Complexity for strategists

Administrative Burden. Photo credit: Wikimedia Commons
Administrative Burden. Photo credit: Wikimedia Commons

There are many people talking about complexity. Managers have realized that complex organizations are driving businesses to fail. This sounds like a modern music hit, however, it is only a reedition of a very old theme.

Sun Tzu said more than 2,500 years ago: “To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself”.

These wise words are a prelude of the modern complexity management. The ancient Chinese general noticed something very important for any manager: We can control our organization, but we cannot control competition or the environment. But he advanced something more important. The resilience of our organization relies only on us. We have the capability to make us strong enough to preserve our survival, and at last but not least, our capability to improve our positioning will depends on the environment.

Traditional quality management techniques obviate this thinking. The industry in the twentieth century has been built on the paradigm that organizations can improve forever. The old myth that we could not increase quality without increasing costs was overcome; however, this was substituted by a different one establishing that improvement can be got forever through continuous improvement and innovation.

In the twenty first century, complexity arisen from that concept has become a menace for many organizations. The problem is not the concept itself. It is how we understand the meaning of improvement. Any improvement is designed for a certain working state in a certain environment, however, it the environment changes we cannot assure that it will produce a better positioning of the company. In order to increase the adaptability of the company to the changing environments, organizations are growing and making themselves much more complex. The larger the functionality is, the larger the required control system is. Then, the managing structure grows even providing a more complex organization.

A control system is built to reduce the working complexity of the full system. The aim of a control system is to preserve the system working in a steady state but, obviously, managing staff is neither designed as an automatism nor acting like that.

Modern organizations are trying to have control systems more similar to automatism due to its complexity. The field of business intelligence is, in fact, to gather and to process measurable data in order to feed the decision making process. This would involve the sensorial part of an automatism, however, the response will not feed any actuator in a measurable way, it will send to the managers in form of conceptual orders.

Increasing the managing staff does not provide a less complex organization. In fact, it provides a more complex organization because the human factor increases the uncertainty about the behavior of the organization. Ancient romans were aware of it, and they developed a great bureaucracy to control their vast empire. Bureaucracy eliminates the human factor in the middle of the decision making process, limiting the uncertainty about the action and then, the complexity of the organization.

Bureaucracy has a very important limit. It is only useful for well-known tasks, and it fails when the senior management is asking for a new task not defined in a procedure. This is the reason why bureaucracy is one of the main barriers for innovation. Bureaucracy, as any control system, is limiting the functionality of the system, and it is limiting its adaptability to the environmental changes.

When the environment changes faster than the control system acts, it is not possible to preserve any system in its previous state. The control system may not be preserving the new equilibrium but destroying it. This is the reason why bureaucracy is considered an obsolete and dangerous managing method in the modern organizations due to its slowness to implement changes properly, and IT systems are winning the game. Quality management must be built on new technologies too instead of a bureaucracy of procedures.

In this case it is necessary to go back to Sun Tzu’s thinking and remind that defense relies on us. We must to redesign the control system in order to protect the organization from the environment reducing its complexity, instead of trying to fight against the enemy with weapons that will not work necessarily. Innovation management is much more than provide new things, it is providing new things to improve a proper working state of the organization.


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