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Have you got complexity under control? Well, if the answer is ‘yes’ maybe you should think again! To deal with a complex external environment requires first mastering internal complexity.
At this time of increased change and uncertainty, a new engagement with complexity is required. That starts within – dealing with a complex external environment requires first mastering internal complexity.
Twin Sources of Complexity
Everybody gets external complexity and the fact that it is on the rise. It derives from markets – technology, competition, regulation, etc. What is often overlooked is internal complexity.
Working within a large organization is inherently complex. This “internal complexity” stems from the realities of working in a large organization, including bureaucracy hierarchy, silos, committees, etc. It is rooted in an organization’s ways of working, planning, budgeting, managing, reporting and so on. Also, its culture too.
Complexity is a byword for the modern age and a fact of life. However, the danger arises when external complexity meets internal complexity. The result is “complexity squared” (C2) and it can start to feel a little chaotic.
Parse our conversations with leaders and one word continuously emerges: ‘Complexity’. Yet, not all leaders are conscious of complexity. The result of this hidden complexity is misplaced certainty and misguided attempts at control.
This insight emerged from strategic conversations with business leaders on the requirements of delivering today’s performance & tomorrow’s transformation. It is part of our most exciting research yet:
Twin Responses to Complexity
There are two responses to C2 levels of complexity and the probability of Chaos varies accordingly.
The table below contrasts the two responses to C2 complexity:
| Rigidity | Agility |
|---|---|
| Top down bureaucratic control | Empowered teams with greater autonomy |
| Functional Silos | Cross-Functional Collaboration |
| Rigid Budgeting & Planning Cycles | Resource Fluidity |
| Strategy is divorced from execution | Strategy & execution are aligned and agile |
| Risk Averse – play it safe | Balanced Risk Taking – safe high trust – learning environment |
Responding with Rigidity
The classic response to danger is ‘threat rigidity’. This happens where leaders double down on existing Business As Usual strategies, structures and ways of working, planning, budgeting and so on. Instead of adapting, the organization becomes more rigid, as:
- Leaders hold ever-tighter to the reins
- Decisions become more risk-adverse and short term focused
- Budgets are cut, with future-focused investments being most affected
- Bureaucratic procedures and controls multiply, with more committees and approvals required
- Short term financial results become the primary obsession.
Responding with Agility
In agile mode, the organization sees both opportunities and threats and is primed to adapt to capitalize and profit from change and uncertainty:
- It adopts ways of working that enable speed, agility, collaboration and innovation.
- It updates its plan to reflect changing business needs & priorities
- It empowers people and teams to act, giving them greater autonomy
- It fluidly allocates resources to where they are needed most
- It stays connected to its purpose.
Complexity is Counterintuitive
Ironically, at a time of complexity, chaos isn’t what happens when leaders let go of the reins, what can result from holding them too tightly.
Leaders need to do what is almost counterintuitive – they need to become more agile when the temptation is to become more rigid. At its core, this is what it means to engage with complexity.
The level of speed, agility and innovation within an organization are a tangible measure of the extent to which an organization has mastered internal complexity.
“…a dynamic cocreating team… will not achieve its potential in terms of speed and flexibility if they are controlled by a slow, internally focused bureaucracy.”
Ferrazzi, Keith; Gohar, Kian; Weyrich, et al1
When Complexity Gets Too Much
C2 complexity generates chaos when business as usual solutions and traditional ways of working come up against business unusual opportunities and challenges.
It also results when the need for speed, agility, collaboration and innovation is met with bureaucracy, hierarchy, silos and traditional ways of working (planning, budgeting, etc.).
An organization must own its complexity. That includes all 3 dimensions of internal complexity – ways of working, ways of interacting and ways of aligning both within and between teams.
Benefiting from Chaos
As a buzzword, I don’t think it will catch on’ said one of our colleagues. The word was ‘anti-fragile’2. Besides, he added ‘…people are still getting to grips with the word agile and that is a much less of a mouthful!’ It is however an important concept. Let’s try to explain it here:
The opposite to ‘fragile’ is ‘robust’. However, we are now encouraged to think about ‘fragility’ and ‘robustness’ in a new way. That is in terms of things that are neither ‘fragile’ nor ‘robust’ in the traditional sense. They belong to a third category called ‘anti-fragile’. In other words, they benefit from pressure, disruption and even chaos. They can turn disorder to their advantage.
For example, a project team has a wobbly moment. It could have been ‘floored’ by a dramatic shift in stakeholder needs, turns the disruption to their advantage by changing direction – embracing the new requirements and finding innovative solutions to meet them. This is possible because the team has the freedom to maneuver – it does not need to wait 3 months for permission (or sign off) to make it happen. It can press the accelerator of innovation because there are no brakes (bureaucracy) to its innovation.
Thus, when it comes to complexity and even chaos, it is how we respond that matters and in particular the extent to which we can turn chaos and uncertainty to our advantage.
- Ferrazzi, Keith; Gohar, Kian; Weyrich, et al, Competing in the New World of Work: How Radical Adaptability Separates the Best from the Rest, Harvard Business Review Press, 2022. [↩]
- The concept of anti-fragile is introduced by Nassim Nicholas Nicholas Taleb in his book: ‘Antifragile: Things That Gain from Disorder’, Random House Publishing Group, 2014. [↩]
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