After discussing how we can leverage entropy and chaos, it’s about time to deal with complexity. I kept it to the end, as there are many options and ways to leverage complexity. Most of them contradict our current thinking and mental models. We can use complexity to increase organization operations and efficiencies. Complexity is also one of the best leverage to gain a competitive advantage.
The first and foremost lesson is simple. Before using any of the below ways and methods, the first task is to make sure you are facing complexity. If you are dealing with a simple linear situation, using complexity will harm. Not any situation is complex. Complexity requires many diverse and autonomous parts that interlink and create a system that can’t be predicted. A system that is working in an environment where the landscape is continuously changing.
The best way to cover all the ways we can turn complexity into a competitive advantage is by discussing each property of complexity.
Diversity had a direct impact on any company. Creativity, reducing errors, increasing robustness, communication and leadership are the main areas where diversity will have an impact. Too less diversity will cause problems and too much diversity will create different problems. Diversity required constant attention and tuning to the current landscape. Remember that a complex system guarantees a landscape that is changing all the time.
There are many types of diversities that you might want to consider and adjust all the time. Culture, thought process, personality, mental model, experience and knowledge are the most common types. You also want to consider the diversity of both people and groups. Groups should be created from diverse people and a group of groups from diverse groups. Personally, I would add technologies to the mix.
Diversity decreases defects in the system and increases the immune system of a system from external attacks (that are using diversity as well). There are two lessons learned so far. Use diversity to protect an organization again external attacks. Use diversity when you are planning to disrupt the market. We shouldn’t limit diversity to people, their backgrounds, and skillsets. We should use diversity with solutions, plans, projects, and actions.
Diversity is also one of the secret sauce for innovation and creativity. A diverse group of people will beat in creativity any monolithic group of experts. More diversity equals more diverse ideas. competitive advantage can be an outcome of new ideas or fusing together several ideas into new ones. The second is more common and supported by diversity.
As a more diverse group of people is, the more robust it is. The diversity of a group is also much more challenging from a leadership point of view. Leaders shy away from diversity because it’s harder to lead. They are ignoring the long-term benefits of diversity. The robustness that diversity creates is one of the main group properties to be more anti-fragile and adjust in time of crises.
The best way to deal with leadership preferences regarding diversity is to add policies that encourage move people roles, creating parallel work teams, diverse training and bringing outsiders.
In nature, complex systems are adjusting all the time by trying new ways of operation and sticking to the ones that are more successful. In organizations, this process is taking place via separation and promotion. Every time that someone is leaving a company that’s part of the selection process of companies. When someone is being promoted, the same selection process is taking place.
Companies have less control over evolutionary separation than when they let someone go. Any separation is a message to the rest of the people. As an organization, you want to make sure that separation will help people to understand which type of behavior and performance are not a fit for the organization. When organizations separate people for the wrong reasons, the wrong message is spreading and causes encouragement of unwanted behavior or performance.
The same applies for promotion. Promoting someone just because he is an excellent executor might lead to a wrong message that execution is important than anything else. The same applies to promote someone just because he is good with people. The message now is that execution is not important.
All the messages that selection processes create in a company end up with a tipping point. An event that pops up from nowhere with a negative or positive impact on the company. Since organizations have an artificial influence on the selection, evolution, and adaptiveness of companies; there should be a lot of attention and communication associated with those activities. Regretfully we can’t see attention and communication in most organizations today.
Adaptiveness needs to be tuned to support the right level of exploring data (learning and experimenting) and exploiting data (executing) that is a fit for the complexity level of the organization and the environment it operating within.
I think the next point provocative since it goes against the belief that efficiencies are the goal of companies. Evolution is always smarter than we are. It will try any available combination to find the best solution for the current situation. People have limits in doing it because of mental models.
If we want to find the best way to operate or to gain a competitive advantage, we need to follow the principle of evolution and run many attempts in parallel and use the one that is the best fit. If you ever wonder why Microsoft used to have five different drawing tools, you have the solution now.
Dependencies required the two ends of a connection to have buffers. Otherwise, any change in one end of the connection will have an immediate (and probably negative) impact on the other side. This is a very important lesson for every social organization, including companies.
Most organizations are obsessed with efficiencies and, as a result, they are reducing buffers. The bottom line is a controversial conclusion. Don’t aim at 100% efficiency! Leave buffers and slacks in a system to protect yourself against changes in other nodes inside and outside of a business. Without buffers, small impacts will cascade into tipping points. Once you see a tipping point, it’s too late to respond.
With more people, groups, and options for interactions and impact, someone needs to validate that the right connections needed to deal with current reality are in place. Are there any connections missing to increase synergy in a group, with other groups, or with externals?
Most times, bad connections can have a bad impact on creativity and slow it down. Find the damaging connections and cut them. Few organizations are dealing with connections, focusing on them will increase your competitive advantage.
The natural and most effective way of systems to respond to external changes is to change internal patterns. In an organization, this translated to the ability to dynamically and promptly change existing groups and create new ones. Competitive advantage is the ability of an organization to empower people to create by themselves a new dynamic with no bureaucracy.
There are plenty of options between strong connections to loosely connections between people and groups. It’s not enough to set connections, every situation required different strength of bonding. Using the wrong bonding will damage connections. Understating the purpose of a connection and match the right strength of bonding is crucial for healthy and contributing connections.
Elements in any complex system are autonomous, the same applies to people and groups. Both people and groups can make their own decisions. Operating any social system that limits this ability, create more damage than benefit. Controlling people just increases the dissonance between their life experience and their work environment. It doesn’t encourage people or attracts them to be part of such an organization.
Control and micro-management created to increase the efficiencies of the business. They are based on the concept that people need patterns to follow and central management is the best way to provide it. In reality, complex systems are characterized by a bottom-up approach to create patterns with the capability to fix errors.
More autonomy to people and groups in organizations will create an adaptive system that doesn’t need any central mechanism to operate. This approach creates a more adaptive and robust system. Autonomy also creates more diversity of decisions and strategies to archive goals. diversity ensures that an organization will select the best solution.
Autonomy also develops intrinsic accountability instead of assigned accountability. When people are the decision-makers, they feel accountable and committed to proving their decision was right. That develops intrinsic accountability that is very hard to find. When accountability is assigned to a person, his committed level is much lower.
Adaptive & Emergent (the whole is greater than the sum of its parts)
Emergent properties or abilities of a group of people that individually don’t have are not an outcome of quality, they are the outcome of quantity. Humans and chimps have the same neurons in their brains. The difference between people and chimps is the number of neurons. It takes 10.3 billion more neurons to create all the wonders that the human brain can produce.
This is a lesson learned for organizations. Quantity of elements and connections can create more than quality. It sounds wrong, but nature and other complex systems support this statement. As organizations are bigger or can be part of a bigger virtual group, they will have a competitive advantage over quality
It’s not just that quantity can be better than quality. As the elements in a system simpler, it’s better. The condition of the success of organizations in a complex environment is simple parts that follow simple rules. Using simple constituents and rules will create organizations that will beat systems created by complicated parts and following complicated rules.
One of the best ways of creating unique group behaviors and capabilities is randomness. Randomness is being used to generate new options and to help refines patterns in the systems. Using the same randomness used by ants to find the shorter path between the nest and food resources using pheromones, helped to solve complex problems such as the traveling salesman problem.
We would encourage organizations to use randomness in any aspect that they can. I’m not promoting an idea that organizations need to be based on randomness. I’m suggesting that randomness, at the right level, is healthier and will create a competitive advantage compared to organizations that are based on stability and predictability. Salting randomness in organizations has another advantage on top of finding new solutions. It will prepare organizations to deal with randomness, that is inventable.
Gradients of attraction and repulsion are crucial to optimize the system. Like magnets, you should design the system with gradients of attraction and repulsion to different elements in the system. Implementing gradient information is another way to optimize the systems by providing a verity of options.
Local physical interactions are important to create emergent properties. Emergent properties result from physical interactions between people that are part of a group. When we take away or reduce physical interactions, we reduce the number and quality of the group properties. If people prefer to work remotely, at least use technology that will enable them to interact virtually. Just be aware that virtual interaction is not the same as physical interaction.
In complex systems such as organizations, a generalist will produce more emergent behavior than a specialist. This is counterintuitive to all the current management systems, especially the early ones (scientific management, bureaucracy, and administration). My continuous attempt to create a group of IT generalists bounced on walls, although the outcome and the benefit were very clear. Generalists create distinctive competitive advantages. This is a very good investment.
There are many benefits and potential competitive advantages that any organization can gain from a better understanding of the complexity and adopting operating principles of complexity. Turning complexity into a competitive advantage requires adjusting mental models and thinking. It’s not a simple transformation, but it’s doable.