Prof. Eve Mitleton-Kelly Director Complexity Group LSE E.Mitleton-Kelly@lse.ac.uk

1. The Practical Application of Complexity Theory in the Public and Private SectorExploring the Science of Complexity in Aid Policy and Practice at ODI on 8th July 2008 Prof. Eve Mitleton-Kelly Director Complexity Group LSE E.Mitleton-Kelly@lse.ac.uk www.lse.ac.uk/complexity

2. Using Complexity Theory in Practice? • Are the ideas/concepts really useful? • How? • To whom? • Why?

3. Why? • By understanding what it means for an organisation to be complex, (within a complex environment) we can work with those concepts and not block them unintentionally • However, not enough to name and describe the concepts • Can use the logic of complexity to: • a. Understand the problem space when addressing apparently intractable problems • b. Create enabling environments

4. How & Whom? • Policy makers who become sponsors • + all stakeholders, incl. those who need to implement the policies • Examples: • NHS • RRM • GSK

5. NHS • 2 Hospitals, both with significant deficits • Each had a double objective of reducing costs while improving the quality of service • How they approached it, was different • 2 Chief Executives created two different environments • X was creative, collaborative, inclusive • Y was perceived as inaccessible and the senior management team as having a hidden agenda

6. Creating an Enabling Environment • EE for change: social, cultural, technical, physical, economic, political, etc, conditions that together create a sustainable environment that co-evolves with a changing social ecosystem • Using the principles of complexity • (a) as an explanatory framework • (b) to offer a different way of seeing and thinking • (c) a different language and set of concepts

7. Narrow Emphasis on the Problem • Emphasis on cost cutting, from a purely financial perspective, met with resistance from clinicians • Issues involved both ethical and power relationships • Ethical: “I joined the NHS to help save lives” - difficult to reconcile the objectives of their profession with financial demands • Power: a layer of management (often administrators with no clinical background) were perceived as diluting the power and influence of consultants • More acceptable approach: reduce costs by reducing wastage rather than cutting services, with a strong emphasis on patient care

8. A key difference: Creating a Positive Future Hospital X: • The CE (familiar with complexity) addressed the large deficit directly as a major challenge that everyone could contribute in resolving • Provided the opportunity for beneficial change • Had to make changes, but not just cost cutting exercises • If they improved the patient journey and cut wastage, then financial savings could be made without affecting adversely the quality of service • The CE saw other possibilities of a different future and offered “a compelling picture I want to be part of” • Very positive and keen to discuss how they each approached the changes as an opportunity to rethink how their particular part of the service could be delivered - to improve the patient experience • “Will have the opportunity to be the best”

9. A key difference Hospital Y: • The change was viewed with fear, anxiety and apprehension • Some of the clinicians had already gone through one major restructuring and downsizing, had left a very strong adverse impression - feared repetition • Also felt the real issues were not being openly discussed – senior management team were not transparent and open, but were hiding some unpalatable truth • Overall impression: one of anxiety and great uncertainty about the future – both about the future of the hospital and personally

10. Two different environments • In X the problems were seen as possibilities for improvement in the service, everyone participated and tried their best to contribute to making a difference • They were anxious about the future nature of the hospital, but this was a manageable anxiety, almost a curiosity about the future • Approach: participative, dual top-down and bottom-up process to change • In Y the anxiety was uppermost in their mind & obscured everything else • Impression of not being given the space to contribute - talked about participation and contribution, but constrained in practice • Approach: primarily top-down

11. In Complexity Terms: X • X had facilitated self-organisation, exploration-of-the-space-of-possibilities, generative feedback, emergence and co-evolution • Staff felt that they had ‘permission’ to try out ideas locally • To explore alternative procedures and processes to improve the patient journey • Could discuss the outcomes openly and honestly within their group and share it more widely • Cross-directorate projects: helped to bridge the tight boundaries between specialities. Cross-over was not always successful, but the possibility was present • As each made a change the others were influenced to varying degree, but the generative feedback did make a difference and other directorates in the cross-over projects were encouraged to also try out some new ideas • Reciprocal influence resulting in changes in the reciprocating entities – i.e. the co-evolutionary process was facilitated

12. In Complexity Terms: Y in 2005 • Y talked about facilitating self-organisation, but constrained: new ideas had to be given the ‘go ahead’ from the senior team • Whole atmosphere was one of constraint rather than encouragement – limited exploration of the space of possibilities • Y was not beset by problems (X had a much larger financial deficit); they did have significant successes in some specialities which were growing out of all expectations • But there was no active learning from these successes and the focus was very much on attaining financial balance • Little generative feedback, and few opportunities for staff to get together to review performance and reflect in an open, relaxed and informal atmosphere • Reviewing done formally in terms of performance management • By restraining self-organisation and exploration and by not actively reflecting on the outcomes (limited generative feedback) the learning environment was constrained

13. Hospital Y Changed significantly • Following the reporting back after the first phase of the project, the hospital changed significantly. • In the 18 months that followed, they made major changes • Complete change in 2006/7

14. Exploring the space of possibilities • “It’s not really telling people – I think it’s creating the organisation that takes the responsibility itself” • Introduced a new management structure • Divisions took responsibility for their own plans • Looked at inefficient departments and helped them to improve: “looking at ways of doing things differently … now we’re reaping the real benefits, because we’ve cut out the stuff that wasn’t working … staff are much more upbeat about it … they’re getting much more medical senior input and liaison with the rest of the hospital which has never happened before”

15. Changes in the Health Ecosystem • Payment by Results – higher salaries (Consultants, GPs) + Agenda for Change costs, but lower productivity “we haven’t got better productivity through paying people more, we’ve actually got less…” • European Working Time Directive – junior doctor shifts, etc + societal changes – expect to leave on time • Some work will go to Specialist Centres and other work to GPs – so the DGHs are losing some of their traditional work • These changes were pushing the hospital to a far-from-equilibrium position

16. In Complexity Terms • Changes in the ecosystem pushed the hospital far-from-equilibrium • At the critical point they explored their space of possibilities and developed • New ways of working – greater autonomy & self-org. + working better as a team, supporting each other and acknowledging their inter-dependence • A different way of thinking + learnt a new bus. lang. • New relationships – i.e. new patterns of connectivity internally and externally • Created and continue to create new order • i.e. they are actively co-evolving with their changing ecosystem • They are becoming more tolerant and comfortable with emergence, unpredictability and uncertainty • They have created a new co-evolving enabling environment

17. 2 Hypotheses + 2 Assumptions • H1: that successful large-scale change can only occur through the adaptation of underlying principles and not by copying of best practice • H2: that innovation and improvement are facilitated by the co-creation of an enabling learning environment • A1: that collaboration and a dual top-down and bottom-up approach make such an environment possible and sustainable • A2: if learning from successful experiments can be encouraged and shared then the improvement process may accelerate and spread nationally

18. Theories Natural sciences Dissipative structures chemistry-physics (Prigogine) Autocatalytic sets evolutionary biology (Kauffman) Autopoiesis (self-generation) biology/cognition (Maturana) Chaos theory Social sciences Increasing returns economics (B. Arthur) self-organisation emergence connectivity interdependence feedback far from equilibrium space of possibilities co-evolution historicity & time path-dependence creation of new order Generic characteristics of complex co-evolving systems

19. RRM • Part of an EPSRC project, called ICoSS, which looked at systems integration. • Two years after a major acquisition RRM was suffering from significant lack of social and organisational integration and all problems were attributed to a single cause. • The research team, working with 16 volunteers from the organisation, identified a set of inter-related causes that would have seriously threatened the wellbeing of the company if not addressed. • The outcome was a set of 12 work-streams implemented by the company, to address each critical issue identified and to create an enabling environment to improve integration

20. LSE Approach • Identifying the real underlying problem when the organisation attributed all issues to a single cause • Analysing a problem space to identify the multiple underlying and interacting causes • Understanding why mono-causal explanations are inadequate when facing volatile, uncertain, complex and ambiguous environments

21. LSE-ALD Project • Accelerated Leadership Development team • 16 volunteers joined the LSE team • Total of 4 teams • Conducted 44 interviews with RRM execs on top 3 levels in Finland, Norway, Sweden, UK and USA • LoM with all 70 RRM executives • 2-day facilitated workshop with all interviewers and sponsors

22. 2-day Workshop to Identify the Problem Space • 72 themes grouped into 8 clusters: • OBU/CFBU Interface • Complexity of structure (matrix) • Human behaviours • Cultures* • Communication • Leadership/role of central team/management • Identity • 12 Underlying Assumptions

23. Twelve Work-Streams to Create the EE Customer / Market Interface Account management process Customer Focus programme Product development process Working the Matrix Training and support for working in a matrix Facilitate informal networks Leadership / Management / Process Leadership Programme Co-ordinated change initiatives Strategy / Structure / Synergy Strategy and strategic process Structure, roles & interfaces Synergistic benefits and knowledge sharing

24. Conclusion 1 • By understanding the complexity concepts and how the theory explained the phenomena they were experiencing, both organisations were able to • a. Identify the problem space and address the problem • b. Create an enabling environment that was sustainable

25. Conclusion 1 (cont.) - EE • By understanding the multiple underlying interacting causes RRM was able to create an enabling environment to facilitate integration – that was sustainable • 2 NHS Hospitals were able to create environments that not only addressed the immediate problem of deficits, but were also able to co-evolve with a changing social ecosystem

26. Conclusion 2 - transferability • By understanding the underlying principles of why it worked and what would have stopped it working well, we can transfer the learning – not by copying best practice, but by adapting these principles to the local context. • Not ‘how’ and ‘what’ but ‘why it worked’

27. Thank you … • E.Mitleton-Kelly@lse.ac.uk • www.lse.ac.uk/complexity

28. Additional slides for discussion

29. Changes in Y – Oct 2007 • “…this organisation just feels as if it’s much stronger, it’s a better place … not necessarily because the people are different, it’s the fact that they’ve been given the opportunity … the responsibility and the authority to get on with it” • “Now 18 months ago I used to hear, well, you’re trying to give me autonomy, but actually there’s people in the organisation keep saying, no, no, your can’t do that. I don’t hear that today. I hear that divisions are doing much more for themselves and taking that responsibility.” • “… we have never been so strong financially, yet the external environment has never been so weak, so why are we so good? … I think it’s because divisions have really taken it on board, … it feels very different than the way it used to be, it was always a bit hit and miss … Whereas now it’s very firm, you will deliver on this, and people are given the authority to get on and do it. I mean we’re not quite there yet, but that does feel different.”

30. Responding in a Weak External Environment • e.g. Trusts and PCTs in deficit But Hospital Y had changed and was: • Better organised to respond • Had better equipment, and clarity through written protocols • “the throughput is very high … you can do a lot more patients in the time available with the same resource” • Better at forecasting some major shocks and crises e.g. a 20% reduction in A&E attendances by the PCT • Ready to redeploy staff, etc – and encourage role extension • Emphasised delivery on financial targets • Culturally the organisation accepted the challenge and rose to it • But they needed to understand the context and how they fitted in

31. Changes in the Health Ecosystem • To survive the changes in the health ecosystem, the hospital has to: • Be aware of what is happening and address it fully (no hiding under the carpet) i.e. scan the landscape and identify the emergent patterns • Not just adapt to the changes, but find radically different ways of working, by exploring the space of possibilities • Develop new relationships with the independent sector, GPs, PCTs, etc – develop new connectivities, feedback • Use its resources differently – use their distributed leadership, intelligence, expertise, etc by facilitating local autonomy & self-organisation

32. A Different Way of Thinking • Working in partnership with the independent sector • To help market their services further afield • Redress the balance of having to deal with the difficult long stay patients, by bringing in more lucrative work • Do the core emergency work really well • Think more in business terms: “if something is making a profit, we should expand it. If it’s making a loss we need to sort it out and make it more efficient” e.g. maternity and cardiology may be profitable, while rheumatology, because of the large drugs bill, can make a loss “but you can’t not do these things” • Address the conflict between the political and the cultural: whether to continue to provide a service that is needed for the local community, which makes a loss

33. A Different Way of Working • Performance management and target orientated • e.g. 4 hour target in A&E is a given • e.g. reducing length of stay • Patient pathway has been different as a consequence of hitting the A&E target – the process has been streamlined and they’ve opened a Medical Assessment Centre • A ‘can do’ attitude with a smile • Greater cultural mix with multiple faiths, beliefs, backgrounds