Saturday, November 22, 2014

Is Managing Complexity First Priority

Change is overwhelming, and complexity is inevitable. It takes complexity mind and strategic discipline to manage complexity.

Complexity is the key characteristic of the digital age. Complex systems are, as their name implies "complex"-with a nonlinear pattern or emergent behavior, unknown unknown; it is caused by the nature of randomness or even chaos. With accelerating speed of changes, the business, and its ecosystem becomes more complex than ever, complexity management is now a significant part of change management, and managing complexity even becomes the first priority in the management agenda for many traditional legacy organizations.

Managing complexity is a misnomer. Life has always been complex, but two things serve to make modern complexity a different situation: the speed at which things happen and the connectedness in networks in the business environment. These two factors make managing in complexity or managing in complex situations, a difficult skill to master. Systems thinking is necessary to succeed in complex situations, as only systems thinking allows you to act with the network in mind. Although each random event is not predictable, the general pattern or distribution of events is. It’s the very reason why population dynamics, quantitative risk analysis actually work. So the challenge is to evaluate the complex real-world in order to decide on and take simple actions and to then monitor the potentially complex impacts of those actions so you can decide how to modify the actions, where necessary, to achieve the desired outcomes.

The complex nature of digital business will influence how strategy should make It is precisely the element of chaos or that feeling of things being out of our control that supports the need for strategic planning - so that a set of values and goals can be applied to every situation and assessed. Organizations, companies or individual leaders can then determine how best to respond in accordance with the strategized direction instead of reacting.  A well formed adaptable strategy that understands this and is based on a systems approach helps to dictate the form/ pattern /distribution of the events or behavior of a system. The better we understand the interrelationships and interactions of the different parts of the whole the better we can craft the strategy. The element of surprise or simply change is the very reason that digital strategic planning is an on-going process and not a static plan. A good strategy will, influence the probabilities but certainly not guarantee an outcome. Of course living in the ever changing world we do need to constantly question if the vision and strategic direction we have chosen is right. Not as simple as it sounds especially in large organizations and given our human nature. Randomness is not our enemy, it is rather the generator of opportunity and progress, any good strategy will take this into account.

Emergence which is a characteristic of all complex systems is, not always predictable but is both an inspiring and intimidating phenomenon. The fact is that change is happening at a much faster pace than ever before, requiring a much more rapid response in order not only to succeed but to survive. The days when businesses spent months doing all sort of analysis and preparing detailed plans are gone. Today is about being prepared and having the organizational capability to deal with the unexpected, without losing sight of the business objectives and priorities. 

Long term strategic planning provides a beacon, guidance, a framework for managing complexity and sustainability. The world is a mix of simple (known known), complicated (known unknown ), complex (unknown unknowns) and chaotic (unknowables). It is not just the complexity of organizations that poses problems for planning; it is the complexity of the economic systems in which the organizations exist that causes ever greater degrees of uncertainty. Strategic thinking, though, is hard work. Look at many possibilities and then focus on the most likely, and those with the greatest impact on the organization. Therefore, the risks to the enterprise become part of management thinking process – look at both the opportunities and threats within the possible risks. Did you really mean that organizations as complex systems are dynamic, self-evolving and self-perpetuating? Just like societies, they aren't always completely predictable. However, ALL actions are necessarily simple (known-knowns) because you can only implement something that you know. The consequences of your actions may be unknown but your actions must necessarily always be known-knowns and hence simple. 

Managing complexity is, in essence, a change management effort. So there’s fundamental question of managing change than managing complexity. One has to have a compelling reason for change. There always is at the starting point for change, and that is: Why is change necessary? The reason should be the starting point. You have to paint a situation picture where your conclusion is that change is necessary, and get everybody on board. Get input from the others in the group so that the situation picture is as accurate as possible. 
Then you got at the motivated group with a common operation picture trying to figure out what to do. Working according to your action list will do the job of finding a solution. Good change management is all about sound communication. Most people inherently resist change if they don't understand the nature of the change, why it's necessary, and what the consequences will be, especially the consequences for themselves. There's no doubt we need the support of people to make changes or to resolve complexity issues, so they need to understand!

Before change comes assessment. If the reason for the change can be well documented and clearly expressed to all of the stakeholders, change management will be a smoother process. All changes need to be aligned to and contextualized in terms of the overarching strategy of the organization. They need to be communicated at all levels and everybody needs to be aware not only of the impacts the changes will have on them but of what the new expectations placed on them will be in terms of performance. Then, and back to the middle management piece,  the culture of a good closed loop management practice needs to be in place- PDCA (Plan-Do-Check-Act.) Did we do what we said we would do? Did we achieve the outcomes we planned? If not, why not? Then close the loop by locking in solutions to under-performance. And hold people to account! Human systems are open systems, which make them a challenge to manage. An actors/stakeholders analysis may help sort out the actors and avoid getting a blowback from any of them during a change process. 

 Change is overwhelming, and complexity is inevitable, but they are both fact that is happening all the time and a faster pace than never before. It is not changing for the sake of changing or managing complexity to make it even more complicated. Strategic Change Management is about "have to think about the impacts and implications", otherwise is not more than firefighting or a complete waste of energy. And complexity management is part of change management effort, with focusing on apply systems thinking in evaluating circumstances, making decisions, taking actions to adapt to the changes and the world of uncertainties.


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