Regardless of your industry, you have to admit things are changing fast. And while much of that change is driven by innovation, for many the workplace remains an unpredictable and unfulfilling place. Startups develop platforms that approach near monopolistic dominance, yet along the way many alienate or dehumanize their workforce. Established firms long for the days of scrappy market making, but they’re buried under an ocean of bureaucracy—organizational debt from decades of “optimization.” It’s fair to ask: is it possible to get big without getting bad?
I’m happy to report: it is possible. As I conducted the research for my new book Brave New Work, I encountered some remarkable firms around the world, who had thrown out the traditional playbook for something far more adaptive and human. While their practices were shocking (e.g. a bank with no formal budget, a healthcare company with no formal managers, an appliance manufacturer with hundreds of P&Ls, etc.) what was most striking about these firms was their mindset. When they looked at human beings and the organizations we create, they didn’t see boxes and lines. They saw richness and messiness. They saw our true nature. And when we understand a system differently, we interact with it differently. As I often remind leaders and their teams: you can shout at the weather all you like, but you’d be better off just bringing an umbrella.
For decades we have been taught to regard organizations as nothing more than elaborate clocks—a combination of cogs, sprockets, and gears for us to tune and perfect. But what if that's the wrong metaphor? What if the truth is far more complex?—Aaron Dignan
What does it mean to be Complexity Conscious? If you ask executives why the old ways don’t work as well as they used to, you’ll hear one response more than any other: complexity. Google searches for the term “VUCA”— an acronym that stands for volatility, uncertainty, complexity, and ambiguity— are up almost 1,000 percent since 2004. These words seem to show up in almost every board meeting, earnings call, and leadership retreat. Somehow, complexity has become a catchall for our problems. Subprime mortgage crisis? Complexity. Syria? Complexity. Facebook’s role in the U.S. election? It’s complex. Suddenly the world is full of surprises.
We know what complexity feels like. But most of us don’t know what it actually means. We use words such as “complicated” and “complex” interchangeably, as synonyms for anything we find confounding.
Picture the engine inside a car. Is it complicated or complex? Make up your mind, and hold that thought.
When I challenge audiences with this question, roughly half the people confidently vote for complicated, while the other half vote for complex.
Now, what about traffic? Complicated or complex?
Again, I ask for a show of hands. Now, more sheepishly, about a third of them raise their hands for complicated. Another third vote for complex. The remainder suspect my trickery and keep their hands down. Sitting with their confusion, everyone starts to realize the point: we don’t know what these words mean.
Contrary to popular opinion, among people who study systems theory, “complicated” and “complex” are distinct words with precise meanings. The engine inside a car is complicated. A complicated system is a causal system— meaning it is subject to cause and effect. Although it may have many parts, they will interact with one another in highly predictable ways. Problems with complicated systems have solutions. This means that, within reason, a complicated system can be fixed with a high degree of confidence. It can be controlled.
This is not to say that a complicated system can’t be confusing or inaccessible to the layperson. Quite the contrary. Understanding a complicated system, such as an engine or a 3- D printer, requires specialized expertise and experience. Here, experts can detect patterns and provide solutions based on established good practice. This is the domain of the mechanic, the watchmaker, the air traffic controller, the architect, and the engineer.
Traffic, on the other hand, is complex. A complex system is not causal, it’s dispositional. We can make informed guesses about what it is likely to do (its disposition), but we can’t be sure. We can make predictions about the weather, but we cannot control it. Unlike complicated problems, complex problems cannot be solved, only managed. They cannot be controlled, only nudged. This is the domain of the butterfly effect, where a small change can lead to something big, and a big change might barely make a dent. Here expertise can be a disadvantage if it becomes dogma or blinds us to the inherent uncertainty present in our situation.
Complex systems are typically made up of a large number of interacting components— people, ants, brain cells, startups— that together exhibit adaptive or emergent behavior without requiring a leader or central control. As a result, complex systems are more about the relationships and interactions among their components than about the components themselves. And these interactions give rise to unpredictable behavior. If a system surprises you, or has the potential to surprise you, it is likely complex. Software is complicated. Creating a software startup is complex. An airplane is complicated. What happens between the people on board is complex. An assault rifle is complicated. Gun control is complex. Building a skyscraper is complicated. Cities are complex.
And what about the organization itself? When ten or ten thousand people come together around a mission, what is the nature of that collective? Is it a complicated system that an expert can fix or change at will? Or is it a complex system— full of uncertainty and surprises— that we must interact with to understand and shape? The answer is intuitively obvious. While many of the activities and outputs of organizations are indeed complicated, the organization itself is complex. Accordingly, organizational culture isn’t a problem to be solved; it’s an emergent phenomenon that we have to cultivate.
"It is entirely possible that you get unpredictable behavior out of predictable rules."— Frank Heppner
The mainstream view is that performance is the result of compliance. If we can just get everyone to do exactly as we say, we will achieve our goals. This translates into a culture buried in governing constraints— rules, policies, or processes for every imaginable scenario that dictate exactly what should be done. But Complexity Conscious leaders view performance as the result of collective intelligence, emergence, and self- regulation. If we can just create the right conditions, everyone will continually find ways to achieve our goals. This translates into a culture that is made coherent and free by enabling constraints— agreements that create freedom to use judgment and interaction in the vast majority of situations.
We fail to recognize this on a massive scale. How many reorganizations and restructurings are rolled out with the sentiment “This time we’ve got it right”? How many leadership training courses have been steamrolled over armies of managers? How many companies have tried to change their cultural values with posters and polo shirts? Every five- year plan, every annual budget, and every fixed target is a public confession that we don’t understand the nature of our organizations. Our desire for control blinds us to the truth.
Say you’re the CEO of a company where travel spending has spiraled out of control. Your CFO is pushing for a solution. What do you do?
You could approach this issue like a signal-controlled intersection. Institute a travel freeze. Create a policy that sets a spending cap on short, medium, and long-haul travel. Require written manager approval on all travel before it’s booked. Partner up with a booking engine that can enforce this policy and offer only preferred airlines and hotels. You could set up an audit committee to flag violations and penalize those employees. That could work.
Or you could try to create a solution that is a bit more like a roundabout. Share total travel spend by team (or by individual) with everyone in the company transparently, so they can see how they compare. Share industry averages and historical averages for your firm. Ask for everyone’s help in optimizing spend, illustrating how it will drive overall profitability (and thus profit sharing, if you offer it). Start a practice of frequent travelers sharing travel hacks and pro tips at your all- hands meeting. Model what good choices look like with your own behavior. Then stand back and see what unfolds.
To the legacy leader, everything still looks like a factory. And all our problems can be fixed if we work long and hard enough. But our bureaucracies are no match for complexity. They can’t handle the surprises that we face every day, and worse, they’ll never surprise us with an unexpected breakthrough. If we continue to treat the complex like it’s complicated, we’ll spend our careers frustrated that control is always just beyond our grasp. Gripping so tightly, we’ll forget about the magic that can happen when we let go.