Satellite tracking-aquisition antenna, Pleumeu...

Satellite tracking-aquisition antenna, Pleumeu-Bodou. (Photo credit: Wikipedia)

There is a strong link between modern management and technology. However, old habits die hard. There are some reasons for this fact that are mainly historical ones. I can remember the world without e-mail but I can say nothing about management without e-mails because I had my first e-mail address at the university as a PhD Student. In that time, the http protocol, which today is well-known all over the world as the web, was making its first steps. I always have had an e-mail address in all my jobs. The world was then larger than now.

Any communication channel makes the world smaller because we can reach larger distances in a shorter time. Our world is always the perceived world, and in order that we can perceive something we need a channel that provides information to us.

The known universe is that part of information in form of light and other electromagnetic radiation that can be detected with the modern telescopes. In a similar way, the markets that we can enter with a business are the markets where the business can provide useful managing information enough to us.

Management is a matter of information processing. In the same way that our brain can manage how any finger is moving processing information received through the nerves, a manager needs to receive information about the business in order to make decisions and provide orders. Multinational companies can be competitive today because of the existence of new information technologies instead of a more efficient cost structure than smaller ones. The concept of scale economy was known many years before. At global level, competitiveness is a matter of technology, not a matter of money. The cost structure can be only a symptom, but the illness can be behind the incorporated technology. Both aspects can be analyzed in a new way through complexity analysis.

Managers can see symptoms, but they should be able to provide solutions for the illness instead of the symptoms. With this sentence I do not want to mean that managers should be well computer programmers, but they should think as an engineer instead of a craftsman. Many computer programmers do not know much about electronics. There is not necessary to know how wi-fi works in order to program a web page. Communication protocols follow a layered scheme, different programmers work on different layers, but finally, they usually work well.

This layered scheme let to face a complex problem, simplifying it, but preserving virtually all functionality. A programmer can develop a web page that can be accessed from a notebook through a cable connection or by wi-fi.

Back to the management problem, senior managers should not be as computer programmers that write the rules at the application layer, but engineers that know and design the layered model. However, in most cases, senior managers only know how the financial layer must be “reprogrammed” instead of knowing how the business model is working, and how they can take advantage of investments in the development of other layers.

This is one of the advantages of SME. The directorate of SME usually knows well all the aspects of the business model of its company because is simple, but in a large enterprise complexity is so high that it can be possible that many decisions are made blindly.

Complexity in larger enterprises usually is much higher than in smaller ones but it can be managed because there are new techniques to do it. A manager of a multinational company cannot know well how the company is working in all the territories, but he must know, at least the foundations of the business model of the company, that can be analyzed in a numeric report. In order to do his work in an objective way he must know which the financial and physical (operative) variables are important to recover, some kind of complexity metric, and some kind of visualization of the internal relations among those variables.

Through new complexity analysis techniques, old habits will be able to disappear finally, but these techniques are based on data provided by information technologies and an effective way to acquire it. Management will continue being a matter of information processing, these systems will have to be always robust and very well designed, in order to control complexity instead of increasing uncertainty excessively.

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