![]() The trouble is, all three processes are underway at the same time. The organisation becomes aimless and inert. Employees become detached and disengaged. Inefficiencies and duplications creep in. People focus more on avoiding mistakes and securing their own positions than worrying about what customers care about. This may sound like gobbledegook to some readers, so let me restate the point in simple language: as organisations grow larger, they become insular and complacent. And if this is the case, the second law of thermodynamics comes into effect, namely that a closed system will gradually move towards a state of maximum disorder (i.e. ![]() In fact, many large companies I know are actually pretty closed to outside influences. But the reality is that most companies are only semi-open. The disciples of self-organising often note that companies are “open systems” that exchange resources with the outside world, and this external source of energy is what helps to renew and refresh them. Finally, there is an entropic process – the gradual trending of an organisational system towards disorder. The role of the leader is therefore to foster “emergent” order among employees without falling into the trap of over-engineering it.ģ. Under the right conditions, it seems, individual employees will come together to create effective coordinated action. This has become very popular in the field of management, in large part because it draws on insights from the world of nature, such as the seemingly-spontaneous order that is exhibited by migrating geese and ant colonies. There is an emergent process – a bottom-up form of spontaneous interaction between well-intentioned individuals, also known as self-organising. There is a design process –the allocation of roles and responsibilities through some sort of top-down master plan. I have been puzzling over complexity in organisations for a while now, and I reckon there are three processes underway in organisations that collectively determine the level of actual complexity as experienced by people in the organisation.ġ. ![]() If you try to manage complexity with an engineer’s mindset, you aren’t going to get it quite right. ![]() But organisations are also social systems where people act and interact in somewhat unpredictable ways. To some extent, organisations are indeed engineered systems –we have boxes and arrows, and accountabilities and KPIs. Unfortunately, organisational complexity is, in fact, more complex than that. It assumes that Jamie Dimon was the architect of JP Morgan’s complexity, and that he, by the same token, can undo that complexity through some sort of re-engineering process. I have written about this elsewhere.īut perhaps the bigger problem is this advice is all offered with the mentality of an architect or engineer. One is that simplification often ends up reducing the costs and benefits of complexity, so it has to be done judiciously. But this advice has a couple of problems. Much of the advice out there is about simplifying things – delayering, decentralising, streamlining product lines, creating stronger processes for ensuring alignment, and so on. So what is a leader to do when faced with a highly complex organisation and a nagging concern that the creeping costs of complexity are starting to outweigh the benefits? ![]() These forms of “unintended” complexity manifest themselves in many ways – from inefficient systems and unclear accountabilities, to alienated and confused employees. Airbus has a complex process for managing the thousands of suppliers who contribute to the manufacturing of the A380.īut complexity has a dark side as well, and companies like JP Morgan, IBM and Airbus often find themselves struggling to avoid the negative side-effects of their complex structures. IBM has a multi-dimensions matrix structure so that it can provide coordinated services to its clients. Companies are complex by design because it allows them to do difficult things. And it is also pretty obvious that their complexity is a double-edged sword. It goes without saying that big companies are complex. JP Morgan has been getting most of the headlines, but many other banks are also investigation, and companies from other sectors, from Siemens to GSK to Sony, are all under fire. The business news continues to be full of stories of large companies getting into trouble in part because of their complexity. ![]()
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