tame problems & wicked messes: choosing between management and leadership solutions

T o feel brave in this newworld of enterprise riskmanagement, bankers

need the correct methods to pro-duce the right solutions. This arti-cle spans nearly 35 years of con-cepts, first by introducing tameand wicked problems, which pre-miered in 1973, and also messes ,introduced in 1970. The authorthen uses a matrix approach to afourth type of problem—thewicked mess—introduced in 1996.

Audit and risk managementfunctions won’t be able to meet therequirements for enterprise riskmanagement (ERM) as demandedby the draft COSO1 report withoutsome changes to their mind set.While this may not come as a sur-prise to most, we might be curiousto know why. It’s because currentsystems can’t deliver an under-standing of socio/economic andpolitical complexities, which willincreasingly be key to delivering

successful outcomes in the future.Managers will need to be on a first-name basis with such concepts aschange management; high-performanceteams; motivation, emotional, behav-ioral attributes; and the learningorganization.

Problem SolvingIn the past, financial institu-

tions have tended to solve prob-lems through analytical methods,breaking things down into parts,fixing components, and assessingthe probability of knownsequences of failures leading to anaccident or loss. In the new world,this type of problem is labelled as atame problem and tame problemstend to enjoy consensus.Everybody pretty much agrees towhy something needs to be doneand the right way to go about doingit. To solve a tame problem, wedevelop systems that gather all thedata, we then analyze that data, for-

mulate a solution, and finallyimplement the solution (see Figure1). Do not mistake tame forsimple—some of these problems areextremely difficult to solve. Overthe years IT systems have carriedout the processes faster and faster,until today’s systems achieveresults in real time. However, thereare still times when we fail and failpretty dramatically.

Because of this we haverecognised that things havebecome more complicated. We areincreasingly faced with problemsof organised complexity, clustersof interrelated or interdependentproblems, or systems of problems.Problems that cannot be solved inrelative isolation from one anotherform messes. We sort out messesthrough systems methods andmodelling, focusing on processes,and interdisciplinary approaches.Rather than simply breakingthings down into parts and fixing

38 The RMA Journal July/August 2004

Tame Problems & Wicked Messes:Choosing Between Management and

Leadership Solutions

by David Hancock

ENTERPRISE RISK MANAGEMENT

T his article provides a way to think about difficult problems

and alternative strategies for coping with them. It has

implications for enterprise risk management, operational

risk management, and auditing and the distinctions among the three.

© 2004 by RMA. David Hancock is executive director of the Halcrow Group Ltd. UK-based Halcrow provides planning, design, andmanagement services for infrastructure development worldwide. With interests in transportation, water, and property, the company hascommissions in over 70 countries from a network of more than 60 offices.

components, we examine patternsof interactions among parts. Weorganize ourselves to sort outmesses through such things ascross-functional groups, redundancy,and learning organizations. Simplybuilding more freeways doesn’tsolve vehicle congestion. A pri-mary danger in mistaking a messfor a tame problem is that itbecomes even more difficult todeal with the evolving mess.However, problems persistbecause managers continue tobelieve that there are such thingsas unilateral causation and inde-pendent and dependent variables.

Charles Perrow in his bookNormal Accidents elaborates onsome of the problems inherent inmesses. First, interactive complexityis the measure of the degree towhich we cannot foresee all theways things can go wrong. Thismay be because there are just toomany interactions to keep trackof. More likely, it is because ourvarious theories are simply not upto the task of modelling socio-technical interactions. Second,coupling is a measure of the degreeto which we cannot stop animpending disaster once it starts.

This may be because we don’thave enough time, because it isphysically impossible, or becausewe don’t know how. The greaterthe degree of interactive complex-ity, the less our capacity to pre-vent surprises; and the greater thedegree of coupling, the less ourcapacity to cure surprises.Therefore, the greater the degreeof interactive complexity and cou-pling, the greater the likelihoodthat a system is an accident wait-ing to happen—what he terms anormal accident . In such systems,“operator errors” merely serve astriggers. Strategies and risk man-agement techniques for dealingwith messes are therefore quitedifferent from those appropriatefor tame problems. Thus, increas-ing our capacity to prevent unan-ticipated interactions among com -ponents entails simplifying sys-tems; increasing our capacity tocure them entails decouplingmajor components (e.g., build inlonger times to respond).

All this is fairly straightfor-ward and fine as long as most ofus share an overriding social theo-ry or overriding social ethic. If wedon’t, we face wickedness. Wicked

problems are termed as “diver-gent” as opposed to “convergent”problems. A convergent problempromises a solution. The more itis studied, the more variousanswers sooner or later converge.Tame problems are convergent bydefinition. Messes are convergentif we agree on what overlaps, onappropriate strategies, and on thekind of climate we wish to main-tain. A divergent problem doesnot promise a solution. The moreit is studied, the more people ofintegrity and intellect inevitablycome to different solutions. Aswith messes, there are very realdangers in solving the wrongproblem. Mistaking or misrepre-senting wicked problems formesses, let alone tame problems,almost inevitably leads one toconclude that those with differentanswers lack integrity, intellect, orboth. The great danger is thatsuch conclusions undermine trust,and trust is a fundamental strate-gy for collectively coping withwicked problems. If wicked prob-lems are becoming more commonin our modern era, and there iscompelling evidence they are, weface a strategic choice. We cancontinue to misrepresent them asmesses or tame problems, hopingthey will not degenerate. On theother hand, we can acknowledgewicked problems for what theyare and try to stabilize them asconditions. This is not going to beeasy, because wicked problemsoffend our sense of logic and ourcommon beliefs even more thanmesses. In our modern times, it ispretty hard to accept that a prob-lem has no solution. This seemstantamount to giving up. Giventhat many people care about or

39

W i c k e d P r o b l e m s & M e s s e s

Figure 1

Traditional Wisdom for Solving Complex Problems. The "Waterfall"

Gather data

Analyze data

Formulate solution

Implement solution

0 20 40 60 80 100

Time Since Beginning of Session

Problem

Solution

have something at stake in howthe problem is resolved, theprocess of solving a wicked prob-lem is fundamentally social, andsolving a wicked problem is fun-damentally a social process.

Much work has been done onbehavioral complexity and dynamiccomplexity . What confuses realdecision making is that the twocoexist and interact in what wecall wicked messes (see Figure 2).

The fact that behavioral prob-lems cannot be solved in isolationfrom one another makes it evenmore difficult to deal with people’sdiffering assumptions and values:people who think differently mustlearn about and create a commonreality—one that none of them ini-tially understands adequately.Systems of interlinked problemsinteract with the misunderstand-ings, divergent assumptions, andpolarized beliefs of differentgroups of people. Improving com-

munication and trust among differ-ent camps is not enough; peoplestill are likely to focus on symp-toms rather than deeper causesand to pursue low-leveragechanges. Conversely, even if deep-er understanding of the systemicforces at play is achieved, suchunderstanding will be viewed withsuspicion by the different, compet-ing interests and mental models.

SolutionsThe main thrust to the reso-

lution of these types of problemsis stakeholder participation and“satisfying.” This is becausewicked problem resolving pro-duces no single optimum solutionbut has many alternative satisfac-tory solutions. Therefore the pro-duction of that solution must be“boxed” or “bounded” either bytime or financial constraints toavoid it going on ad infinitum.

So how do we propose to deal

with wicked messes? The strate-gic issue is whether we choose toallow wicked messes to degener-ate into chaos, whether we chooseto stabilize them as conditions, or,more radically, whether we chooseto try to dissolve them together.

From the risk perspective,real listening and dialogue areessential to mapping the bound-aries and learning to recognize thepatterns of those interactions,which are the crux of sorting outwicked messes. Real listening isalso essential in establishing trust,and trust is the sine qua non ofeffectively working together. Moresignificant, mistrust is the darkheart of wicked messes. Thestrategic principles for establishingtrust is grounded in the realizationthat our commonalities are farmore significant and profoundthan our differences. In sum, thesestrategic principles are essential tosorting out wicked messes togeth-er. More significant, in our increas-ingly complex and interdependenttimes, these principles guide us tolive in ways that help us dissolvewhat is problematic.

What does this mean for theworld of finance and internalaudit? Let us first look at the con-cepts of management and leader-ship. It is key to draw a distinc-tion between management andleadership. For our purposes, let’suse John Kotter’s definitions.2

Here management is about copingwith complexity, and its practicesand procedures are largely aresponse to the emergence oflarge organisations and complexprojects. Leadership , by contrast, isabout coping with change. Thesedifferent functions—coping withcomplexity and coping with

The RMA Journal July/August 200440

Figure 2

Matrix showing the Four Types of Problems

Wicked Wicked Mess

Tame Mess

High

BehavioralComplexity

Low

Low High

Dynamic Systems Complexity


change—shape the characteristicactivities of management andleadership. Each system of actioninvolves deciding what needs tobe done, creating networks ofpeople and relationships that canaccomplish an agenda, and thentrying to ensure that those peopleactually do the job. But eachaccomplishes these tasks in differ-ent ways. Therefore, how can wechoose when we require the skillsof leadership to dominate againstthose of management on a projectto obtain a successful outcome? Ipropose that we use the matrix. Ifwe look at the activities requiredin more detail to see the attributesexhibited by the two principals, itmay indicate the type of problemsbest solved by those skills.

Let’s revisit Figure 2 and lookat the characteristics required toaddress some of these issues.Those required to achieve changeare predominantly behaviorally

based—needs and emotions—requiring more influence thanpower to ensure their resolution.Trust and relationships must bedeveloped, indicating a highdegree of behavioral complexity.This allows us to segment thematrix into two, where leadershipqualities dominate solutions inthe upper half and managementqualities the lower (see Figure 3).

How can this model help uswith our understanding of riskand risk management? In the past,there has been a considerable dif-ference of opinion between theuse and legitimacy at varioustimes of qualitative and quantita-tive risk assessment. If we acceptthe preceding classification oftypes of problem as shown byFigure 2 and then analyze howrisk analysis may be applied tohelp us with each type of prob-lem, we can see that as we movefarther to the right of the matrix

that there appears tobe an increasedreliance on the use ofsystems emphasizingan interconnectivity ofevents. As we movefarther toward the topof the matrix, thereseems to be anincreased reliance onsocial-science typesolutions, where peo-ple do not necessarilybehave as “soft sys-tems”; rather, theirbehavior is dominatedby belief systemsbased on their emo-tions and feelings. Ifwe then apply our twotypes of risk assess-ment (quantitative andqualitative) and overlay

them on the matrix we producethe diagram as shown in Figure 4.

We can observe that for thebottom sectors, where scientific-based solutions are dominant,quantitative risk data is reliable inthe assessment of risk. Ourassumption is that there is an opti-mum solution and therefore anunderlying number that we willconverge toward. Thus, by gener-ating more and more data, we willmove closer to the underlying“truth.” However, as we move uptoward the behavioral sector, thereis no underlying single solution.The solution will now depend onthe feelings and ideologies of thepeople concerned in the assess-ment. Here by the use of quanti-tative data to inform facilitatedopportunity—risk workshops,qualitative results will ‘reveal’those underlying beleifs whichwill lead to satisfactory solutions.

41

Figure 3

Boston Matrix with Suggested Leadership and Management Skills Overlaid

Low High


High


Low

Wicked Wicked Mess

MessTame

Solutionpredominantly

throughleadership

Solutionpredominantly

throughmanagement


Here therefore it is criticallyimportant to involve all stakehold-ers who can influence the successof the project and to attempt tolimit your boundaries to the casein hand as otherwise the groupwill grow beyond the limits ofacheiving a workable solution.

The most difficult part of thisrole for both auditors and riskmanagers will be recognising thetype of problem they are facing.To help the reader to achieve thisI have used the classification ofTame, Messes, Wicked Problemsand Wicked Messes. This hasproved useful in ensuring the useof the correct tools to deal withproblems based on their level ofsystem and behavioural complexi-ty in social sciences. We have alsoused the matrix to understand thedominant behaviours required todeliver outcomes when usingmanagers or leaders and finally Ihave attempted to overlay theconcepts of risk management on

this matrix to aid in choice of therisk management techniques asso-ciated with the type of problem.

The key to the solution ofwicked messes lies in the peopleand the use of discussion andforums to explore these problemsand understand the limitations ofthe solution. Accurate reporting of“near misses” and the use of facili-tated workshops to identify rootcauses can aid this process. How-ever, there must be an open culturewith an attitude of “no blame.” Italso requires the pursuit of designsthat limit system coupling and com-plexity where possible.

The move to enterprise riskmanagement will require futureaudit and risk managers to live“comfortably” in all areas of thematrix and to become familiarwith and apply the tools and tech-niques as dictated by their govern-ing laws. Successful problem solv-ing means finding the right solu-tion to the right problem.

To the observantreader it is apparentthat as we move to theupper right quadrant,some of the skills forsolving problems in thisarea fall outside therealms of what wepresently consider astraditional risk manage-ment. Rather, theseissues are resolvedusing a variety of tech-niques such as scenarioplanning, political fore-casting, and environ-mental scanning—toolsmore commonly usedby the sociologists andeconomists. If we are tobecome successful inthe move to ERM,

then we need to understand thelimitations of our capabilities orembrace these new skills to helpus succeed.

We fail more often because we solve thewrong problem than because we get thewrong solution to the right problem.

—Russell Ackoff, 1974 p

Contact Hancock by e-mail [email protected].

Notes

1 COSO is the Committee of SponsoringOrganizations of the Treadway Commission. TheNational Commission was jointly sponsored bythe five major financial professional associationsin the U.S.—the American AccountingAssociation, the American Institute of CertifiedPublic Accountants, the Financial ExecutivesInstitute, the Institute of Internal Auditors, and theNational Association of Accountants (now theInstitute of Management Accountants). Currently,the COSO Chairman is John Flaherty, chairman,retired vice president, and general auditor forPepsiCo Inc.

www.coso.org—

2 John P. Kotter, considered an expert on leader-ship at the Harvard Business School, wroteLeading Change, which outlined an actionable,eight-step process for implementing successfultransformations.

42 The RMA Journal July/August 2004

Figure 4

Boston Matrix with Suggested Risk Assessment Processes Overlaid

Low High


High


Low

Wicked Wicked Mess

MessTame

Solution issocial/political/ethical/moral/

behavioral

Solutionis

scientific

Increasing reliance onqualitative assessment

Increasing reliance onquantitative assessment
