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January 9, 2012

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In a recent conversation during the diagnosis stage of a strategy project, I was asked whether I would, “put my money where my mouth is,” and price my engagement on a contingency basis. Given the large potential value generation in this project, I might have been tempted but for a lesson learnt earlier in my consulting career.

My heart skipped a beat the other day when I read that Snowden was about to bring some heavy artillery onto the topic of better understanding the starting position when resolving Complex problems. It is an area where the application of some intellectual beef would yield a significant return as I believe the lack of coherent and cohesive tools for analysis of the current state has been a contributing factor in the dominance of the ‘idealised end-point’ strategy.

Historically, I have been an active participant in the process of ‘idealised end-point’ strategy. For many months I have toiled with the client to fix(ate) an ‘idealised end-point’, reverse engineered back to a loosely-defined starting point, and generating the perfect, mechanistic A->B project plan. In the past clients have built the most inspiring ‘Flying Pig’ strategy, having had little porcine characteristics within the organisation, and little competency in aeronautical engineering. Nevertheless, that was the direction in which we had to proceed, and like the Fellowship, we walked forward together, but individually harboured some doubts about the correctness and validity of the direction.

For a consultant, the perfect storm is to be on the implementation team of a ‘Flying Pig’ strategy while being compensated on a contingency basis. It is at this time when you are most susceptible to the ‘Frodo Baggins’ syndrome.

The group builds the Flying Pig strategy together, and the Fellowship (oneself and the eight members of the leadership team) move forward together. However, it doesn’t take long before various parts of the organisation and market pick apart the strategy and suddenly you, the consultant, become the Ring Bearer, the driver of the less attractive parts of the strategy implementation. Usually this is straight forward because you are pure of heart and kind of spirit, but the role of being a Ring Bearer for an overly-optimistic strategy plan in conjunction with the precious pull of high reward can subvert decisions against the clients’ best interests.

When asked to consider contingency pricing, I follow these steps:

1. Introduce the Cynefin framework
2. Place the problems to be solved on the framework.
3. If the problems are complicated, or a mix of complicated and simple, and if I have the confidence that the impact of my intervention will be greater than expected by the client, I will consider contingency pricing.
4. If the problems are complex, I will only consider contingency if I am given full executive decision making capacity for the duration of the project. However, because my value proposition is to develop the leadership as part of this intervention, this is a qualification I never seek.

The interesting spin-off was the follow up conversation with the CEO. We placed his annual personal objectives on the Cynefin framework, and he realised that most of his bonus was placed on achieved ‘guaranteed’ resolution of Complex problems, which lead to further discussion on how to reward leadership of emergent strategies.

His response will be the subject of a future blog piece!

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The Cynefin Company (formerly known as Cognitive Edge) was founded in 2005 by Dave Snowden. We believe in praxis and focus on building methods, tools and capability that apply the wisdom from Complex Adaptive Systems theory and other scientific disciplines in social systems. We are the world leader in developing management approaches (in society, government and industry) that empower organisations to absorb uncertainty, detect weak signals to enable sense-making in complex systems, act on the rich data, create resilience and, ultimately, thrive in a complex world.
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