory team.

Hybrid people are the rare folks whose expertise and interests cross multiple disciplines. They might be accountants with degrees in fine art, sculptors with MBAs or anthropologists who’ve spent years practicing industrial design. Some of the most important agents of change in the corporate world are hybrid thinkers. Claudia Kotchka, for example, trained as an accountant, built a career in marketing, then immersed herself in the world of design before leading a design revolution at Procter & Gamble.

Like Kotchka, hybrid people have been uniquely successful at identifying and seizing opportunities that others have overlooked. That’s no accident: their advantage lies in their ability to see connections between seemingly-unrelated pieces of data. Quite often, as was the case with Kotchka, these people bring together in one brain the worlds of design, culture and practical business needs. But hybrid thinking isn’t restrained to those specific disciplines; it comes in all shapes and sizes. The current chairman of the U.S. Joint Chiefs of Staff, Admiral Mike Mullen, brings to the table expertise in naval warfare, global economic policy, education and social media; and James Cameron has revolutionized filmmaking through his deep knowledge of technology and storytelling.

Unfortunately, corporations don’t often celebrate hybridity, so the skill sets they seek are typically uni-dimensional. That’s often sensible: corporations want a seasoned PR pro to run communications and an ex-investment banker to run strategy. But there are almost always a few hybrid people in even the most conservative corporations – folks with an accounting background who’ve come up through the ranks in marketing to lead design or R&D folks with a passion for anthropology. Such hybrid thinkers are exactly what it takes to address ambiguous problems.

In closing

Exploratory Organizations capture our imaginations: their unique work, groundbreaking insights and fresh approach to business seems inspired. And it is. But that doesn’t mean that other organizations can’t learn from what they have accomplished.

Developing the capability to tackle ambiguous questions within an organization requires a dedicated effort to shift practices and attitudes. Of course, these cultural shifts aren’t trivial. Some of the best companies on Earth are hard-wired to behave in ways that prevent exploration. Admitting that we don’t know the answer to a question makes most people uncomfortable, and the learning process is often messier than we’d like it to be. However, creating conditions that minimize the risks associated with grappling with ambiguous questions holds great promise. While the journey can be difficult, the payoffs can be game-changing.

Dev Patnaik

CEO

Dev Patnaik is the CEO of Jump Associates, the leading independent strategy and innovation firm. He’s a board member of Conscious Capitalism. Dev has been a trusted advisor to CEOs at some of the world’s most admired companies, including Starbucks, Target, Nike, Universal and Virgin.

Lauren Magrisso

Principal

Lauren brings an expertise at the intersection of social research, design and business strategy. She has helped some of the world’s most admired companies tackle critical challenges, from climate-beneficial product strategies to the future of retail.