We live and work in more complex environments than ever before, but much of this complexity is generated by our decisions. The higher our position and responsibility in the organisation, the more complexity we generate.
In my opinion, it is caused because we are ill-equipped to perceive the long-term consequences of our decisions. We tend to see our reality as a succession of linear and almost isolated events, preventing us from perceiving our own influence on the problems. Where there is a “no tolerance to errors” approach in making decisions it makes learning and developing a holistic vision of our organisation even more difficult.
If we want to reduce the overwhelming complexity, we need to improve our ability to synthesise, to identify patterns in isolated events and find out the structure and principles that govern the behaviour of the problems. But technological firms have focused on developing tools for analysis, that contribute to fragment our vision of the reality, instead of developing tools of synthesising that contribute to a more integrated and cohesive view.
Based on this assumption: our incapacity to understand and manage complexity, I’ve drawn a causal diagram to reflect how the inefficiency in making decisions due to complexity, leads to the fragmentation, internal conflicts and the deviation in the outcomes of our relationship with the market into the business environment.
THE CAUSAL DIAGRAM
In the diagram, I show, in a very simplified way, when complexity increases, so does our inefficiency in making decisions (the blue arrow indicates that when one increases so does the other and vice versa). The lack of understanding of the true origin of the problems, makes us respond to them poorly, creating a new and unexpected set of problems. For instance, some organisations try to solve their teams’ stagnation by providing them with sessions to develop their creativity, engagement, and motivation. In my experience, it is counterproductive, because the stagnation is only a consequence of a deeper and non-obvious problem. We should first understand it in depth to be able to remove the obstacles to create the conditions where the team feels secure and confident enough to enhance their creativity, engagement, and motivation.
The impact of addressing the symptoms instead of the real cause of the problems results in the fragmentation and redundancy of structures, functions, and processes within the organisation. As fragmentation and redundancy increase, competition between people and conflicts do so as well, creating an inexhaustible source of complexity. At this point, the organisation faces two titanic tasks with limited resources: to create value for its customers and to manage people and productivity to keep up the efficiency eroded by the wrong decisions.
Something similar happens in the relationship of the organisation with its customers. The inefficiency in the decision making caused by the mismanagement of complexity, creates a relationship with its customers that doesn’t work. The greater the deviation in this relationship, the more the disaffection and the lower the understanding that the organisation has of its customers. This situation creates a reinforcing feedback loop that provokes an exponential increase in the complexity.
Maybe we can not do anything to stop globalisation and technological advances, but what we can do is to develop our capabilities to reduce, understand, and manage complexity to improve the effectiveness of our decisions. Improving our decision-making requires systemic innovation. It allows us to follow a simple and orderly way to synthesize information, question our assumptions and mental models, differentiate symptoms from real causes, make visible the forces that create and sustain problems and design lasting solutions. The outcome of this systemic innovation is a continuous process of learning and development. We have called it Emerging Innovation.