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

RMA Journal, The, July-August, 2004 by David Hancock

This 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.

To feel brave in this new world of enterprise risk management, bankers need the correct methods to produce the right solutions. This article spans nearly 35 years of concepts, first by introducing tame and wicked problems, which premiered in 1973, and also messes, introduced in 1970. A matrix approach is then used to address a fourth type of problem--the wicked mess--introduced in 1996.

Audit and risk management functions won't be able to meet the requirements for enterprise risk management (ERM) as demanded by the draft COSO (1) report without some changes to their mind-set. While this may not come as a surprise to most, you might be curious to know why. It's because current systems can't deliver an understanding of socioeconomic and political complexities, which will increasingly be key to delivering successful outcomes in the future. Managers will need to be on a first-name basis with such concepts as change management; high-performance teams; motivation, emotional, behavioral attributes; and the learning organization.

Problem Solving

In the past, financial institutions have tended to solve problems through analytical methods, breaking things down into parts, fixing components, and assessing the probability of known sequences of failures leading to an accident or loss. In the new world, this type of problem is labelled as a tame problem, and tame problems tend to enjoy consensus. Everybody pretty much agrees to why something needs to be done and the right way to go about doing it. To solve a tame problem, we develop systems that gather all the data, then we analyze that data, formulate a solution, and finally implement the solution (see Figure 1). Do not mistake tame for simple--some of these problems are extremely difficult to solve. Over the years IT systems have carried out the processes faster and faster, until today's systems achieve results in real time. However, there are still times when we fail and pretty dramatically at that.

[FIGURE 1 OMITTED]

Because of this we have recognized that things have become more complicated. We are increasingly faced with problems of organized complexity, clusters of interrelated or interdependent problems, or systems of problems. Problems that cannot be solved in relative isolation from one another are messes. We sort out messes through systems methods and modeling, focusing on processes and interdisciplinary approaches. Rather than simply breaking things down into parts and fixing components, we examine the patterns of interactions among parts. We organize ourselves to sort out messes through such things as cross-functional groups, redundancy and learning organizations. Simply building more freeways doesn't solve vehicle congestion. A primary danger in mistaking a mess for a tame problem is that it becomes even more difficult to deal with the evolving mess. However, problems persist because managers continue to believe that there are such things as unilateral causation and independent and dependent variables.

Charles Perrow in his book Normal Accidents elaborates on some of the problems inherent in messes. First, interactive complexity is the measure of the degree to which we cannot foresee all the ways things can go wrong. This may be because there are just too many interactions to keep track of. More likely, it is because our various theories are simply not up to the task of modeling socio-technical interactions. Second, coupling is a measure of the degree to which we cannot stop an impending disaster once it starts. This may be because we don't have enough time, because it is physically impossible, or because we don't know how. The greater the degree of interactive complexity, the less our capacity to prevent surprises; and the greater the degree of coupling, the less our capacity to cure surprises. Therefore, the greater the degree of interactive complexity and coupling, the greater the likelihood that a system is an accident waiting to happen--what Perrow terms a normal accident. In such systems, "operator errors" merely serve as triggers. Strategies and risk management techniques for dealing with messes are therefore quite different from those appropriate for tame problems. Thus, increasing our capacity to prevent unanticipated interactions among components entails simplifying systems; increasing our capacity to cure them entails decoupling major components (e.g., building in longer times to respond).

All this is fairly straightforward and fine as long as most of us share an overriding social theory or overriding social ethic. If we don't, we face wickedness. Wicked problems are termed as "divergent" as opposed to "convergent" problems. A convergent problem promises a solution. The more it is studied, the more various answers sooner or later converge. Tame problems are convergent by definition. Messes are convergent if we agree on what overlaps, on appropriate strategies, and on the kind of climate we wish to maintain. A divergent problem does not promise a solution. The more it is studied, the more people of integrity and intellect inevitably come to different solutions. As with messes, there are very real dangers in solving the wrong problem. Mistaking or misrepresenting wicked problems for messes, almost inevitably leads to the conclusion that those with different answers lack integrity, intellect, or both. The great danger is that such conclusions undermine trust, and trust is a fundamental strategy for collective]y coping with wicked problems. If wicked problems are becoming more common in our modern era, and there is compelling evidence they are, we face a strategic choice. We can continue to misrepresent them as messes or tame problems, hoping they will not degenerate. On the other hand, we can acknowledge wicked problems for what they are and try to stabilize them as conditions. This is not going to be easy, because wicked problems offend our sense of logic and our common beliefs even more than messes. In our modern times, it is pretty hard to accept that a problem has no solution. This seems tantamount to giving up. Given that many people care about or have something at stake in how the problem is resolved, the process of solving a wicked problem is fundamentally social, and solving a wicked problem is fundamentally a social process.