Tuesday, 6 August 2013

A Tale of Two Complexities

By Tom Lloyd
Visiting Fellow to Northampton Business School

‘Managing complexity’ is the ‘next big thing’ in management. Books and articles on the subject are emerging almost daily, consultants are developing new complexity management offerings like there’s no tomorrow, and the challenge of ‘Managing Complexity’ is the theme of the Harvard Business Review’s fifth annual Global Drucker Forum in Vienna, next November.

Despite all the attention being paid to it, however, there remains considerable confusion about what ‘complexity’ is.

Some interpret it as the noun for the adjective ‘complicated’, and urge managers to do all they can to reduce it. One leading firm of consultants offering ‘to help companies manage complexity’ says that ‘too many products can create complexity and strangle growth’ and that ‘Unnecessary complexity cripples companies’. According to this view, complexity is like sclerosis - it clogs up the arteries and slows response times. Managers should seek it out, and weed it out.

But contrary to modern common usage, the noun for ‘complicated’ is ‘complication’. Complexity is the noun for ‘complex’, which is not at all the same thing as ‘complicated’.

A complicated system is ‘linear’: its chains of causes and effects are fixed and predictable. A complex system is ‘non-linear’; there are no definable logic paths linking causes to effects.

It was a realisation of the complexity of our weather systems that first alerted scientists to the complexity all around us.

To save time when he was using a computer model to rerun a weather forecast in 1961 Edward Lorenz entered a variable as 0.506 instead of the full 0.506127. The subtraction of 0.000127 caused a totally different weather pattern to emerge. In 1972 Lorenz gave a talk to the American Association for the Advancement of Science that began with the question: ‘Does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?’

Lorenz’s ‘butterfly effect’ vividly describes one of the qualities of what have come to be known as ‘complex adaptive systems’ - they are extremely sensitive to initial conditions.

This is a world where a decision by an apocryphal young home-owner in Cleveland, Ohio to spend his wages on a ticket for the ballgame instead of paying his mortgage can bring, through a sequence of events no one could have predicted, the world’s banking system to its knees; a world where the harassment by local officials of a market trader in Tunisia can lead, via a sequence of events no one could have predicted, to revolts and revolutions, and a re-writing of the political map of North Africa and parts of the Middle East.

This is the challenge of complexity.

The complicated can and should be simplified. The complex can’t be simplified and the complexity of complex adaptive systems can’t be ‘reduced’, let alone eliminated. It is what it is; an integral and defining part of such systems. All you can do is recognise it, and try to adapt to it, by ensuring that your structures, organisation and decision-making processes are ‘complexity-compliant.’

This may mean counter-intuitive moves. Contrary to what the global consulting firm cited above prescribes, company managers might be better advised to value, and deliberately increase the complexity of their organisations, to permit the self-organising qualities of complex systems to enhance the adaptability of their companies.

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[The views and opinions expressed in this blogs by guests or members of the CCEG are those of the author, and not of the CCEG or the University of Northampton Business School]

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