Why Complexity Drives Managers Crazy

Business life has always featured the unpredictable, the surprising, and the unexpected. What’s changed is that the level of complexity that people have to cope with has simply become…..more complex.  To further complicate complexity, the pace of the change has accelerated.  In just a short time, most businesses have evolved from operating in a simple system to a complex marketplace.  That makes it harder to make sense of things, especially if the people making the decisions and solving the problems continue to operate in a simple cause-and-effect world.

The problem with complexity is that it’s harder to plan ahead and to solve problems when they arise. That’s because complex systems interact in unexpected ways, unlike simple systems where understanding one action can reliably predict another.  That uncertainty alone rewrites the managerial and leadership competencies required to compete and thrive effectively in today’s business ecosystem.

At the core of the problem is lack of awareness between what constitutes simple, complicated, and complex. A recent Harvard Business Review article (September 2010) offers an insightful explanation into the differences. The attempt by many executives and consultants to simplify complex systems performs a significant disservice to both the company and likely his or her careers.

For example, simple systems rely on the same action producing the same results each time.  Simple systems have few variable interactions. Complicated systems, on the other hand, have many moving parts but they operate in patterned ways – follow the patterns and you can make accurate predictions about how a complicated system might behave.

Complex systems differ from both complicated and simple systems in that the patterns of interactions are constantly changing based on three properties:

1.  Multiplicity – the number of potentially interacting elements

2.  Interdependency – the connectivity between the elements

3.  Diversity – the degree of differences between the elements.

Knowing the starting point in a simple and complicated system, one can usually predict outcomes.  But in a complex system, identifying the starting point may still result in different results.

The result is that companies that used to function within simple systems and contained markets now face competition from unexpected players. Executives and managers who attempt to simplify the complex do not understand the world we live in or the consequences of their actions. As the world economies and business markets become more interconnected, two management challenges present themselves: unintended consequences and making sense of a situation. The ability to understand and manage complex systems is clearly an essential competency for all managers and executives moving forward.

The biggest hindrance to minimizing the unintended consequences and making sense of complexity is that it’s hard to observe and comprehend a highly diverse array of relationship from one viewpoint.  We are further hampered by cognitive limits to understanding the effects of other people’s actions on our own and our own actions on others.  Unfortunately many executives believe they can take in and make sense of more information than research suggests they can.

Companies clearly need a better way to manage complexity. The danger of misunderstanding complexity is that good intentions don’t adequately anticipate the intended results and unanticipated consequences.  Humans like to link cause and effect but cause does not always lead to a linear effect in complex environments. Making decisions based on simple systems logic bets that the future will be like the past. But we clearly live in a more complicated and complex world.  Complexity isn’t the problem as many executives and managers would like to have us believe. The problem is how companies respond to it.

What do you feel are the essential competencies required by managers and executives moving forward


Ira S Wolfe