Cracking the complexity code

There was a good article within the McKinsey Quarterly published way back in 2007 entitled “Cracking the complexity code,” written by three authors Suzanne Heywood, Jessica Spungin, and David Turnbull. It still has a lot of relevancy in my mind today.

They lead this article with “one view of complexity that holds that it is largely a bad thing- that simplification generally creates value by removing unnecessary costs.” Yes, we all yearn for a more simplified life, structure, organization, approach to systems or just reducing complexity in our daily lives to find time for what we view as improving its ‘quality.’

Within the article, they argue there are two types of complexity – institutional and individual.

The former concerns itself with the interactions within the organization; the latter is the way individuals or managers deal personally with complexity.

The real important take away from this article for me was when organizations treat complexity as something they must overcome, reduce, or try to ignore they miss opportunities. Complexity, the authors argue, should be seen as a challenge to be managed, managed well, and its full potential exploited, not as a problem to be reduced or eliminated. It is through the nature of these complexities we achieve competitive advantage and can deploy more of the flow of knowledge for those new sources of new profit and wealth creation.

They suggest organizations need to decide on where to hold complexity within any design and build the right capabilities where they matter. I would argue innovation certainly matters, and it is complex and needs to be understood as precisely that and managed accordingly, not in a piecemeal fashion. Complexity matters in building the right processes, skills, and culture, but because they don’t behave in linear ways and any ‘messing’ with the complexity and relationships within this can have an awful lot of unintended consequences.

We have choices of complexity

There are different types of complexity to manage. Work conducted by Julian Birkinshaw and Suzanne Heywood suggested four types of complexity. I only summarize these here.

1) Imposed complexity, those interventions both internally and externally that require ‘higher’ insight.

2) There is the inherent complexity found with any organization and presently managed through striving to be more efficient and effective.

3) There is designed in complexity, where innovation needs to fit more. These are choices about how, where, and why an organization sets about its operation. These can be constrained, underinvested in, even jettisoned but do have lasting consequences for the future of the organization. This is the area of strategic impact as these can limit competitive advantaged from the level of innovation intensity chosen as an example.

4) The fourth is unnecessary complexity where increased misalignment resides, it is sometimes easy to recognize but often hard to let go as it sometimes makes up “the way things are run around here” and have a richness in history.

The challenge of complexity within innovation

If you can begin to identify complexity that hampers effectiveness, you can start to remove it. What you have to be very clear upon is having a complete understanding, or a well informed one on all the effects of the complexity part you are removing is not the route to value and often innovation. The more creative side certainly does get constrained and caught up in this often shorter-term pursuit of effectiveness for effectiveness’ sake. You suddenly don’t have the bandwidth for innovation exploration and more.

Do recognize that innovation is complex; recognize it does have to be handled carefully, but it needs to also be fully understood for what it is, a complex adaptive system. It cannot be treated in the same way as effectiveness or efficiency can. It needs ‘actively’ managing differently, for all the future opportunities it holds by placing emphasis on building more exceptional innovation capabilities to make it ‘dynamically’ work. Otherwise, you end up with unexplained consequences to the more unsatisfactory performance from your innovation activities and often at a loss to explain why.

We do need to relate more to complexity as it comes with the turf if you want really lasting innovation. We need to deal with all the different types of complexity.

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