Coping with the complexity of today’s business environment is not about predicting the future or reducing risk. It’s about building the capacity, in yourself, your people, and the organization to adapt continuously and learn speedily, in order to maximize the chances of seizing fleeting opportunities. These authors’ excellent suggestions will help today’s leaders cope with complexity
As business leaders, policy makers, the academic community, the media and an outraged public search the rubble of the global economic crisis for clues as to what went wrong, all fingers point to a common perpetrator, poor risk management. But while risk management, or lack thereof, played its part in the disintegration of the world financial system, we contend that another culprit played an even bigger role: complexity, and an inability to cope with it. The unpredictable, unstable, non-linear, and fast-paced nature of the complex interrelationships between nations, firms, and persons that shape the global economic landscape are at the root of today’s risk-management challenges. Hence, these relationships are of central concern to leaders. In these turbulent times, the question becomes: How can business leaders effectively cope with complexity?
However, the above approach is ill-suited to the dynamism inherent in complex environments, where information is often incomplete and ambiguous. Complicated structures and policies that promote a control mindset, where standard operating procedures presume answers to known problems, leave little room for creativity, innovation and the new patterns of behaviour required to solve complex challenges. According to Shari Ballard, Executive Vice-President of Best Buy, “Look at why big companies die. They implode on themselves. They create all these systems and processes – and then end up with a very small percentage of people who are supposed to solve complex problems, while the other 9 percent of people just execute”.3
Yet, developing a learning organization means more than having a bunch of capable individuals. It is clear that complexity dictates that the understanding and associated action is a shared endeavor, and that therefore there are critical group elements that underpin organizational learning capability. Many of these are embedded in the simple process rules of improvisers around listening, yes-anding, supporting one another, being accountable to one another and to the joint goal.
Leadership in this context, regardless of role, needs to act as an enabler of spontaneous action. Leaders need to serve as catalysts for bottom-up interaction by promoting empowerment at all levels. Hence, power is diffused through the system and blunt authority is pushed aside in favour of collective influence. John Brown, former CEO of BP observed:
Reprint from Ivey Business Journal
[© Reprinted and used by permission of the Ivey Business School]