“The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think and act anew.”
Have you ever wondered why your best laid plans don’t always achieve their objectives, and why the reasons for that are not clear? Have you seen major change programmes, or mergers, that haven’t worked to create value as intended? Apparently, 60-80% of large scale change efforts fail. In addition to the pace of change, managers tell us that their work is becoming more complex, and that outcomes are not predictable. Whilst challenging, this is not surprising, because complexity is inherent, in both an organisation’s internal and external environments. What we can be reasonably sure of is that the complexity of our environment is unlikely to go away, rather it can be expected to increase. Even so, managers still have to take action, but, as Peter Drucker points out, ‘The greatest danger in times of turbulence is not the turbulence – it is to act with yesterday’s logic’. How then might we act with today’s logic?
Looking Back – Management Theory
The successes of the Industrial Revolution may have led us to believe that we could build large organisations that were ordered and predictable, and that we could also control and change them. Early management theory focussed on improving efficiency through work measurement, standardised procedures, and planning, organising, commanding, coordinating and controlling. Later, the emphasis switched to human relations, to improving working conditions, and to finding ways to motivate employees. A bigger shift came next, with systems theory, which challenged the reductionist view, and introduced the idea of organisations as open systems which were, thus, open to influence by their environment.
Then, in the 1960’s, along came complexity theory, which described us humans, our organisations and their environment, as complex adaptive systems. These systems have many parts that can interact in multiple ways, and are unpredictable. Contrary to previous beliefs, complexity theory showed us that our organisations were not always ordered and predictable, but dynamic.
This can mean that, for example, links between cause and effect are not clear, the behaviour of the system is difficult to model, complex patterns can emerge from the interaction of the parts or agents, and we cannot reduce the system to its parts for easier analysis. One recent example of the effects of complexity theory was the 2008 financial crash. Only after the event did some of the causes, links and relationships become clearer.
Despite knowing about complexity, some managers can still behave as if their enterprises were ordered and predictable rather than complex. While that may work in relatively stable times, it can prove costly and detrimental in complex conditions. To paraphrase Ross Ashby’s Law of Requisite Variety, ‘the complexity of an organisation needs to match the complexity of its environment’.
Looking Ahead – Does your organisation have the required capacity to meet the complexity of its environment?
If not, then how might you build that capacity? This question prompts 3 further questions:
1. How do we, as individuals, adapt to, or learn to cope with, complexity?
2. How can we, as managers, match each individual’s capacity to work with a given level of complexity?
3. How can we, as leaders, design organisations that adapt to the changing complexity of their environments?
We would like to offer some ways of thinking about these questions. Each question will be addressed in 3 subsequent blogs.