Managing Complexity

By: Patrick Williams

If you're anything like the executives and people I work with, your challenges are escalating. Clearly, business isn't anything like what your parents encountered in their careers. It's nothing like what your business professors explained either. Leading people and organizations is fundamentally more complicated than it was 20 years ago—and it’s not getting any easier. Economic and global uncertainties, along with innovative technologies, complicate efforts to run a business. Businesses are also becoming more intrinsically complex. It’s harder to predict outcomes because intricate systems interact in unexpected ways. Interpreting data also proves more challenging because:

1. The degree of complexity may lie beyond our cognitive limits.
2. Past behavior may not predict future actions.
3. In a complex system, an outlier may have a disproportionate impact.

In a September 2011 Harvard Business Review article, Learning to Live with Complexity, business professors Gökçe Sargut and Rita Gunther McGrath distinguish between organizations that are merely complicated and those that are genuinely complex. Complicated Versus Complex Here's a basic review of the distinctions to keep in mind. Simple systems feature few—and extremely predictable—interactions. When you turn a light switch on or off, you expect the same result every time. Complicated systems have many moving parts, and they operate in patterned ways. We can make accurate predictions about how they will behave. For example, flying a commercial airplane involves complicated, but predictable, steps. As a result, it’s reliably safe. In contrast, complex systems may operate in patterned ways, but their interactions are continually changing. Air traffic control is a complex system that constantly changes in reaction to weather, aircraft downtimes and other critical variables. The system is predictable not because it produces the same results from the same starting conditions, but because it has been designed to continuously adjust as its components change in relation to one another.

Two problems commonly surface in complex systems:

1. Unintended consequences
2. Difficulties in making sense of a situation

With multiple independent and interrelated parts in a system, it’s hard to predict all of the possible consequences of a change in one component. And with so many data and informational components to deal with, it’s tough for an individual decision maker to visualize and master an entire complex system. Most executives tend to overestimate the amount of information they can process, but humans have cognitive limits. No manager can understand every aspect of a complex business, yet many refuse to acknowledge this reality. What about you? Can you see the forest? Or just the trees in your own yard?