Complexity is a bad word for many organisations, however, they must find ways of mirroring the complexity of evolving marketplace dynamics, writes Dave Hanna
Mention the word “complexity” in today’s organisations and you will likely hear phrases such as:
- “The marketplace has become so complex; we are facing problems we have never seen before.”
- “We have too many complex bureaucratic processes that are painfully slow.”
- “We are constantly confused by those with ambiguous roles and overlapping responsibilities.”
- “Our organisation has increased the layers of hierarchy to better manage the complexity. This means the decision-makers have moved ever farther away from the issues that need to be decided.”
These statements are understandable in our world of evolving global markets, multinational interdependencies, and a heritage of bureaucratic models of organisation.
For many, complexity is a bad word.
Complexity and survival
But in the world of nature’s living systems, the word complexity has a very different meaning and, in fact, is key to a systems’ survival. Natural organisms face extinction when their rigid structural makeup is overpowered by increasingly more complex environmental conditions. Think of the dinosaurs as a prime example.
Similarly, organisations suffer as their business environments become more complex and managers attempt to manage the new complexities with habits and tools that originated in simpler times gone by.
Organisations must find ways of mirroring the complexity of their evolving marketplace dynamics. But such mirroring does not mean they need to make things more complicated.
“Today’s complex organisations build broader skill sets, connectivity between related functions, and partnerships between themselves and their stakeholders”
For example, in biology terms, a virus is a very simple biological agent that exists only in a host cell. Move it out of its host cell and the virus dies.
Plants, animals, and humans, on the other hand, have more complex structures that enable them to survive amidst changing environmental conditions.
Organisations are even more complex. Organisational complexity (i.e., the abilities of adapting, regulating, coordinating, and integrating) enables a plethora of adjustments as conditions change both inside and outside the organisation.
Paradoxically, bureaucracy’s “simple” structures also dictated restraints on more “complex” survival skills. Today’s complex organisations build broader skill sets, connectivity between related functions, and partnerships between themselves and their stakeholders. Traditional supervision is replaced often by purpose-driven oversight close to the decision points.
Two examples of complexity producing self-adaptation
Ben, a warehouse technician in a manufacturing plant, noticed that one of his company’s largest customers was no longer ordering his product. He took it upon himself to schedule a visit with this customer to find out why. “Your pallets are too big for our stacking pattern in our warehouse,” Ben’s customer told him.
Ben then returned to his plant and reported his findings. His plant changed its pallets to be compatible with the customer’s. The large business account was restored.
Not only did Ben have skills and experience to understand and lead the solution to the problem, he did so in a culture that made it okay for him to leave his workplace, visit a customer without hierarchical approval, and design a solution acceptable to all parties.
In another situation, a marketing team, on the path of continuous improvement, noticed from a market analysis that they and their competitors always dropped the price of their products in the first quarter of the year in hopes of getting a bump in sales. A careful analysis showed the prices in these companies dropped, but the bumps never materialised.
Decisions frequently are best made by those closest to the problem, not by those at the top of the pyramid”
Then the marketing team worked with IT to run some computer simulations of different price assumptions. The findings showed that the volume would remain the same even when the price was not dropped. The marketing team, against strong objections from upper management, did not drop the price in January and sales remained steady. This enabled the team’s product to have its most profitable year ever.
This example shows that decisions frequently are best made by those closest to the problem, not by those at the top of the pyramid. The key here is that upper management backed away from its initial judgment and deferred to the team that had studied the issue far more extensively.
Some “complex” structural options that support self-adaptation and survival
Here are some examples of constructive organisational complexity:
- Multi-skilled career paths so individuals can contribute spontaneously to problems in many different areas.
- Self-sufficient teams in which individuals also share leadership responsibilities formerly held by their manager.
- Cross-functional teams, who collaborate with neighbouring units, to optimise the whole business process, not just their own individual pieces.
- Self-sufficient business units who have all the resources within their boundaries to handle their daily business.
- Stakeholder partnerships in which the players move from transacting their business agreements to becoming business partners who do whatever is required for both parties to survive.
- Business alliances: the organisation reaches outside for special needs apart from the daily business (research, technology, alliances, etc.)
Yes, complexity does enable self-adaptation and survival!