The Leader as System Architect with Dr. Willy Donaldson

Dr. William (Willy) Donaldson has over 35 years of experience as a Board member and President and has been CEO of 8 companies and over 30 years of experience in higher education. Willy is the Founder and President of Strategic Venture Planning, a management consulting firm that assists boards, investors and senior management teams maximize results.

Dr. Donaldson is an Assistant Professor in Finance. He teaches Advanced Financial Statement Analysis, Entrepreneurial Finance, Strategic Management, Innovation, Entrepreneurship and Systems Thinking, as well as multiple capstone classes. Dr. Donaldson is the Director of the Luter Business Institute.

A Few Quotes From This Episode

• "Managers and leaders don't solve problems, they manage messes."
• "If you don't see the whole system, you're gonna draw a boundary around your job...and you're gonna start optimizing in that space. And that may be great for finance, but it may be disastrous for the whole system."

Resources

• Book: Simple Complexity: A Management Book For The Rest of Us
• Resource: OODA Loop by John Boyd

About The International Leadership Association (ILA)

• The ILA was created in 1999 to bring together professionals interested in studying, practicing, and teaching leadership. Attend The Global Conference in Toronto, October 28-31.

About  Scott J. Allen

• Website
• Weekly Newsletter: Practical Wisdom for Leaders

My Approach to Hosting

• The views of my guests do not constitute "truth." Nor do they reflect my personal views in some instances. However, they are views to consider, and I hope they help you clarify your perspective. Nothing can replace your reflection, research, and exploration of the topic.

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Transcript

Scott Allen: [00:00:00] Okay, everybody. Welcome to the podcast. Thanks so much for checking in wherever you are in the world. I have a, uh, my, my complexity guru on, on, on tap this morning, Willy Donaldson, if you have not listened to the episode Simple Complexity, please make sure that you do that.

Let's have you introduce yourself really quickly, and then we'll jump into the conversation. 

Willy Donaldson: Scott, thanks for having me. And again, you know my background. I- my father introduced me to all of the systems thinking texts back when I was, before I even went to high school, and I often wonder whether that was for, punishment or enlightenment, but I take it as enlightenment.

And so I come at the world from having run many complex systems. Thought about it from a leadership perspective, and that's why I think we connect so deeply. And I see how both, liberating and humbling leadership can be, and I try to approach the world that way. And I've found,

What I've found, you know, and, and what respo- why I responded to your post was that a lot of people conflate [00:01:00] complexity theory and systems thinking. And I think there's a very clear, in my mind, distinction about them, and maybe we can spend some time talking about that. 

Scott Allen: The impetus of this was I did a post on LinkedIn, and I think it was called Problem Solving and Complexity. And- ... it was rooted in this article by Snowden and Boone, Harvard Business Review, their, Cynefin model. And, you've got clear problems, complicated problems, complex problems, and then chaotic problems.

And at least how I framed it for listeners, and for listeners we'll put a link to the infographic in the show notes- ... so you have a sense of what's going on. But I when I'm working with groups, I talk about the need to set the environment, right? Do we have psychological safety?

Do we have clear norms of how we're gonna rumble with respect, is what kind of Brene Brown would say. But are we going to... Do we have the right decision-making environment where people feel like they can bring their voice to the table? 'Cause oftentimes no one person has the answer or there isn't an answer.

It's what's our best guess. And then do we have a clear [00:02:00] process of how we navigate these complex adaptive challenges? Different scholars call them different things, but do we have a decision-making process? And then I think I, I highlighted Jensen Huang, and I... Jeff Bezos famously talks about how he navigates some of these types of problems.

Now, Willie, I'm super interested in hearing your perspective now. 

Willy Donaldson: Yeah. So Scott- 

Scott Allen: Take it 

Willy Donaldson: away, sir. All of that is terrific, and the infographic is spectacular for understanding complexity. The challenge that I would throw out to leaders and managers universally is- Are we all viewing the complexity the same way?

Senge famously said we have to have common mental models and common language. And an example you may remember from my book, working with a very well-known government contractor that a board member asked me to go in and talk to because he thought they were struggling with project management.

Pretty important skill for a government contractor.

Scott Allen: Yeah. 

Willy Donaldson: I got the senior team selected. We sat down, seven [00:03:00] of us, the CEO, the CTO, it's all the C-suite. And I said, "This board member seems to think you're struggling with project management." Before I could even finish that sentence somebody said, "It's not project management we struggle with, it's program management."

One other person said, "They're the same thing." Another person said, "No, they're not." So I stopped them and I said, "Okay, ladies and gentlemen, get a piece of paper and draw, write down your mental model and your language for project management." Seven different models. 

Scott Allen: Wow. 

Willy Donaldson: You know, and so every one of those was complex, and any one of those models would work and helped each individual understand the complexity.

But without a shared mental model and common language of those, they talked past each other. So somebody's getting, a raise in San Diego for doing something that somebody in Norfolk is getting fired for. Yeah. And it's just, that's what I see as the difference, is making sure that, yes, it's complex and systems thinking is never going to make that go away if it's a complex adaptive system, [00:04:00] but it helps you get oriented to it.

And then again, that common language, common mental model is just critically important. Another example, I w- I was brought in by a debtor-in-possession financing deal that went south and the financers brought us in to clean it up and they'd brought in a whole bunch of turnaround specialists from top companies, Procter & Gamble, IBM, et cetera, all unbelievably intelligent, great stuff.

But the product marketing department and the engineering department used a different stage gate product development process with different deliverables and different models and different language. 

Scott Allen: Yeah. 

Willy Donaldson: And then blamed each other for why they couldn't come together. 

Scott Allen: I saw something like this week, with the senior team, Willie.

And so one ... Okay, I wanna make sure we're on the same page. So in the world of Bezos and Amazon, they're gonna have the memo, right? They're gonna have that the memo that they all pause, they all read for about 20 minutes or whatever it is. Yeah. It takes a long [00:05:00] time to write the memo, but that's Bezos trying to get everyone into the same space.

So that's what you're saying, and that's what the infographic probably has missing from it is, are we all defining things? Are we all seeing things? Are we all working the same problem? 

Willy Donaldson: Yep, exactly. And a lot of my work has been on corporate universities, Scott and a lot of leaders and business owners struggle with that term.

They think, "I don't have 30 acres and a billion dollars for a university." No it's setting up your internal learning process to make sure that you do have common language and common mental models. So my brother-in-law had a small manufacturing firm in New Jersey, and same problems. People talking past one another and we just set up his corporate university.

It was in a 10 by 10 break room. 

Scott Allen: Yep, yep.

Willy Donaldson: But it was a, a, a shared learning library that they could take out texts and, and then pictures of the common processes and common models. And until we got to that, they, [00:06:00] they all struggled with what somebody would think was complex and somebody else thought was trivial.

And so they think that person's not intelligent." No, they're very intelligent. They just may not have the intelligence to understand that mental model. 

Scott Allen: Yeah. I was with a group this week where I think in the ... It was a senior team, and in the course of the conversation, it was really fascinating because- One individual said I thought that was a priority," and the other individual said, "I thought this was the priority."

And they were at odds because they were... a- and then it gets personal at times. That person's difficult, that person's... and one person's "Look," the R&D f- individual's "Look, I'm trying to move forward on all these things, and now this has been, brought into the picture.

And then the operations individual's I'm concerned that we aren't on the same page of what our priorities are." This is an EOS organization. They're doing the work, but it's not easy.

Willy Donaldson: No. No and this is [00:07:00] where, Chad, I think you've probably seen it, is leaders have to understand they are the system architect. 

Scott Allen: Yeah. 

Willy Donaldson: And they have to be the one that senses those and also follows through. They're the only ones who can negotiate and square those kinds of challenges. So in another example, I was brought in with, to a very large, again, government contractor, five different divisions and the president was driving digital transformation.

But she refused to n- to negotiate and mitigate the differences between the platforms. She just turned it over to the IT department and said, "Oh, no, just make everybody do it the way we want." Okay. The IT department cannot change incentives and cannot decide on budgets and those sorts of things.

Scott Allen: So h- how do you help organizations get to that place? I gave you a simple example of kind of Bezos, but you just, your radar's up and you're looking from the very start, are people defining this the same way?

Are [00:08:00] they seeing it through the same lens? Talk a little bit about that. What are the red flags that, okay here's a little bit of a challenge out of the gates? 

Willy Donaldson: Yeah. It's just exactly what you say. The, different priorities in different departments and you just start to see, or, misplaced incentives that have somebody doing the wrong thing.

You, you are a student of W. Edwards Deming, and he believed that upwards of 94% of all the mistakes, faults, flaws, misunderstandings, defects were systemic. People wanted to do the right things, and if you've hired good people, they typically wanna do the right thing, but they're led to do the wrong things.

One of the infographics talks about engagement and really making sure they understand the strategy and they understand the priorities and the trade-offs, and they can speak truth to power. And if you don't have those systemic elements in place, it's gonna be problematic. And yet, often in the absence of system thinking, [00:09:00] people, create a market for villains.

They're frustrated they're overworked, and, "Oh, those damn people in sales," or that, "Those stupid engineers." And you've seen it. 

Scott Allen: Yep. 

Willy Donaldson: Oh, yeah. I see it all the time. 

Scott Allen: Yep. 

Willy Donaldson: I had an engineer working for me one time, and he was complaining about, "Those stupid customers and users.

They're doing, they don't, they're, they have all these problems. They keep calling." And I said why don't you go out and spend some time with them?" I gave him a plane ticket, and he went out and sat with them. He came back, he said, "Wow, our software stinks." So- 

Scott Allen: Talk more about the system architect.

I really like that phrasing for the leader. 

Willy Donaldson: Yeah. Again, if you look at the canonical model of a system, inputs into the system, a black box, and outputs, the CEO has to be, or the executive director of a non-profit, has to be the system architect. Because if there are problems, it's the system.

You've got to understand the whole has to come together, and if you don't [00:10:00] approach it that way you'll almost always use bounded rationality and optimize in what you think is best, sales, finance, et cetera. But a lot of, CEOs don't like that position. "I don't know enough about IT.

I don't know enough about..." Well, you don't have to be brilliant in all of them, but you have to listen, and you have to be humble before the system and look for the system dynamics that are throwing things off. 

Scott Allen: Yeah. And, and Heifetz often talks about, treating adaptive challenges like technical problems.

And, and, and I think y- you're getting to that a little bit. Our minds want to find a villain or want to find a kind of, simple, quick, this will make it go away. If we just- ... put billboards up along the highway, then people will come you 

Willy Donaldson: know? Like- Yeah. Exactly. And it's why people don't like systems thinking.

Russell Ackoff said that, managers and leaders don't solve problems, they manage messes. That doesn't sound like much fun, and we all- ... wanna solve the problem. Imagine an [00:11:00] elected official saying, "I wanna just manage the mess," "and I wanna spend my time with really hard trade-offs and upsetting half the people."

No one ever says that, but that's the reality. And part of system thinking is to get you to realize there's always trade-offs in the systems and always compromises that you have to make. 

Scott Allen: Yeah. 

Willy Donaldson: But most leaders don't like that and haven't been trained like that. And I'm big, I'm bad, I can just force this through.

Scott Allen: Yeah. Yeah. What else comes to mind as you think about the infographic? Is there anything else that, you know... I love that addition, Willie, and I'm gonna, in the next version of it, put that version out in the world. And, is there anything else that you think is a nuance or just when your critical eye looked at it that you thought, "Wow, this resource would benefit from..."

For now, what else is missing? 

Willy Donaldson: I might actually put in a graphic about mental models- and, common language, because I think a lot of complexity is often in the eye of the beholder. And so [00:12:00] they don't go and talk to the VP of IT because they just think that's way above my... But if they understood all of the mental model of how that fits in with them, they might very well have that conversation.

Scott Allen: Yeah. 

Willy Donaldson: They're not ignorant people, but they just don't see the whole system, and so those mental models and common language are so powerful.

Scott Allen: Yeah. And I think at times if I'm not taking the time to truly empathize and learn what it is that this individual, the CFO, what are the constraints and the demands and the frustrations and the challenges- ... that individual's navigating. And then again, to your classic kind of R&D versus sales kind of conundrum, what, what are the different constraints and challenges?

And I'm just looking at it through my lens. 

Willy Donaldson: Yeah. 

Scott Allen: It's, it's a recipe for challenge, right? 

Willy Donaldson: Absolutely. And you probably have watched, the show Undercover Boss and no- notice how many times the boss is like, "Wow, I had no idea that was going [00:13:00] on." And so that's seeing the system and making sure everybody sees the system, because Herbert Simon's bounded rationality, if you don't see the whole system, you're gonna draw a boundary around your job, accounting, finance, whatever it is, and you're gonna start optimizing in that space.

And that may be great for finance, but it may be disastrous for the whole system. 

Scott Allen: Yeah. It reminds me of the blind men and the elephant. You know this poem? Yep. 

Willy Donaldson: The Sufi model, yeah. 

Scott Allen: Yeah. 

Willy Donaldson: Yeah, so it's blind men looking at an elephant, and one is holding the ear and thinks that this must be a carpet."

And the one is holding the trunk and thinks this must be a hose." And the other's holding a leg, and "This has to be a tree." And If you don't see the whole thing, you're gonna make up...

they're gonna complete the story. They're gonna complete the picture, "Oh, this is a tree I'm holding onto," if they don't see the whole elephant. 

Scott Allen: Yeah. 

Willy Donaldson: And so that's why if so- you bring somebody into [00:14:00] accounting, you bring a s- a high-powered finance person into your organization, and you don't give them the caution that, "Hey, you can't just optimize finance.

You gotta optimize the whole system," they may very well just optimize for finance 

Scott Allen: So would one intervention with this senior team that I'm working with would n- a potential intervention be to challenge the senior leaders to spend some time with some of these other individuals and experience their world for a day?

What... and that's- Yeah ... it feels trite 'cause it's just a day, but is it better than nothing? How do you think about that? 

Willy Donaldson: I was asked by a very large financial institution to come in, and it's interesting, Scott. I posed these questions to the s- this collected group, I think it was 86 folks, and I said, "Is your company a system?"

And all the hands went up. "Absolutely." "Is your department a system? Is your company a subsystem of the holding company?" [00:15:00] "Absolutely." All the way down, "Is your department, is your team, is your..." All the way down everybody used the word system. I said, "How many of you have ever studied systems thinking or systems engineering or systems dynamics?"

Three hands went up. 

Scott Allen: Yeah. 

Willy Donaldson: And so people talk about systems, but they don't really understand how powerful they are. So then getting them to, as you say, walk a mile. I love the old adage is walk a mile in someone else's shoes. Go sit with the person in operations that you just said was an idiot. 

Scott Allen: Yeah.

Yeah, yeah. There's that, Japanese phrase, and I'm not gonna say it exactly correctly. Genchi genbutsu, which is, go and see. Yes. 

Willy Donaldson: Yes, and that's why I love the concept in systems thinking of in scoping and out scoping. Wherever you are, out scope. Step back, look and see where those artificial boundaries drop away, and you see what's really going on.

Or in scope and go find out what's working. And so getting yourself... I use the John Boyd's OODA loop all, all the time. Yeah. First observe really closely [00:16:00] and get yourself oriented. Because as Boyd himself pointed out, if you do not observe carefully and get yourself orient, you may be disoriented.

Yep. And that's a terrible position from which to make decisions and act. 

Scott Allen: Especially if you're a fighter pilot. 

Willy Donaldson: Yeah, exactly. Especially if you're a CEO. 

Scott Allen: Yeah, exactly. 

Willy Donaldson: Or a CFO, for that matter. 

Scott Allen: Who are some C-level executives today that you observe that people may know that you respect, that you think do a nice job of kind of thinking in this way?

Are there folks that come to mind for you?

Willy Donaldson: Yeah. One that jumps to mind immediately is Tim Cook I think does a very good job, in this fashion. I, many people will not know her, but a friend of mine at the Rockefeller Foundation, Sarah Farley is just great at it. So most of the ones I know that really think about this I don't see it a lot publicly.

Scott Allen: Yeah and it'll be so interesting to see how, this ... I think it's, is it two people who are [00:17:00] taking over for Cook? Is that what was, has been decided? That's what I think. 

Willy Donaldson: Yeah.

Scott Allen: It'll be interesting to see how... I think of a Microsoft, this tension of perform and transform. I think of a Microsoft I think has done a really on the whole, push back if you disagree, please. On the whole, Microsoft has done a very nice job, 50 plus years of this, navigating that tension of perform and transform, and really- staying relevant. If they were still sending out CD-ROMs, we wouldn't have Microsoft anymore, right? Yeah. But they've done a really nice job of that. No, and that's- And it'll be interesting to see how, Apple, because some of their ... I, just yesterday I was like, "I hate you, Siri." I lost my emotional intelligence with Siri 'cause it's been the

same. Right. Yeah, but, but- or Google with, you know, how do you, how do you monetize and gr- revenue from LLMs? Because- 

... 

Scott Allen: It's gonna be Gemini. I no longer really go to Google to find things out. I go to Claude and so it's gonna be interesting to watch them transform.

Willy Donaldson: I write about this in my book [00:18:00] about that dynamic tension between getting trapped, the management paradox I talk about is you want to lock everything down and have it be repeatable and predictable, that's what the stock market wants, but it's a fool's errand because everything on the outside and inside is changing.

So you have to balance this tension to constantly be changing but also deliver results, and it's hard. It's a hard balancing act. 

Scott Allen: So I'm gonna switch gears on you right now and, I hope that's okay. But it's in the- Sure ... it's y- it's in the, a close cousin to what we've been discussing, if not completely, connected.

I think it is. You just mentioned it. It's ... I was with a banking group this week, and the amount of, I think back in Kotter's day where it was like, "Hey, you're gonna do a change? Here's the eight steps," and I'm listening to these folks, and there's, we've had this number of, I'm gonna s- gonna say chief [00:19:00] technology officer.

Let's, that's not the example, but, "We've had three in the last four years. We have this going on. This is happening. This is c- occurring. We, digitization, tariffs, Strait of Hormuz." Just go down the list. Come back to office. The number of changes that these folks are navigating w- and the scope of them- It it's really fascinating.

And so it's almost like an existence in permanent white water as you just- Yep ... it's like you're just going- Yeah ... down the rapids and they're gonna be category four, and every once in a while you might... you have a stretch where it's cat three. But get, strap in. Buckle up.

Willy Donaldson: How,

Scott Allen: how do you see that?

Do you see that it's accelerating maybe than maybe-

Willy Donaldson: Oh, I ab- I absolutely see it. And, where I get in trouble, Scott, is the CEOs who come to me and say, "Oh, woe is me. What am I gonna do?" I just push back and say, "Sorry, TS." That's your reality. Man up because it's not gonna get any better and you whining about it is not gonna change anything."

And [00:20:00] that's when most of my consulting engagements get ended. They don't want to hear that. But that's the reality that the CEO has to hear is, "Okay, sorry it's complex and it's hard, but if that's your reality, somebody else is gonna take advantage of that. Somebody's gonna learn through it and change and adapt to it.

And if you don't, we'll put you on the dustbin of companies that couldn't get through it either." So- 

Scott Allen: Exactly ... 

Willy Donaldson: that's the sort of tough love that I try to bring. But it's hard. It just feels like everything is changing all the time, and that gets back to, a concept I think we've talked about before is that there is a medical model of stress where, ambiguity leads to uncertainty and feelings of anxiety.

And if you don't resolve those, that leads to all, what I call the outs. Burnout, dropout, passout. 

Scott Allen: Yeah. 

Willy Donaldson: And management's job is to put a filter of certainty in that [00:21:00] ambiguity. Put a lens that says, "Yes, all that's problematic, but..." Because back to the Herman Newsworth, people are gonna make up their own story- 

Scott Allen: Yeah

Willy Donaldson: about how you're responding to it. 

Scott Allen: Yeah. Yeah. Yeah. Uh, I think it's, and I don't know, this is not a well-formulated thought, but, what are some of those principles for better preparing individuals to just exist in that permanent white water? And w- real quick, what did TS stand for? Too sad?

Tough shit. Okay. Okay. Close. Very close. Very 

Willy Donaldson: close. 

Scott Allen: Yours was a little bit more just like, "Here's, here's how it is." Fantastic. But, yeah, it's, don't expect... and I come across individuals in organizational life that, that almost expect as if it's gonna slow down, if it's going- Mm-hmm

to get back to normal, quote unquote. And I just, again, global competition, digitization- Yeah ... uh, you just go down the list of kind of- Yep ... what's happening in the environment. I don't see that. 

Willy Donaldson: But here's my solution that I try to, I tried in my, all my [00:22:00] companies, and I try to work with my clients, and that is make strategy an everyday event.

Scott Allen: Yes. 

Willy Donaldson: And the good news is, in this day and age, with Teams and the cloud and AI, you can be tracking those critical assumptions you've made in the outside world, in your external environment, on a regular basis, and storing it where everybody can see, and you can summarize it for people so that you're building the people's awareness of those changes as they go.

Todd Jick at Harvard, you know, wrote famously, "You have to get everybody as uncomfortable with the status quo as you are for them to wanna change and go forward." Now, when everybody has access to it, and you can chirp out a summary of where we are any time, you can keep people pretty, pretty informed.

It doesn't make it any easier, but at least you're, you're putting that filter of certainty in place, that people know what's going on, they understand the changes that are coming. They may not like them, but they can hopefully understand them and see them 

Scott Allen: Well, Willie, I, I so appreciate your time today. I really, really do.

I, I've been ending the podcast [00:23:00] lately by just asking guests what's the practical wisdom in this conversation. This, in, in this, in a topic that doesn't always feel practical. But what is the practical wisdom for you that you want to leave listeners with?

Willy Donaldson: Yeah, my students and my customers are and, clients are tired of hearing me say it, but systems thinking is a worldview.

It's, it just, it helps you see the world. And so if you can really embrace it, it's not a solution. It do- it is not a tool. It's just a way of viewing the world that hopefully brings greater clarity. So- Yeah ... I embrace systems thinking wherever I go. 

Scott Allen: And it more and more is probably foundational to someone having a level of success when they're in a position of authority, right?

Willy Donaldson: Absolutely ... it, 

Scott Allen: It is an incredibly important topic when it comes to individuals being successful when serving in these positions of authority, 100%. 

Willy Donaldson: And what's interesting, Scott, is as I've introduced it to freshmen and even high schoolers, [00:24:00] most of their time their response is, "Wow, now I see it."

Because they've been living in these systems all their lives. 

Scott Allen: Yeah. 

Willy Donaldson: And now they're starting to see the dynamics and the distinctions and the relationships differently. 

Scott Allen: Yeah. 

Willy Donaldson: And so I think people can understand it. Often we train leaders to not see the system and, they come out of finance or they come out of this area.

And so I think starting early and then getting everybody, in all of my corporate universities we've started with critical thinking and then systems thinking, and then, "Oh, by the way, here are all of our systems and how we view the world at this company." 

Scott Allen: Yeah. Okay, sir. I, appreciate you. We will do it again.

Okay. Keep commenting on LinkedIn when, when I'm missing a little thing here or there, or a big thing here or there.

Willy Donaldson: Will do. 

Scott Allen: Do. I appreciate it. 

Willy Donaldson: I appreciate it. It's great to see you again, and thank you so much. 

Scott Allen: Take care. Be well. 

Willy Donaldson: Okay.

Scott Allen: Okay