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This four-part series addresses strategies for managing the challenges of living in and leading through VUCA (Volatility, Uncertainty, Complexity, and Ambiguity). If you missed the first installment (which puts VUCA in a historical context and offers strategies for managing the V in VUCA – Volatility), you can find it here. The second installment on managing Uncertainty is available here. Now let’s move to the third element of VUCA – Complexity.
Living in Complexity
Wasn’t technology supposed to make our lives effortless and our business’ easier to operate?
In a Harvard Business Review (HBR) article titled, The World is More Complex than it Used to Be, Columbia Professor Rita Grath explains that modern complexity is the result of “a host of technological and sociological changes that occurred after 1980:
- digitization of massive amounts of information,
- smart systems that communicate interdependently,
- the decreasing cost of computing power,
- the increasing ease of communicating rich content across distances,
- an increasingly wealthy human population, resulting in more participation in the formal economy, and
- the wholesale rewriting of industry norms and business models.“
Not All Complexity Is the Same
Business complexity typically comes in three forms: structural, emergent, and sociopolitical. Andra Picincu writing for Bizfluent, describes these three types of complexity by noting:
A company is structurally complex when it has a large number of organizational structures, such as subsidiaries and divisions, as well as multiple shareholders, suppliers, and other elements.
Emergent complexity, on the other hand, results from chaotic interactions between different systems, processes, or individuals. Some companies try to reduce this kind of complexity, while others embrace emergence.
Sociopolitical complexity arises from social and political factors that may interfere with business processes. As a business owner, you have little or no control over it.
Tips To Simplification
Here are four ways to reduce your controllable complexity:
- Standardize – Joe Newsum of Stratechi Consulting suggests, “One of the easiest and best returns on investment tools in reducing and managing complexity is standardization, which is driving consistency and conformity within activities and elements. Standard operating procedures standardize processes. Standardized components in a product eliminates multiple options and conforms to one standard, reducing costs and complexity. Standardizing on one IT platform, where once there were many, reduces complexity, costs, and capital.
- Modularize – Researchers Martin Reeves, Simon Levin, Thomas Fink, and Ania Levina note, “businesses can build structures to be modular rather than fully interconnected so that elements can be changed or removed later. This also increases resilience by ensuring that failures are contained at a local level rather than allowed to spread across the entire organization.”
- Eliminate – Martin Reeves et al. note. “At Netflix, for example, the company’s famous ‘Reference Guide on Our Freedom & Responsibility Culture’ stipulates that it is the duty of managers to eliminate unnecessary rules. This principle enables the company to continue to develop new products and processes while avoiding a continual increase in total complexity.”
- Diversify – Kim Buch-Madsen writing for Manage Magazine, notes, “High complexity situations are simply too complicated for one mind… If we seek out perspectives, tools, and points of view from other professions and departments, we can apply the kaleidoscopic thinking that works well in high complexity situations.”
In times of great Complexity, winning requires focus and simplification. In the words of the late Steve Jobs:
“That’s been one of my mantras — focus and simplicity. Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”
Related: How To Lead in Uncertain Times