The Schumpeter column in The Economist got it wrong: "It's complicated. Management thinkers disagree on how to manage complexity." The column comments on the recent 5th Global Drucker Forum – Managing Complexity and describes organizations as having two choices, deal with complexity or simplify.
Those that deal with complexity "may look complex and unwieldy but they have an inner logic and powers of self-organisation." In contrast, "the second, rival solution to dealing with complexity is to impose simplicity."
But to present the situation as 'either / or' is simply misleading, and I think it comes down to a failure to appreciate the critical difference between complexity and complication, a difference that must be well understood when redesigning the way your organisation works.
In his excellent introduction to complexity, Two’s Company, Three is Complexity, Neil Johnson explains “there is no rigorous definition of Complexity. But that isn’t so bad – after all, it is hard to define a word such as 'happiness' and yet we all know what its characteristics are.”
He lists the characteristics of complexity:
- The system contains a collection of many interacting objects or ‘agents’
- These objects’ behaviour is affected by memory or ‘feedback’
- The objects can adapt their strategies according to their history
- The system is typically 'open'
- The system appears to be ‘alive’
- The system exhibits emergent phenomenon which are generally surprising, and may be extreme
- The emergent phenomena typically arise in the absence of any sort of ‘invisible hand’ or central controller
- The system shows a complicated mix of ordered and disordered behaviour.
That reference to "disordered behaviour" is chaos, so complexity is a system with a seemingly random mix of order and chaos.
In contrast, complicated simply means consisting of many interconnecting parts or elements. An automatic watch is complicated, but will never exhibit complexity. Cars are complicated, but will never exhibit complexity. The traffic formed by thousands of cars may however.
Large organisations are complicated, and the larger they are the more likely they'll exhibit complexity. At any rate, all organisations sit in markets and in societies that are undoubtedly complex, and the advent of social media and related information technologies is critical in contemplating how an organisation might respond.
In the stack I presented at the recent 3M ThinkTANK conference, I adopt this shorter definition of complexity: "a system in which there are multiple interactions between many different components; bridges the gap between the individual and the collective." The very next slide presents precisely the same definition for the word "social".
Social technologies help bridge the gap between the employee and the organisation, the customer and the marketplace, the citizen and the country. We can't understand traffic better by flipping the hood of the car, and we can't understand our organisation and its marketplace better by collating and reviewing an individual's digital footprint. But when we wield information technologies (did someone say "big data"?) to view these multiple interactions in the large, organisation's acquire an unprecedented facility to visualise the complexity and design responses in real-time.
This is central to Euler Partners' Six Influence Flows approach.
Organisations may gain advantage by reducing the complication over which they have domain – and perhaps there's a happy medium to be found – but they cannot simplify complexity beyond this, for that is the product of nature. We can only seek ways to navigate it more simply and more nimbly.