“Life is really simple, but we insist on making it complicated” – Confucius
Most of us, as individuals as well as in our organizational roles, tend to complicate things, often unnecessarily so. Many of us may actually feel a degree of comfort in complexity! Is this tendency OK? My sense is that there are at least two dysfunctional effects from complexity, both perhaps interrelated. The first is that excessive complexity might hamper speed! In today’s context, with ultra-rapid technological and communication developments, such a slowing down might definitely hamper business development. And also, excessive complexity tends to be synonymous with excessive bureaucracy, another factor that tends to slow down business development and curtail individuals’ initiatives and motivation.
But, as Morieux and Tollman clearly argue, the problem may not be complexity as such, but too much “complicatedness”. In today’s competitive world, the winners may be those firms that are able to exploit complexity to create competitive advantage. Excessive complicatedness, on the other hand, is clearly undesirable. It is a paradox that much of a proliferation of over-complicated organizational structure, procedures and rules, actually are put in place to deal with the increased complexity of business today. But, such complicatedness tends to be dysfunctional, i.e., impeding firms’ performances! To add another nuance to this subject, it should be said that complexity might arise from good intentions. To strengthen the sustainability of the firm, we might create new initiatives, structures, and define new KPIs, etc. But our good intentions might lead to new unforeseen costs, since complexity increases further!
In this short note, I shall draw on several recent books, all relevant in regards to better understanding the virtues of “keeping it simple”: Y. Morieux and P. Tollman (Six Simple Rules, Harvard Business School Press, 2014); D. Kahneman (Thinking Fast and Slow, Penguin Books, 2011); M. Lewis (The Undoing Project, Penguin Books, 2017); T. Snyder (On Tyranny, Penguin Books, 2017); as well as on a recent blog on “Complexity Bias” (https://www.fs.blog/2018/01/complexity-bias) and, importantly, on discussions with Professor Knut Haanaes of IMD, as well as learning from his presentation “Agility and Smart Simplicity” (IMD, March 2018). Above all, however, I shall draw on my own experience as a senior manager (Including at IMD, the Lorange Institute) and as an entrepreneur (including as Chairman of Lorange Network and the S. Ugelstad family investment company).
Now, first to some ways to ameliorate the situation. Morieux and Tollman list 6 simple rules to cope:
Understand what your people do
Reinforce integrators (me: the importance of teams!)
Increase the total quantity of power (me: more power to the top, in particular)
Increase reciprocity (me: “win-win”!)
Extend the shadow of the future (me: do the work today that might matter in the future; today for today and today for the future)
Reward those who cooperate (me: again, the power of teams!)
The first three address how individuals might apply their intelligence and energy to fight dysfunctional complicatedness; the latter three address how groups might be mobilized to battle excessive complicatedness through cooperation.
Haanaes suggests four complementary ways to address complexity in a positive way:
Address excessive inside complexity: avoid cumbersome strategies, too many and often conflicting Key Success Factors (KSFs), simplify organizational structures, processes and systems, especially complex multi-dimensional matrixes.
Planning follow-up: Haanaes cites the planning of the new garage of Norway’s parliament, initially budgeted to cost 70 M. NOK (2011), but ending up costing 2.3 B. NOK (2018). When being an insider, one might tend to be over-optimistic; when on the outside, over-critical. A key learning: analyze previous projects that might be analogous. And, watch out against being too optimistic at the start.
Reporting overload: One should attempt to cut down on excessive reporting and controls. There might be many hidden costs here, and several unintended consequences! One might typically want more reporting, but one might not see the costs of creating the additional reports. A pragmatic balance is key!
Avoid too many initiatives: The firm’s portfolio should be managed. Strategy means choice!
This brings us to the question of decision-making and speed. Kahneman, and several others, have shed much light on this matter. His so-called “system 1” would imply the fast, intuitive type of thinking, while “system 2” would imply the slower type of thinking, in essence “monitoring” system 1, i.e. attempting to maintain some control. It follows that to rely as much as possible on system 1 in decision-making processes might enhance speed, while system 2 might tend to slow things down. But the two systems are, of course, complementary and necessary for ensuring solid performance. While relatively simple strategies should be given preference, since these might lead themselves better to more intuitive decision-making (system 1), it would also be necessary to “turn all stones”, i.e. engage in proper analysis (system 2). Thus, to quote world champion chess player, Magnus Carlsen:
“Of course, analysis can sometimes give more accurate results than intuition, but usually it´s just a lot of work. I normally do what my intuition tells me to do. Most of the time spent thinking is just to double-check.”
To further enhance the quality of more intuitive decision-making it might be desirable to have teams in place in an organization: complementary view-points might imply a better mix of intuitions. Lewis details how the two renowned psychologists Amos Tversky and Daniel Kahneman worked together over a period of 14 years and came up with truly break-through findings, which both admitted that none of the two might have been able to have done alone. And, Kahneman himself stresses how teams might lead to stronger decision-making. Finally, Morieux and Tollman discuss how more optimal cooperative solutions might be achieved, when there might be some costs that the various individuals must carry for not compromising. For this reason, it would be so important to amply reward those who cooperate and contribute to their team´s performance (rule 6!).
Let us now move to another phenomenon that might lead to unnecessary complications, namely the use of difficult language and jargon. The respected British physicist James Gingell stresses that it would be key to translate scientific jargon to understandable English. And, complexity bias due to jargon may be a serious issue in politics and economic debates too. Snyder deals with this matter, by setting out 7 lessons that tend to complicate societal debates, 7 others that may complicate the life of individuals, and a final 6 that might unnecessarily complicate the world order. This complication due to specialized language and jargon may indeed constitute a treat to democracy!
So, we have seen that there are ways to confront excessive complexity:
To apply the 6 simple rules of Morieux and Tollman when it comes to the working of organizations
To address the 4 focal points of Haanaes in a mode of “today for today and today for tomorrow”
To strive for relatively more “system 1” fast intuitive decision-making, discussed by Kahneman, but of course, with a balancing of this with “system 2” decision-making, for quality and control
To embrace teams, for enhancing the quality of outputs, by also allowing for relatively more intuitive decision-making, as proposed by Lewis, but also by Kahneman and Morieux and Tollman
Finally, we saw that specialized language and lingo can lead to unnecessary complexity, and also to dysfunctional complications at the societal level (Snyder)
So, we have emphasized five different ways to cope with excessive complexity, with the intent to restore more performance-enhancing simplicity. But, there are undeniably other methods too. While certainly not an easy task, we should remain optimistic, and here I would like to conclude with the words of Ernest F. Schumacher: “Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius – and a lot of courage – to move in the opposite direction”.
Discussion questions from the Lorange Network team
What are some key ways to diminish complication and increase speed?
How can teams become stronger?
Simple incentives?
Values?
3. How to find a better balance: “today for today” and “today for tomorrow”?
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