Former CIO
Tata Power
Complexity is usually viewed as an anathema by most managers. In the last two decades, if you were to compile the results of surveys, carried out on senior business functionaries, you will discover that a substantial proportion of respondents have cited complexity as the main source of worry, in the current environment.
Manifested in a variety of ways it ushers in uncertainty, ambiguity and immense volatility resulting in a whole host of associated problems in the management of any organization. It is because of such adversarial association that complexity is sought to be shunned by managers and individuals alike.
What is Complexity?
However, despite these alarming probabilities one must appreciate that complexity is an integral part of the reality encountered and shall only grow with time. It is imperative therefore to understand the nature and causes of complexity, if we want to satisfactorily manage organizations within this complex environment. Today’s world is an interconnected one where effects of actions are often felt, both spatially and temporally, far away from the cause.
Deriving out of extensive physical and communication links world-wide every societal entity be it business organizations, educational organizations, non-governmental organizations, governmental organizations, health care and even families and individuals are all impacted by external factors. This is precisely the causes that introduce complexity in the work arena. When you are influenced by factors that are far away and not even familiar to you, danger could be round the corner.
Consider the following facts. During the pandemic there was an acute shortage of toilet paper in the US and one was at a loss to understand why some people having one type of food several thousand kilometres away could cause toilet paper to vanish from shelves of stores in the US.
Similarly, when decisions are taken with a particular objective in mind the result turns out to be completely different simply because all factors that could impact the outcome had not been considered. Consider the zero covid policy that was strictly followed resulting in fewer cases initially but also not building immunity resulting in a deluge when the lock down was lifted.
Several such instances can be cited where external factors have substantially influenced the outcome, much to the chagrin of the stakeholders. Often at the start of an initiative one is not sure what are indeed the factors that influence the outcome and for tasks that are spread over longer duration of time the factors emerge as we go along. Managing in such an ambience must be necessarily different from the traditional way of functioning.
Is complexity growing with time?
Interconnections have always existed but effects of that was not so pronounced level till sometime back. However, with growing connections both physical and electronic, the density of interconnections has been growing rapidly and the effects are much more prominent. Even a few decades back long-distance travel was limited to certain sections of the society and going abroad was even more scarce.
Today, though, travelling is much more common place resulting in transfer of ideas and practices some of which, overtime, blossom to a new adaptation that may alter conditions in the host system. Such proliferation of interconnections is exacerbated several notches by the electronic exchange of information. The world wide web brings at one’s finger tips information from every part of the world in fraction of seconds.
Practically nothing is hidden from the earnest seeker. The combined effect of these factors is the formation of a formidable web of significant interconnections within which all of us are constrained to function. Owing to this explosion of interconnections that has been possible because of recent technological improvement, complexity has, in recent times, increased by leaps and bounds and hence managers all over the world, who are compelled to operate in this background of ever-growing complexity, are apprehensive.
Is complexity all bad?
However, is complexity all bad? Is no good to be expected from complexity? Let us discuss this concept a bit more. There are clearly two sides to complexity the first being that which we encounter in managing our organizations. The part that is affected by an interconnected world and gives us nightmares. The second side of complexity is the way we handle this external complexity. In order to handle this external complexity, we need to develop our own internal complexity (capability).
Tasked with handling the high level of external complexity one can survive if, and only if, one can enhance one’s own internal ability to manage that complexity because if we cannot do so we will no longer exist, but if you can then we shall remain in business.
Matching the external complexity with our own internal complexity is, therefore, key to survival in today’s world. But what does “enhancing one’s internal complexity” mean? It means increasing your capability to encounter and manage the complexity that this interconnected world can throw at you.
This may sound simple but is anything from being so, because external complexity comes in many flavours and one will need to identify these and build capabilities to handle the same. Additionally, complexity does not come in nicely packaged boxes but emerge as we proceed. Hence preparation is often not possible and these are some reasons why managers list this as the most pressing issue faced by them. The way forward is to enhance internal capability in all areas of functioning, in strategy, structure, systems, personnel, technology, partnerships and so on.
In my book “Systems Thinking for Managers – A Road Less Travelled” published by Sage Publications I have discussed several examples of mismatch of complexity throwing up a motley host of problems for managers. The approach therefore is to enhance internal complexity on a continuous basis so that when crunch time arrives the organization is ready.
Explaining this with an example if one were designing a system for transaction processing and reporting a higher level of complexity may be incorporated so that the system is capable of more wider range of options, may be customers, situations or have the ability to furnish real time data for reporting and so on. However, this understanding is not as common as may be expected given the uncertainty inherent in the environment. Here’s an actual and interesting case study that highlights this shortcoming.
An interesting Case Study
This is about a medium sized financial institution headed by a seasoned executive who had many years of work experience and an excellent appreciation of the business. As is well known, the financial industry landscape has been changing rapidly and this change has been triggered largely by technology. About two decades ago an economist had declared that computerization will, in future, not yield any competitive advantage to its users.
His basic contention was that standardised packages, that have invaded the market, offer the same features to all adopters, and hence could not possibly furnish any comparative advantage. In other words, the economist was not accounting for any advantage deriving out of the quality of implementation of such prepackaged software.
Probably sharing the same view, the experienced CEO of the finance organization decided to develop, ab initio, a major part of their basic operational systems. The idea was to devise digital solutions not available among competitors and thereby gain a competitive advantage. He was willing to invest the time, effort, and resources for this purpose. To this end he engaged a set of capable professionals and initiated the process.
Technologies were finalized and within the guard-rails of the technology choices made at the program level, individual teams were given the liberty to suitably select/adapt technologies to build their respective components. Standards pertaining to general programming practices were specified including latency, resiliency, SLAs related to response time along with cost objectives for each component, and teams were expected to ensure that the way they designed their components would ensure
all standards and SLAs were met.
Change in Team
The teams worked on their components for a year, however management was not happy with the progress and changed the leadership team. The new leadership team mandated that all components must follow a common architecture and focus on implementing existing business processes. All technology-based constructs related to integration, resiliency, instrumentation was supposed to be fixed and handled by common libraries and teams were instructed that in no scenario should solutions be
over-engineered, instead all solutions must ensure they are implemented in the simplest manner.
These restrictions were enforced in response to the situation and would assist by reducing the overall customers’ time and cost. The organization was keen to develop, through introduction of this complex IT system, special capabilities that would differentiate them from competitors. Superior services coupled with quick responses perfectly secure systems covering the range of services etc. that would be available to customers would help the organization stand out as an excellent institution.
That would extend competitive advantage to the organization. Now the attempt of the boss to restrict variety in development by insisting on a standardised solution was completely in contrast to the overall organizational objective. Standardised solution is usually a default option for most implementations and will be unable to help differentiate the organization from its competitors.
Reduce options to contain complexity
There are several ways of handling complexity and one of the ways is to reduce options. If the decision is to utilise standard components and processes the task of management for designing and implementation of the system becomes a lot easier.
Adherence to stated norms is the main aspect that needs supervision. Compare this to when autonomy is awarded to developers to be creative and develop solutions that go far beyond the standard. Such a step would introduce a variety that would require individual attention of the supervisor and several iterative rounds of discussion and proto typing before finalization.
Clearly the cost and time required would be more, a fact strongly resented by senior management. However, the benefit would be a more comprehensive application that would subsequently provide the organization a decided advantage.
Another additional issue would be the dissatisfaction of the programmers who would not be intellectually challenged and hence would end up being disillusioned with the entire development process. However, the most serious outcome of this step would be non-achievement of the organizational objective.
Conclusion
Complexity, as I hope you agree by now, is a two-edged sword that can cut both ways, one detrimental to the organization and other beneficial. The attempt is always to enhance the internal one and thereby manage the external one effectively. In the case discussed above a step simplifying the process of design, development and implementation of systems threatens to contain the internal complexity and hinder the achievement of the stated objective.
Prashun Dutta is the former Chief Information Officer at Tata Power.