Sense-Making: The Foundation of Strategy (and others)

Table Of Content

1. Introduction to Sense-Making

2. Historical Development and Key Contributors

3. Core Principles of Sense-Making

5. Relationship with Other Concepts: Theory of Business, VUCA, BANI etc

7. Conclusion

Introduction to Sense-Making

My friend FX Iwan prefers the word "mindset".?Anyway, why it is more important now than ever? The speed of change is never slower than before (Siegel, 2018). Scholars easily refer to an over-rated VUCA framework whose meaning is degrading further and further.

In a world characterized by relentless change and increasing complexity, the ability to make sense of the events and situations we encounter has become more crucial than ever. This introductory sub-chapter delves into the concept of sense-making, a process central to how individuals and organizations navigate their ever-evolving environments. For those who wish to learn the application of sense making in leadership please refer to Ancona (2011).

Definition of Sense-Making

At its core, sense-making is the process through which individuals or groups interpret and construct meaning from their experiences. It involves turning the raw data of experience - the scattered and often confusing array of information that confronts us in our daily lives - into a coherent narrative. This narrative then forms the basis for understanding, decision-making, and action.

Karl E. Weick, a key figure in the development of this concept, describes sense-making as a way people structure the unknown, transforming the chaos of the world into a reality they can understand and work within. It's not just about processing information but also about structuring and framing it in a way that aligns with our existing beliefs, experiences, and expectations.

Relevance in a Rapidly Changing World

In today's dynamic landscape, the ability to make sense of complex, ambiguous situations is indispensable. Organizations and individuals are constantly bombarded with information, much of it contradictory or incomplete. The traditional, linear approaches to problem-solving and decision-making often fall short in such scenarios. This is where sense-making comes in - as a tool for navigating through the noise and uncertainty to find clarity and direction.

The relevance of sense-making is particularly pronounced in the context of global challenges and organizational dynamics. In the business world, leaders and managers use sense-making to steer their organizations through market disruptions, technological advancements, and shifting consumer behaviors. In personal contexts, individuals use sense-making to navigate life's uncertainties and complexities, from career decisions to personal relationships.

Framework for the Modern Era

Sense-making is not just about understanding the present; it's also about anticipating the future. It equips us to foresee potential outcomes and implications, preparing us for what lies ahead. This foresight is invaluable in an era where change is not just constant but accelerating.

Moreover, in an interconnected world, sense-making goes beyond individual or organizational boundaries. It involves understanding broader societal, economic, and environmental contexts, highlighting the interdependencies and systemic nature of modern challenges. It's about making connections between seemingly disparate events and trends, recognizing patterns, and discerning the underlying dynamics at play.

Setting the Stage

As this sub-chapter unfolds, we will explore the origins of sense-making, its theoretical underpinnings, and its practical applications. We will delve into how it intersects with other concepts like VUCA and BANI, and why it's considered a foundational skill in the 21st century. Sense-making is not just a theoretical construct; it's a vital capability for anyone looking to thrive in a complex, uncertain world.

In conclusion, sense-making is more than a cognitive process; it's a critical life skill. It enables us to interpret, navigate, and shape the world around us, turning the unknown into the understood. As we venture deeper into this subject, we will uncover the layers and nuances of sense-making, illuminating its role as a beacon in the ever-shifting landscape of our times.

Historical Development and Key Contributors of Sense-Making

The journey of understanding how individuals and organizations make sense of their environments is as fascinating as it is complex. This sub-chapter focuses on the historical development of the sense-making theory and the key contributors who have shaped its evolution.

Karl E. Weick and the Foundation of Sense-Making

At the forefront of sense-making theory is Karl E. Weick, a renowned organizational theorist whose work has been seminal in shaping our understanding of organizational behavior and cognition. Weick’s approach to sense-making is articulated in his influential 1995 book, Sensemaking in Organizations.

In this book, Weick explores how people in organizations construct, interpret, and give meaning to their experiences. He presents sense-making not just as a process but as a necessary framework for understanding how organizations function and adapt. Weick’s work emphasizes the interactive nature of sense-making - it is through social interactions and shared narratives that organizational members construct a common understanding of their environment.

Brenda Dervin's Contributions

Another key figure in the development of sense-making theory is Brenda Dervin, known for her work in the field of communication studies. Dervin's approach to sense-making is grounded in understanding how individuals seek and use information.

Dervin's model of sense-making revolves around the idea of 'gap-bridging', where individuals actively seek information to bridge gaps in their understanding of their world. This process is dynamic and constantly evolving, influenced by the individual's context and experiences.

Russell Ackoff's Systems Perspective

Russell Ackoff, an American organizational theorist, contributed significantly to sense-making, particularly from a systems thinking perspective. Ackoff's work emphasizes the importance of understanding the whole system, rather than just its individual components.

Ackoff's perspective is crucial in sense-making as it highlights the interconnectedness of elements within a system. His approach suggests that to truly make sense of a situation, one must consider the broader system's structure and dynamics, not just isolated events or issues.

Synthesizing the Contributions

The contributions of these scholars have been pivotal in shaping the sense-making theory. Weick’s insights into the social and interactive aspects of sense-making, Dervin’s focus on the individual’s information-seeking behavior, and Ackoff’s systems thinking approach collectively provide a comprehensive understanding of how sense-making operates in various contexts.

Sub-Conclusion

The historical development of sense-making as a theory reflects a shift from seeing organizations and individuals as passive reactors to their environment, to active interpreters and constructors of their reality. This sub-chapter sets the stage for a deeper exploration of the practical applications of sense-making in various fields, from business to personal development.?

Core Principles of Sense-Making

Understanding the core principles of sense-making is crucial for grasping how individuals and organizations interpret and navigate their environments. This sub-chapter delves into the seven properties of sense-making as defined by Karl E. Weick, along with the contextual nature of this process.

The Seven Properties of Sense-Making According to Weick

Karl E. Weick's model of sense-making is grounded in seven properties that characterize how individuals and organizations interpret and respond to their environments:

1. Identity Construction: Sense-making is deeply intertwined with the identity of the sense-maker. Individuals and organizations understand the world in a way that is consistent with their self-image and role within a group or society.
2. Retrospective Analysis: Sense-making often involves looking backward to understand the present. It is through retrospection that events are given meaning and significance.
3. Enacting Environments: This principle posits that rather than just responding to an external environment, individuals and organizations are involved in shaping their environments. Through their actions, they help to create the context in which they operate.
4. Social Interaction: Sense-making is inherently social. It is through interactions with others that individuals develop and refine their understanding of the world. This process often involves negotiation, collaboration, and conflict.
5. Ongoing Projects: Sense-making is not a one-time event but a continuous process. It occurs within the flow of everyday activities and is shaped by ongoing projects and goals.
6. Extracted Cues: Individuals and organizations focus on certain elements of their experience while ignoring others. These extracted cues form the basis of their sense-making and guide subsequent actions.
7. Plausibility vs. Accuracy: In sense-making, plausibility often trumps accuracy. The aim is not to find the one true explanation but rather a story that makes sense and is useful in guiding action.

Contextual Nature of Sense-Making

Sense-making is highly contextual, depending on the individual's or organization's experiences, background, and current situation. This contextual nature means that the same event can be interpreted differently by different people or organizations, based on their unique perspectives and circumstances.

• Influences of Context: Factors such as cultural background, organizational norms, past experiences, and current challenges all influence how sense is made of a situation.
• Adaptability of Sense-Making: The contextual nature of sense-making underscores its adaptability. As contexts change, so too do the ways in which individuals and organizations make sense of their environments.

Sub-Conclusion

The core principles of sense-making, as outlined by Karl E. Weick, provide a robust framework for understanding how people and organizations interpret and respond to their surroundings. These principles highlight the complex, dynamic, and subjective nature of sense-making. Understanding these principles is essential for anyone looking to navigate the complexities of the modern world, whether in a personal or organizational context. This sub-chapter sets the groundwork for exploring practical applications and strategies for effective sense-making in various domains.

Relationship with Theory of Business, VUCA, BANI etc

In the complex world of organizational frameworks, sense-making stands as a foundational process that underpins and unifies various conceptual models. This sub-chapter explores the intricate relationship between sense-making and other contemporary frameworks such as VUCA and BANI, as well as its profound influence on leadership.

Sense-making and The Theory of Business

Even before that, Peter Drucker (thanks to Woz Ahmed ), explained the reality of sensemaking in his notable article (Drucker, 1994):

The root cause of nearly every one of these crises is not that things are being done poorly. It is not even that the wrong things are being done. Indeed, in most cases, the right things are being done—but fruitlessly. What accounts for this apparent paradox? The assumptions on which the organization has been built and is being run no longer fit reality. These are the assumptions that shape any organization’s behavior, dictate its decisions about what to do and what not to do, and define what the organization considers meaningful results. These assumptions are about markets. They are about identifying customers and competitors, their values and behavior. They are about technology and its dynamics, about a company’s strengths and weaknesses. These assumptions are about what a company gets paid for. They are what I call a company’s theory of the business. Every organization, whether a business or not, has a theory of the business.

He further draw the connecting lines that a theory of the business has three parts.

First, there are assumptions about the environment of the organization: society and its structure, the market, the customer, and technology. Second, there are assumptions about the specific mission of the organization. Third, there are assumptions about the core competencies needed to accomplish the organization’s mission.

He then explained 4 specifications on how to make the theory of the business ( [sic]company's strategy) work:

1. The assumptions about environment, mission, and core competencies must fit reality. (hence sense-making)
2. The assumptions in all three areas have to fit one another (hence sense making)
3. The theory of the business must be known and understood throughout the organization. (hence sense-making - to internal organization)
4. The theory of the business has to be tested constantly (here he predicted the emergent strategy that then introduced by Clayton Christensen)

Sense-Making and V.U.C.A

The VUCA framework – encompassing Volatility, Uncertainty, Complexity, and Ambiguity – presents a multi-faceted view of the challenges inherent in today's dynamic environments. Sense-making intersects with each aspect of VUCA, providing the cognitive and interpretive tools leaders need to navigate these challenges:

• Volatility: Sense-making helps leaders interpret rapid changes in the environment, allowing them to construct coherent narratives amidst flux.
• Uncertainty: Through sense-making, leaders can create contexts that offer clarity and make informed decisions even when the future is unpredictable.
• Complexity: Sense-making allows leaders to discern patterns within intricate systems and make decisions that account for interdependencies.
• Ambiguity: In the face of ambiguous information, sense-making guides leaders to develop multiple hypotheses and flexible strategies.

Sense-Making and BANI

The BANI framework – representing Brittleness, Anxiety, Nonlinearity, and Incomprehensibility – extends the dialogue on navigating modern challenges. Sense-making is critical in addressing these dimensions:

• Brittleness: Leaders use sense-making to recognize the fragile aspects of systems and to build resilience against sudden breaks.
• Anxiety: Sense-making equips leaders with the capacity to reduce anxiety by providing meaning and understanding in uncertain situations.
• Nonlinearity: Acknowledging that small inputs can have large and unpredictable outputs, sense-making is vital for interpreting nonlinear dynamics.
• Incomprehensibility: When faced with overwhelming complexity, sense-making helps in simplifying and contextualizing information for actionable insight.

The relationship between sense-making and other conceptual frameworks like VUCA and BANI illustrates its central role in contemporary organizational thought. Sense-making is not merely a passive reflection but an active engagement with reality that shapes the decisions and strategies of effective leaders. In a world defined by constant change and complexity, the ability to make sense of the environment is what distinguishes transformative leaders who can navigate the unknown and steer their organizations towards success.

V.U.C.A (1987)

VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity. It's a term that originated in the late 1980s and has been used extensively in the fields of leadership, strategic planning, and organizational development. Here's a brief explanation of each component:

1. Volatility: This refers to the nature and dynamics of change, and the speed at which it happens. Volatile environments are characterized by rapid, unpredictable, and often unforeseen changes that are beyond one’s control.
2. Uncertainty: Uncertainty arises from the lack of predictability and the prospects of surprise in an environment. It highlights a lack of knowledge or information about future events and their outcomes.
3. Complexity: This involves the multiplicity of factors that need to be taken into account, their interconnectivity, and the difficulty to understand them fully. Complex situations are often composed of numerous, interrelated variables.
4. Ambiguity: Ambiguity refers to the lack of clarity about the meaning of an event. It occurs when the information available is incomplete, contradictory, or too inaccurate to draw clear conclusions.

In a VUCA world, leaders and organizations are encouraged to develop corresponding strategies: Vision to counter Volatility, Understanding to deal with Uncertainty, Clarity to tackle Complexity, and Agility to address Ambiguity. This approach helps in navigating through challenging and rapidly changing environments.

The concept of VUCA, standing for Volatility, Uncertainty, Complexity, and Ambiguity, originated within the U.S. military, specifically at the U.S. Army War College. It was developed as a way to describe the changing and challenging conditions of the post-Cold War era. The aim of this concept was to help senior military officers adapt to the new nature of warfare and leadership that emerged following the end of the Cold War.

1. Origins in the U.S. Army War College: The U.S. Army War College introduced the concept of VUCA around 1987. This was a period marked by significant geopolitical shifts, most notably the end of the Cold War, which led to a more complex and multilateral world. The framework was designed to provide a lens through which to view and understand the increasingly dynamic and unpredictable global security environment.
2. Response to the Collapse of the USSR: In the early 1990s, the collapse of the Soviet Union and the consequent demise of the Eastern Bloc as a singular, primary adversary, prompted the need for new strategic approaches. The U.S. military, particularly the Army War College, used the VUCA concept to characterize and respond to these new conditions of volatility, uncertainty, complexity, and ambiguity that were defining the post-Cold War world.
3. Based on Earlier Leadership Work: The development of the VUCA concept was influenced by earlier work by leadership scholars Warren Bennis and Burton Nanus. Their contributions helped shape the VUCA framework, making it a valuable tool for understanding and navigating the complexities of modern strategic environments.

The VUCA framework has since transcended its military origins and is now widely used in various fields, including business and organizational leadership, to describe the challenges and complexities of operating in fast-changing and unpredictable environments.

B.A.N.I (2020)

BANI is a more recent concept that has emerged as an alternative to VUCA, particularly in the context of describing the modern, complex world we live in. BANI stands for Brittle, Anxious, Nonlinear, and Incomprehensible. Here's a brief overview of each element:

1. Brittle: This refers to systems or situations that might appear strong on the surface but are actually vulnerable to sudden and catastrophic failure. Brittle systems lack resilience and may collapse under stress or when unexpected changes occur.
2. Anxious: Anxiety in this context relates to the pervasive sense of worry or unease about the future and the unpredictability of outcomes. It acknowledges the emotional response to the uncertainty and rapid changes in our environment.
3. Nonlinear: Nonlinearity indicates that small causes can have disproportionately large effects, and outcomes are not always directly proportional to their inputs. This reflects the complexity and unpredictability of systems where traditional, linear models of prediction and control are inadequate.
4. Incomprehensible: This aspect recognizes that despite the vast amount of information available, understanding the full scope and implications of events or trends can be overwhelming or confusing. The complexity of information and its interconnectedness often makes it difficult to derive clear, actionable insights.

While VUCA has been widely used, particularly in the fields of business and military strategy, to describe volatile, uncertain, complex, and ambiguous environments, BANI offers a different perspective that is seen as more reflective of the current state of the world, where traditional systems and ways of understanding are constantly being challenged. BANI emphasizes the fragility, emotional aspects, unpredictability, and the often confusing nature of modern challenges, making it a relevant framework for analyzing contemporary issues and trends.

Academic research on BANI, as a concept to describe the contemporary world, is relatively recent compared to the more established VUCA framework. BANI stands for Brittle, Anxious, Nonlinear, and Incomprehensible, and it provides a different lens through which to view the complexities of modern life and systems.

1. Origin of BANI: The term BANI was coined by Jamais Cascio, a distinguished fellow at the Institute for the Future. Cascio is known for his work in futurology, focusing on the intersection of emerging technologies, environmental dilemmas, and cultural transformation. He introduced BANI as a conceptual framework that more accurately reflects the nature of challenges and uncertainties in the 21st century compared to VUCA.
2. Applications of BANI:

• Organizational Strategy and Leadership: BANI is increasingly being discussed in the context of organizational strategy and leadership, particularly as traditional models of planning and decision-making become less effective in the face of rapid changes and uncertainties.
• Risk Management: In risk management, BANI offers a perspective that emphasizes the need for resilience and adaptability, recognizing that responses to risks need to account for nonlinearity and the potential for sudden, unpredictable changes.
• Future Studies and Scenario Planning: BANI is relevant in the field of futurism and scenario planning, helping to frame potential futures in a way that accounts for emotional responses, the fragility of systems, and the complexity of understanding interconnections in a globalized world.
• Education ?and Learning: In education, BANI can be used to prepare students for a world where traditional linear and predictable career paths are less common, and adaptability and continuous learning are crucial.
• Academic Research: While the concept is gaining traction in discussions about future trends and organizational strategies, the academic research specifically focusing on BANI is still developing. As a newer framework, it is gradually being explored in scholarly articles and research, particularly in fields related to organizational studies, future forecasting, and complexity science.

BANI offers a nuanced way of thinking about the world, emphasizing the need for new approaches to leadership, strategy, and problem-solving that account for the fragile, anxiety-inducing, and often incomprehensible nature of modern challenges. It suggests a shift from traditional, linear ways of thinking to more adaptive, empathetic, and holistic approaches.

Other relevancies:

In addition to VUCA and BANI, there are several other concepts and frameworks that have been developed to describe and navigate the complexities of the modern world. These concepts are often used in strategic planning, organizational development, and leadership. Some of these include:

1. TUNA: This acronym stands for Turbulent, Uncertain, Novel, and Ambiguous. It emphasizes the turbulent nature of the environment, the uncertainty of outcomes, the novelty of situations requiring new and innovative responses, and the ambiguity in understanding and interpreting events.
2. VUCA Prime: Developed as a response to the limitations of the original VUCA model, VUCA Prime focuses on Vision, Understanding, Clarity, and Agility. It's a framework that suggests counterbalancing strategies to each aspect of VUCA: Vision counters Volatility, Understanding counters Uncertainty, Clarity counters Complexity, and Agility counters Ambiguity.
3. PACE: Standing for Persistent, Agile, Coordinated, and Energetic, PACE is used to describe the qualities needed to succeed in a rapidly changing environment. It emphasizes the importance of persistence in goals, agility in approach, coordination among teams, and energy in execution.
4. DANCE: This acronym stands for Dynamic, Adaptive, Nonlinear, Co-creative, and Emergent. It focuses on the dynamic nature of the environment, the need for adaptive responses, the nonlinear relationships between causes and effects, the importance of co-creation in problem-solving, and the emergent properties of complex systems.
5. DEAL: DEAL stands for Digital, Engaging, Agile, and Lean. This concept is particularly relevant in the context of digital transformation and business agility. It emphasizes the importance of digital capabilities, engaging stakeholders, agile methodologies, and lean processes in navigating the modern business landscape.
6. CYNEFIN Framework: This is a conceptual framework used to aid decision-making. It categorizes problems into five domains: Simple, Complicated, Complex, Chaotic, and Disorder. Each domain requires different approaches to decision-making and problem-solving.

Each of these frameworks offers a different perspective on the challenges faced in today's complex and fast-changing environment. They provide tools and strategies for leaders and organizations to better understand and respond to the dynamic nature of their operating landscape.

Takeaway

As we conclude our exploration of sense-making, we reflect on its vital role as the cognitive bedrock upon which leaders and organizations construct their understanding of the world. Sense-making is not merely an academic concept; it is an essential, practical skill that permeates every aspect of organizational life and leadership.

In a landscape often described by acronyms like VUCA and BANI, sense-making emerges as the compass that helps navigate through volatility, uncertainty, complexity, ambiguity, brittleness, anxiety, nonlinearity, and incomprehensibility. It is the process by which leaders interpret and act upon the myriad of signals and information that bombard them daily. Effective sense-making results in the ability to discern the signal from the noise, to innovate amidst chaos, and to provide a clear direction when paths forward are shrouded in fog.

The chapters have highlighted the historical evolution of sense-making, its theoretical foundations, and its application across different frameworks and real-world scenarios. We have seen how sense-making can drive strategic thinking, foster organizational resilience, and enhance decision-making. It empowers leaders to not only interpret their environment but also to shape it, influencing the narrative and steering their organizations toward desired futures.

As organizations continue to operate in an increasingly complex world, the value of sense-making cannot be overstated. It is the underlying skill that enables leaders to convert challenges into opportunities, to transform uncertainty into a strategic advantage, and to lead with confidence. Sense-making does not promise a world with fewer surprises; rather, it provides the tools to deal with surprises more effectively.

In conclusion, sense-making is the quintessential skill for the 21st-century leader. It is a dynamic and continuous process that equips leaders to manage the present and prepare for the future. As we advance, those who master the art of sense-making will lead the charge in navigating the complex, uncertain terrains of tomorrow, turning potential turmoil into triumph.

Notes on the image:

The image above represents an abstract visualization of sense-making as the basis of strategy making. It features a central human figure symbolizing a strategist, surrounded by various abstract elements that represent data, trends, and uncertainties. These elements are depicted as interconnected lines, shapes, and symbols, forming a complex but structured network around the figure. The background's subtle color blend suggests a dynamic and evolving environment, encapsulating the concept of gathering and interpreting information to form coherent strategies.

REFERENCES

Ackoff, R. L. (1971). Towards a System of Systems Concepts. Management Science, 17(11), 661-671.

Ancona, D. (2011). Sensemaking: Framing and Acting in the Unknown, in The Handbook for Teaching Leadership: Knowing, Doing, and Being by S. Snook, N. Nohria, R. Khurana, eds., Sage, 2011 ISBN: 978-1412990943

Christensen, C. M. (2021, November 18). Managing the strategy development process: Deliberate vs. emergent strategy (HBS No. 420-018). Harvard Business School Publishing.

DALL·E. (2023). Abstract Representation of Sense-Making in Strategy. OpenAI. Retrieved from Link to OpenAI's DALL·E

Dervin, B. (1992). From the mind's eye of the user: The sense-making qualitative-quantitative methodology. In J. D. Glazier & R. R. Powell (Eds.), Qualitative research in information management (pp. 61-84). Englewood, CO: Libraries Unlimited.

Drucker, P. F. (1994, September). The theory of the business. Harvard Business Review. Retrieved from https://hbr.org/1994/09/the-theory-of-the-business

Siegel, S. (2018, October 10). The Future of Work: Perspectives from the Industrial company of the Future. https://www.slideshare.net/Catalant/sue-siegel-ge

U.S. Army War College. (1987). Introduction of the VUCA concept.

Weick, K. E. (1995). Sensemaking in Organizations. Thousand Oaks, CA: Sage.

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