Managing Ambiguity: How Effective Managers Use CPRI


My last post asserted that successful hedge fund managers have an exceptional ability to manage in an environment characterized by ambiguity and complexity. This ability emanates from their use of effective cognitive strategies (ways of thinking). I introduced the CPRI (Context, Process, Results, Implications) framework, and recommended screening hedge fund managers based on how well they address each of these four elements when describing decisions they have made.

This post will:

  • Illustrate ambiguity and complexity in a hedge fund environment

  • Demonstrate how an effective manager reduces ambiguity by first analyzing the context (C) before moving to effective action

Before proceeding, I would like to acknowledge the many readers who commented that the ability to deal constructively with ambiguity and complexity is just as crucial for managerial success outside the hedge fund industry.

Ambiguity and Complexity in a Hedge-Fund Environment

Transactions are at the core of business. They typically start with a request. Requests are ambiguous; they have both explicit and implicit components to them. 

Imagine a hedge fund serving institutional investors. Suppose a customer says, “I would like to invest another $100M with you.” The explicit request is both ambiguous and complex. There are countless ways the money could be invested (e.g. stocks, bonds, or other asset classes). Even if they had said, “I would like this invested in US equities,” there are nearly 3,000 listed on the NYSE alone. 

The implicit aspects of this request are also ambiguous. Does the customer want to:

  • Quickly make up for losses on another investment?

  • Avoid losses of a certain size?

  • Satisfy some other agenda?

Given this uncertainty, what’s the best way to proceed?

Reducing Ambiguity by Analyzing Context (C)

The CPRI framework suggests that the first step in an effective strategy for dealing with ambiguity is to clarify the context

To do this, managers can ask relevant contextual questions. The most powerful of these relate to goals.

Questions on which the manager might reflect include:

  • Who is this customer?

  • What are the customer’s goals, interests, underlying emotional concerns?

  • What are my firm’s values, mission, goals?

  • Are there other relevant stakeholders (e.g. regulatory agencies, other customers)?

Questions to ask the customer include:

  • Can you tell me more about what led to your decision to invest another $100M with us?

  • What does this represent as a fraction of your institution’s total portfolio?

  • How is the other portion invested?

  • What are you hoping to accomplish with this portion?

  • What is your time horizon?

  • If, at some point, your investment was down by 10%, what would happen?

By first clarifying the context, the manager produces information that reduces the ambiguity. The next step will be to use this information to guide development of an effective course of action (in this case, an investment strategy and the tactics for implementing it).

In the CPRI framework, developing and implementing a course of action is represented as Process (P). The process must produce results (R) that integrate the goals of all of the stakeholders identified by the manager during the analysis of the context (C).

Future posts will address designing processes (P), assessing results (R), and teasing out implications (I).

#hedgefund #leadership #leadershipdevelopment #coaching #peopleanalytics #hranalytics #recruiting #highpotential

Originally posted by Paul Edelman on LinkedIn on August 27, 2018.

Going Hypothetical: A Powerful Way to Surface Emotional Concerns Before They Derail Your Change Effort


My last post began with a premise, an assertion, and a suggested question to ask those affected by the change:


All change, even change that leads to improved business performance, represents displacement and threat to those affected.


Hidden emotional concerns are the root cause of most failed change efforts.

Suggested Question:

What emotional concerns does this proposed change raise for you, or others who will be affected?

This question is more likely to produce useful information than a less specific question like, "How do you feel about the proposed change?"

Astute readers have asked:

What if the emotional concerns are outside of awareness, or the individuals choose not to articulate them for other reasons?

In this case, you can try entering the domain of the hypothetical. To go hypothetical, say to those affected by the change:

Imagine the proposed change has been successfully implemented. How will things be different?

Their answers will heighten awareness of the emotional concerns that could otherwise sabotage the change effort.

For example, suppose you and your team have been asked to implement a new survey/feedback process. You ask the project sponsor how things will be different after the change. Suppose his/her list of post-change differences includes the statement, "I could end up with more feedback than I can handle."

You can follow up by asking:

"How will you feel then?"

Whether they are aware or not, project sponsors harbor a variety of emotional concerns. These can include fears like those of being exposed, embarrassed, or overburdened. Whether the sponsor communicates his/her concerns explicitly or implicitly, all parties to the conversation will gain insight. Then, you will all be in a better position to play your respective roles in a collaborative endeavor.

In contemplating this approach, you may worry that calling attention to emotional concerns could lead to the project sponsor terminating the effort. If you sense the sponsor heading in that direction, you can use your skills to reconnect him or her with the stated goals that initially prompted the change (in this case, developing a survey/feedback process).

By developing a good understanding of the emotional concerns associated with the various stakeholders in your next change effort, you will be better able to address their concerns and ensure success. Depending on the context and the particular concerns, there are many ways to do this. 

Originally posted by Paul Edelman on LinkedIn on July 30, 2018.

Wear Your Red Hat to Implement Change More Effectively

red hat.png

All change, even change that leads to improved business performance, represents displacement and threat to those affected. This is the key reason most efforts to produce change fail. Cultivating awareness of the emotional experiences associated with change is crucial to making change successfully.

In the training program on Team Creativity that Dr. Richard Kremsdorf and I developed for MIT's Undergraduate Practice Opportunities Program (UPOP), we incorporate Edward DeBono's Six Hat framework into a structured process for analyzing problems and generating creative solutions. The six colored hats symbolize different ways of thinking, or moves that participants can make, in the context of team interaction.

One of the "hats" is the red hat. "Red-hat thinking" or "red-hat moves" have to do with feelings or emotions. At the appropriate point in the process, we ask team members to "put on their red hats" and discuss how they feel about the various proposed solutions to a problem. Invariably, this part of the process is problematic. Team members have trouble differentiating their intellectual reactions from their emotional ones. For example, a team member might say, "I feel that this solution will be the most economical." This is after we have already asked them to state their thoughts about the positive aspects of the solution (the yellow-hat step).

Recently, the cause of this difficulty dawned on me. MIT students (like many of us who earn a living using the part of our bodies above the neck) are selected for their intellectual prowess. They tend to be less skilled (and therefore less comfortable) in accessing their feelings. Asking them how they feel about a proposed solution is too vague. A more specific (and more effective) question is, "what emotional concerns does this solution raise for you or the others who will be affected?"

With the benefit of a more specific prompt, and a little coaching, they are much more likely to become aware of the kinds of feelings that undermine successful efforts to implement change. Eventually, they will grow to be the kinds of team members and leaders who can say, "This solution is likely to scare the individuals whose jobs it may threaten." Or "This solution is likely to embarrass the people who developed our current method." Armed with this awareness, they are much more likely to anticipate the resistance they are likely to encounter and devise effective steps to mitigate it.

The lessons from the MIT UPOP Team Creativity training generalize to many other situations. For example, this sort of questioning can be useful in executive and team coaching.

Originally posted by Paul Edelman on LinkedIn on July 27, 2018.

Translating People Analytics Insights into Impact: Speaking to the Pro-Change Part of the Brain


People analytics practitioners strive to derive insights from HR data to inform managerial decision-making and drive improvements in employee engagement and performance. New scientific insights suggest that practitioners can have greater positive impact by cultivating the ability to speak to the "pro-change" part of managers' brains.

At the Conference Board’s recent HR Analytics Conference several participants described this frustrating pattern:

  1. The analytics practitioner meets with a line-management client to discuss a real business problem (e.g. reducing the cost of turnover)

  2. Together they formulate a question that can be answered by gathering and analyzing data (e.g. what are the controllable causes of turnover?)

  3. The analytics practitioner gathers data, analyzes it, extracts insights about the problem, and develops possible solutions

  4. The analytics practitioner meets with the line manager to share the insights

  5. The line manager questions the validity of the data or the insights

  6. The analytics practitioner attempts to defend the validity of the data or the insights

  7. The engagement ends with the analytics practitioner feeling frustrated with their ability to produce impact

This pattern recurs frequently enough that it is worth asking:

  1. What factors underly this pattern?

  2. Are there best practices for shifting the pattern and achieving more positive outcomes?

From my experience doing organizational consulting and executive coaching, as well as from my study of recent developments in brain science, I have developed a perspective I would like to share and refine through discussion with leading people analytics practitioners. There is scientific evidence that the brain is a complex, interdependent systems comprised of multiple subsystems. Different subsystems are activated at different times and under different circumstances. 

The so-called parasympathetic nervous system (PNS) controls the body at rest and is activated when we think positive thoughts. It is associated with positive emotions like hope. The neural pathways in this system are longer and function more slowly. When you ask a manager to envision positive changes in their organization, and to imagine the benefits that will accrue to him or herself personally from those changes, this part of the brain is most active. 

The sympathetic nervous systems (SNS) controls the body's responses to perceived threats and is responsible for the "fight or flight" response. It is associated with negative emotions like fear and anxiety. These pathways are shorter and function much faster. When you present a manager with information that is threatening in some way, this part of the brain is activated.

The language we use when we speak with our clients can activate either of these systems. For our purposes, as people analytics practitioners hoping to effect positive change in organizations, I suggest calling the PNS, the “pro-change” part of the brainWe can think of the SNS as the “no-change” part of the brain. Our challenge then is to find ways to speak to the pro-change system within the brain and avoid activating the no-change system. For example, compare the following questions:

  1. Would you like me to do a survey to find out what people see as the issues in your organization?

  2. Would it enhance your position in some way to know what people see as the issues in your organization?

Let’s assume that the manager already suspects that there are issues, and that some of these may be the result of things that he or she has either done or failed to do. Question one is likely to evoke a negative emotional response and activate the SNS, or no-change system within the brain. In earlier times, the human fight or flight reflex was easier to recognize. Our clients, however, have evolved too far to punch us in the nose, or get up and run. So we may not recognize the fight or flight response when they reply, “How do I know your survey methods are valid?” or “Why don’t you come back in a few weeks so we can discuss this further?”

Question two is designed to speak to the PNS or pro-change part of the brain. The survey still represents the same threat of exposure, however, we are purposely redirecting our client’s brain by challenging it to envision possible positive consequences that could flow from doing the survey. This is more likely to evoke a positive emotional (and behavioral) response.

So one best practice for people analytics practitioners is to pay careful attention to the language we use and to cultivate the skill of purposely speaking to the pro-change part of our client’s brains. 

I am interested in hearing feedback from people analytics practitioners. Please send your comments, suggestions, or questions to, or call me on 508-947-5300. Also, do you have a best practice to share? I am interested in learning what has worked for you.

Originally posted by Paul Edelman on LinkedIn on November 8, 2017.