Investing with Cynefin: Chaos

To properly understand the Chaos domain in Cynefin, you must consider it from the perspective of the Complex Domain. In the Complex Domain there is enough information for us to form multiple hypotheses. By defintion, in the Chaos Domain, there is not enough information for us to even create a hypothesis. We need to act in order to form hypotheses. Hence:

• Act
• Sense
• Respond

Investments in the Chaos domain should fundamentally be about gaining information.

Novelty often occurs in the Chaos domain because there is a need to act but no known solution. As a result, it is easy to see that innovation occurs in the Chaos domain as no hypotheses exist to guide the investment. Many investments in the Chaos domain are often pure bets where by definition, the pay off is unknowable.

However there is a form of investment in the Chaos domain that is not a pure bet. A form of investment that is often scorned and overlooked… An investment in insight and measurement.

Many organisations invest millions, or even billions in transformation efforts to improve themselves. These organisations will spend a fortune on “consultants” and “thought leaders” but struggle to find funding to demonstrate whether the changes are successful. The reason is that it is impossible to put “accurate” cost saving or revenue estimates on being able to see. Success is often a matter of an executive’s opinion, rather than being based on data. An organisation that cannot measure whether it is successful with an investment will continue to make bad investments, and will fail to learn how to make good ones. The more accurate the accurate the measurement, the more efficient the learning.

Investment in the measurement of the organisation should be overseen by executives to ensure that it happens. An absence of transparency is a failing of the culture, and hence a failing of executives who have a responsibility to investors.

Before investing in a transformation, the organisation should first invest in the measure that will prove the success or otherwise of the transformation. For an Agile transformation, that means investing the measurement of lead time (weighted lead time). This measurement is most easily done on historic data rather than waiting for new data. All that is needed is to link existing data to value rather than functionality. However the value of reorganising existing data is often considered waste and so organisations continue without insight.

Executives who engage on transformations without measurement of lead time time are like drivers who close their eyes whenever they get behind the wheel of a car.