Wednesday, October 2, 2013

Do you have 'Complexity Mindset'?

Complexity is a nature characteristic, with color, with pattern, with theme...it can create order, as well as chaos, just depends on how you deal with it....

Besides change, complexity is the other characteristics facing in business today, what might be the impacts complexity could have on businesses today and how to deal with it strategically? 

1.    Complexity Mindset 

There are five major sources that interact together to drive profound changes in today’s economic, regulatory, political, and social environments, they are diversity, interdependence, uncertainty, ambiguity, and flux...So, the question is: What’s the mindset to understand complexity in depth? What’s the starting point to manage complexity? How to change the strategy to dissolve the complexity? How to be flexible enough to gain from moving in a dark forest?., etc. 

  • Complexity ‘Mindset’: Complexity means increased uncertainty in things outside our control and uncertainty in the results of implementing strategies.Complexity thinking is best thought of as a form of perspectives, continually generating multiple perspectives on issues. There are five capabilities that form the pillars on a development bridge that can close the gap from your current mindset to the complexity mindset, which are: dynamic attention, synthetic understanding, integrated capacity, strategic clarity and cohesive collaboration. These capabilities expand thinking, improve performance, understand complexity systematically and support high-impact relationships. 
  • Complexity thinking has an affinity with Strategic/scenario planning. No one sets out on a sailing boat without checking out the wind, yet most businesses have few procedures in place to routinely assess the relative strength and direction:
         (1). Complexity is part of the day-to-day of any company or business
         (2). A high complexity is associated with a high uncertainty
         (3). The complexity is generated externally and it has an impact inside of the business
        (4). Before develop a Business Strategy, the business needs to set the purpose of business and
             understand the business dynamic.
        (5) Evaluating the business environment via three dimensions: Predictability, Malleability, and Harshness
        (6). Deciding on the best strategy for a particular business

2. Complexity Management 

The complexity can be good or bad for you depending on your strategy. Complexity Management is the methodology to minimize value-destroying complexity and efficiently control value-adding complexity in a cross-functional approach:

  • Strategic scenario needs to be permanently checked with a cycle of strategic analysis. While business needs to try and understand the nature of the complexity through more regular analysis, scenarios etc, more and more analysis does not necessarily lead to more certain outcomes. In order to get the clarity you seek, you are going to have to distil what you are referring to as "complexity."  Organizational complexity can be addressed through scenario planning and control systems (accounting, IT...). You use past data to mirror the impact on the organization and forecasting to estimate future responses. The challenge has been, forecasts are only as good as the data input; often times, by the time data is available on a new industry paradigm, and it is too late for a proactive response. 
  • The biggest challenge for strategists or any manager is how to convert the outcome of the complexity analysis into an operational plan that will make the difference and aide achievement of their final goal. The thing with complexity is tightly related with the initiative. If you are a mover, complexity is your partner because it makes difficult for your competitors to recognize your moves and address them adequately in time. If you are a mere reactor, growing complexity makes growing troubles for you. Further, even at parity of information input and equal conclusion on the analysis, between competitors in the same market, there won't necessarily be an advantage from one competitor over the other. But strategically speaking, coping better with complexity than competition provides a competitive advantage. 
  • You cannot manage something that you cannot measure, but fortunately, complexity can be measured and there are techniques to understand how complexity can become a problem for your business and how complexity can be properly managed, still, the key is to well align the complexity thinking, governance processes as well as a well-defined set of metrics in order to manage complexity effectively. 
Complexity is perhaps neither a problem nor the enemy, they're both opportunities and risks in it. Complexity can be lessened as a problem or grasped as an opportunity with systems thinking, dynamic strategy as well as adaptive talent with flexible processes. And organizations must learn to navigate uncertainty, innovate, and adapt to increasingly changing business realities.  








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