Introduction to Leveraging the Principles of Complexity Science in Organizational Management - Joseph M. Ferraro What is Complexity Science and how does it relate to an organization? At the most basic level Complexity Science studies the organization that can occur within a fundamentally complex and seemingly chaotic system of dynamics. The goal of which is to characterize emerging properties and to identify patterns of organization and relationships among the dynamic factors to better understand the complex interactions within the system and predict the outcome of the changing system. Within an organization or business, complex dynamics occur because of a multitude of internal and external factors. The compounding effect of these multiple dynamics is what makes an organization itself a complex system. Internally within an organization the differences in human personalities, management styles, levels of individual motivation and means of communication all drive a dynamic, interactive environment among human resources. Layered across these human resources are various functions and hierarchies that create their own set of complexities. Horizontally across the organization different functions operate under different priorities toward their own unique objectives. While vertically, the different levels of employees operate with different understandings and perspectives of the organization and varying degrees of visibility toward the strategic direction of the organization’s overall goals. Externally, the operating environment changes in competitive nature along with changing consumer preferences, dynamic economic climates and any number of industry-wide and geographically dispersed set of factors, all of which create a complexity of variables through which an organization must navigate. Why does a company need to understand the complexity within its organization and what does this understanding bring? Organizations have survived successfully for thousands of years, but in the evercompetitive operating environment of the 21st century, survival depends on a company’s ability to manage itself in a superior manner as well as to compete effectively with its competitors. The ability to understand and manage the internal and external complexities of the organization provides the necessary competitive advantage to develop a dynamic strategy that is effective and necessary to compete in today’s environment. Understanding how each dynamic changes individually and collectively over time, and how these dynamics can be structured to work collectively, are the foundation for successfully leveraging complexity for long-term success. Leveraging the understandings of complexity allows the organization to operate more efficiently and achieve goals more effectively. In comparison to the organization that has no understanding of the complexities within, the educated organization has a competitive advantage in that they are more flexible to change, more strategically reactive, and more effective in solving problems and developing innovation. Complexity Science helps to understand, manage and ultimately leverage the complex dynamics of humans and their related goals, projects and strategies as they change dynamically over time due to such factors as: - Requirements changing Pitfalls that make certain goals impossible or obsolete Individuals coming and going from a project, group or workforce Timelines and priorities changing New, better ideas that develop The different personalities of employees Etc. Complexity Science provides the framework for understanding the value of collaboration and why and how it can be successful. It provides the story behind the path that an individual, a group or an organization goes through when collaborating to solve a problem, manage a project or otherwise interact toward a common goal. Just as any scientific discipline explains in logical form the realities of our natural world, so too do the principles of Complexity Science explain the benefits of collaboration as an emerging property that arises from the complexities of an organization. What are the benefits of leveraging the principles of Complexity Science in an organization? In the typical hierarchical structure of an organization, departments and functions often operate independently with insufficient communication and suffer from the “silo effect” resulting in independent, possibly conflicting, operations characterized by lack of continuity and limited innovation. In contrast, Complexity Science teaches us how to utilize collaboration to solve issues collectively leading to: - A common understanding of issues, problems or goals More prolific and effective sharing of knowledge Improved innovation, creativity, etc. Cross-functional understanding of issues Improved focus on tasks, goals, priorities, etc. More comprehensive solutions Development of a more fluid process for idea generation, problem solving, etc. Simultaneous progress towards order out of chaos The organization that understands complexities and understands how to manage and leverage the related dynamics can work collectively toward effective results with a common set of strategies and priorities in real-time. Failure to recognize complexity and the need to collaborate leads to goals and priorities that appear common at first but change independently over time. The principles of complexity tell us that there are identifiable dynamics that occur within a system like that of an organization. Within an organization, the heads of each group or function, and the executive management are often decisions makers that have only limited knowledge of the details of what make up the key components of decisions and strategies. They are often the managers of knowledge rather than the developers or experts in the knowledge itself. Collectively engaging the lower-level employees who do the work and have the knowledge with all ranks within the organization helps to leverage that knowledge to establish common understanding and improved focus on strategic goals for the organization as a whole. How does an organization implement the principles of complexity for improved management? The principles of complexity suggest that order can emerge in systems that are fundamentally complex. Understanding that complexities exist within the organization and identifying their level of influence is the first step toward creating an organization that successfully leverages the principles of complexity for effective results. Dynamics that work in conjunction with each other can lead to more identifiable results with common properties, versus independent dynamics that lead to independent results that may or may not have common properties. These common properties are what an organization identifies as strategic initiatives, goals or operating priorities and what the organization hopes that all employees are working toward. Within the organization it is possible to recognize areas where collaboration can improve communication and produce common understandings of key priorities, strategies, etc., as in the following cases: - Managing a project Developing a strategy in a changing environment Solving a problem Knowledge sharing Improving communication Fostering innovation These areas may involve dynamics that work independently and require collaboration, or they may exist as external dynamics that simply need to be understood collectively. The idea is to create a managed complex system from the components of the organization (the internal dynamics) that are trained and managed in such a manner that common, predictable results are achievable. These components should also be exposed collectively to the external dynamics to insure a common understanding of what may be out of the direct control of the organization as the environment changes. The organization must also create a culture of collaboration that identifies with and rewards order, innovation, common understandings and effective results. The development of this culture begins with collaboration that involves discussion of problems collectively and cross-functionally to achieve a common understanding of roles/responsibilities, priorities and goals. The organization can also utilize cross-training to develop a more comprehensive understanding of the inner-workings of the organization across its entire base of human resources. Most organizations exist in a hierarchical form with the delegation of responsibility flowing from the top down through a particular chain, or silo, which leads to independent understanding of goals and potentially divergent results. In contrast, the organization that integrates groups, project teams, functions and individuals to solve problems allows the different dynamics of people, operations, understandings, etc. to work together towards a common goal. A hierarchy can and will still exist, but it will be project-oriented or crossfunctional in nature, rather than independently functional as it exists within an organization. Finally, the management of an organization plays a key role in the direction and the reality of how the principles of complexity can be leveraged within the organization. Different styles of management lead to different organizational structures and different realities of collaboration. As an example, at one extreme with a structured, organized leader, the organization will find itself with a structured, rule-based environment for knowledge sharing, collaboration and problem solving, while a creative, flexible leader may create a more fluid environment. Individuals at all levels of an organization are fundamentally different, but the way in which they interact follows directly from the characterization of the leader. In an environment of collaboration there are some risks that arise from the varying degrees of knowledge within the organization and the structure under which functions are defined. There is always the risk of exposing a lack of knowledge and leadership of higher-level employees to lower-level employees and the risk of insubordination. And across functions, struggles of power and initiative can develop if roles and responsibilities are not properly defined. There is also some difficulty in utilizing a collaborative environment with a divided hierarchy for problem solving or innovation as the inherent ranks are intended to separate levels of knowledge and reporting structure. But if employees are trained and managed to understand and recognize the benefits of this type of environment, a united workforce will emerge and the benefits can be recognized for the long term. These risks themselves can be leveraged as a dynamic to the advantage of the organization. A collaborative environment motivates employees to gain a deeper knowledge of their own responsibility as well as the responsibility of other groups, and ultimately exposes the more motivated and talented resources within the organization. The collaborative environment forces the organization to understand and define roles and responsibilities, which only improves focus on strategic objectives. The environment must be developed to put politics, hierarchy and pride to the side for the benefit of knowledge sharing for the organization as a whole. What can we take away from this understanding? What we’re talking about here is the quality of the emerging property of the complex system that is an organization. And the emerging property that we’re trying to develop is common understanding and efficient and effective movement towards a common goal or strategy. It is important to understand that emerging properties take time to develop. Releasing results, communication or even products often helps manifest the development of these properties. And exposing everyone to the results, and not just the developers of the results, helps everyone understand how and why the properties are emerging and changing. An organization is a complex system over which management has control of most of its components and the ability to affect the emerging properties to its advantage. At it’s most basic form an organization is a fundamentally complex system, and, when managed effectively, the order that results can allow the organization to improve focus on strategic initiatives and to more effectively achieve goals and manage priorities. Collaboration and common understanding as emerging properties are the real key to leveraging complexity in an organization. The organization must understand the dynamics that exist and utilize techniques like collaboration, cross-training and crossfunctional teams for problem solving and efficient knowledge sharing to insure those dynamics are used to their advantage rather than disadvantage. And as the organization develops a more collaborative environment, the shared knowledge and problem solving skills along with a culture of improved innovation will evolve over the long term and allow for flexible operations and the ability to implement dynamic strategy in a rapidly changing environment.