How to stop complexity overwhelming your business

By 2025, autonomous vehicles will account for around 10% of sales, ride sharing will be more common than privately owned car trips, there will be 76 billion internet connected devices, people will produce their own medicines at home, global temperatures will continue to rise, and technology will have replaced many jobs, with a third of audits being done by AI.

By 2050, AI and automation will have replaced most of today’s jobs and unemployment will be soaring, space travel will be common place, embedded technologies will enhance human intellectual capabilities, renewables will be the common form of power generation and traditional banks will have been replaced by creative fintechs that will disrupt global economies.

These are just some of the predictions that a quick search of the internet throws up.

Will they all come true? Probably not (at least not in the form or timeframes currently imagined). Will some come true? Absolutely … but which ones and what shape they will take, no-one can be certain.

However, what we can say with certainty is that the level of uncertainty about the future is on the rise.

And not just distant future but also the more immediate future. Even predictions about the state of the economy over the next 12 months are difficult to make.

A key driver of this unpredictability is the increasingly complex nature of the business environment and global economies. With greater connectivity, faster technologies and more and more organisations interacting with each other, the range of possible business outcomes multiplies exponentially.

Given this scenario, how can boards and senior executives forecast what will happen and plan accordingly? What strategies should they pursue and how should they be resourced? What new risks will emerge and how can they prepare for these? How will customer buying habits change?

Bottom line, how should organisations and leaders face this uncertain future?

Putting structure around uncertainty

The answer is to not only become a more responsive, agile and perceptive organisation … but to put structure around managing uncertainty and break it down intomanageable pieces.

Identify what is driving complexity and unpredictability in your organisation

Firstly, undertake a detailed review of both your internal environment (your business operations, structure and processes) and external environment (your industry, economic conditions and government regulation) to determine precisely what is creating complexity and driving unpredictability.

This approach is different to a typical industry or organisational assessment as it aims to move beyond identifying symptoms to uncovering the underlying source of issues and opportunities. For example, a traditional industry scan considers suppliers, customers, competitors, regulation and barriers to entry. However, a complexity approach goes deeper to consider the interactions between organisations, levels of change and influences from outside the industry (such as complimentary products).

Classify the sources of complexity

Secondly, having undertaken the identification phase, it will be apparent that not all sources of complexity and uncertainty are equal. Different sources will need to be addressed differently. To deal with this, classify each type of complexity and then develop a suitable approach.

One method to do this is to use the RIDE framework (shown below):

  • Identify which sources of complexity and uncertainty are redundant and limiting organisational effectiveness and can be reduced. This type of complexity is often seen in organisations that grown over many years without a ‘big picture’ view of process development.
  • Identify which complexity is intrinsic and is part of the very nature of the organisation. Investigate if changes are possible. For example, intrinsic complexity is often seen in member-based organisations where members are both ‘customers’ and ‘owners’ of the organisation.
  • Some organisations, systems and processes are designed in a way that gives rise to complexity and uncertainty (often as a result of the nature of the product or service they offer). Similar to redundant complexity, you should consider if developments can result in less complexity and uncertainty.
  • Most organisations face a degree of external complexity and uncertainty. This comes from the industry, economic conditions and government regulation. Given that it is beyond the organisation’s control to change this complexity, they must evolve to suit it. A typical example is government regulation which can require an organisation to adopt new processes.

Determine your ability to operate in this environment

Next, having considered the sources of complexity and uncertainty, it is time to evaluate the capability of your organisation to operate in this environment.

This requires taking a holistic view of the organisation, examining everything from your governance, structure and operations, through to risk appetite and management, resourcing, strategy and workplace culture.

Each should be assessed individually and collectively to understand how suited your organisation is to the specific sources of complexity and uncertainty you face. For example, uncertainty may require you to have flexible financing arrangements, however these will be no use if you still have slow and cumbersome governance processes.

Transform your organisation

Finally, now that you understand what complexities you face – both within your organisation and externally – and what needs to be done to address this uncertainty, it is time to make changes or drive critical transformation across your organisation and take advantage of the opportunities that complexity creates.

Remember, that despite the uncertainty and unpredictability of our current business environment, it is still possible for CEOs, boards and business leaders to move forward with confidence and for their organisations to not only survive but thrive in our increasingly complex world.

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