Leading amid Complexity
Attempts to apply complexity theory – also known as complexity science – to management is one of those long-term trends that never gains huge headlines but never quite goes away, either. This year, Management Decision magazine published a series of articles on the subject. Among the more interesting themes encountered in some of these articles is the apparent paradox of how leaders should lead in a “self-organizing” environment.
Complexity science is largely the brainchild of a multidisciplinary group of scientists working together at the Santa Fe Institute, a nonprofit research and education center. Much of the original research focused on complex adaptive systems, or CAS, which are systems that share a variety of characteristics. A partial list includes the fact that CAS are made up of smaller components, sometimes referred to as “agents”; they tend to behave in a nonlinear fashion because agents regularly react and interact with each other; they are self-organizing and adaptive; and they tend to exist at what some call “the edge of chaos” – that is, in a realm between high levels of order and utter anarchy.
Dr. Richard Pascale, author of Surfing the Edge of Chaos, noted in an interview that business organizations are examples of organized complexity. This makes the art of change management particularly difficult, especially if leaders adopt the social engineering paradigm of managing change. This paradigm views top managers as the organizational “brains” who design a change program that then cascades throughout the organization in a predictable way. “Stated plainly,” Pascale asserts, “when societies, communities and organisations encounter the need for adaptive change (that is, change that departs from the trajectory of ‘business as usual’), social engineering does not work. And it never has” (Powell, 2006).
What Pascale argues for instead is an unconventional type of leadership that frames problems and then tries to tap into the ideas and practices that already exist in organizations. The implication is that leaders can leverage the self-organizing, adaptive dynamics that tend to exist in complex systems. After all, there are usually employees already solving problems in unorthodox ways. These homegrown solutions often contain the seeds to the solutions of larger problems. And these solutions – not coming from the top down or from outside the organization – often meet with less organizational resistance.
In a Harvard Business Review article, Pascale and coauthor Jerry Sternin (2005) refer to these hidden innovators among the organizational community as “positive deviants,” and they suggest ways of bringing such unorthodox ideas to the fore. But doing so requires courage, faith and innovation on the part of leaders. “Leaders must relinquish to the community the job of chief discoverer. This isn’t easy, for it requires leaders to set aside their egos and habitual identities (being the go-to guy, the decision maker who knows what to do).”
Another feature of leadership revolves around strategy creation and implementation. In a fast-changing and even turbulent business environment, traditional strategic planning probably won’t suffice to keep an organization competitive. Miguel Pina e Cunha and Joao Vieira da Cunha of the Universidada Nova de Lisboa in Portugal propose – based on ideas from complexity theory – that organizations in these environments might benefit by adopting a “minimally-structured organizational form” that allows for strategic improvisation, which in turn allows for faster responses to changing environments and greater organizational resilience. To make such structures work effectively, however, organizations need to establish a set of rules. “Minimal structures,” they write, “are constituted by a clear strategic intention, an adequate number of simple rules and ample individual freedom” (2006, p. 843).
In the complexity science literature, there’s a well-known example of how a few rules can result in a cohesive but adaptable system. It is a computer model that includes a large number of autonomous, bird-like symbols (called “boids”) that “fly” around a virtual environment littered with many obstacles. Each boid follows three simple rules, and all rules are local, meaning that they apply only to what an individual boid “perceives” in its own area. There’s no rule telling boids to flock, for example, and there’s no leader. And yet, in the computer model, flocks always form. M. Mitchell Waldrop (1992), author of Complexity, writes, “[Creator Craig] Reynolds could start his simulation with boids scattered around the computer screen completely at random, and they would spontaneously collect themselves into a flock that flowed around both sides of an obstacle, rejoining on the other side as if the boids had planned it all along.”
In business organizations, of course, rules would have to be much more sophisticated to achieve any kind of strategic purpose. In a recent working paper, Davis, Eisenhardt and Bingham (2006) outline five types of organizational rules. Boundary rules help companies determine which opportunities they should pursue; priority rules help them prioritize those opportunities; how-to rules help them figure out how to execute on new opportunities; timing rules help determine how many opportunities to pursue; and exit rules help them know when to stop pursuing an opportunity (p. 21).
Miguel Pina e Cunha and Joao Vieira da Cunha note that “simple rules can be viewed as synthesizing strategic intention, managerial foresight and organizational control” (p. 847). Such rules in combination with other factors might help organizations improvise strategic actions in fast-changing market environments. On the other hand, such improvisations also carry a number of risks, such as “organizational drift,” which occurs when actions cause a business to drift away from its original strategic objectives. Davis, Eisenhardt and Bingham find that having too few organizational rules can result in a “catastrophic drop in performance” (p. 27). Having too many rules can also result in decreased performance, but this decline occurs more gradually.
These ideas about leadership, change and self-organization remain incomplete. It’s likely, however, that management scholars will continue to elaborate on ideas from complexity theory, if only because such ideas seem to have the potential to help organizations adapt to fast-changing and increasingly disruptive business environments.
For a PDF of a working paper called “Complexity Theory, Market Dynamism, and the Strategy of Simple Rules,” click here.
For an interview with Richard Pascale, click here.
For more on “Your Company’s Secret Change Agents,” click here.
For more on “Towards a Complexity Theory of Strategy,” click here.
Documents used in the preparation of this TrendWatcher include the following:
Cunha, Miguel Pina e and Joao Vieira da Cunha. “Towards a Complexity Theory of Strategy.” Management Decision. Emerald. Vol. 44, No. 7, 2006, pp. 839-850.
Davis, Jason S., Kathleen M. Eisenhardt and Christopher B. Bingham. “Complexity Theory, Market Dynamism, and the Strategy of Simple Rules.” Working Paper, March 20, 2006.
Pascale, Richard T. and Jerry Sternin. “Your Company’s Secret Change Agents.” Harvard Business Review. EBSCO. May 2005.
Powell, Sarah. “Spotlight on Richard T. Pascale.” Management Decision. Emerald. Vol. 44, No. 7, 2006, pp. 973-979.
Waldrop, M. Mitchell. Complexity: The Emerging Science at the Edge of Order and Chaos. New York: Simon & Schuster, 1992.
Complexity science is largely the brainchild of a multidisciplinary group of scientists working together at the Santa Fe Institute, a nonprofit research and education center. Much of the original research focused on complex adaptive systems, or CAS, which are systems that share a variety of characteristics. A partial list includes the fact that CAS are made up of smaller components, sometimes referred to as “agents”; they tend to behave in a nonlinear fashion because agents regularly react and interact with each other; they are self-organizing and adaptive; and they tend to exist at what some call “the edge of chaos” – that is, in a realm between high levels of order and utter anarchy.
Dr. Richard Pascale, author of Surfing the Edge of Chaos, noted in an interview that business organizations are examples of organized complexity. This makes the art of change management particularly difficult, especially if leaders adopt the social engineering paradigm of managing change. This paradigm views top managers as the organizational “brains” who design a change program that then cascades throughout the organization in a predictable way. “Stated plainly,” Pascale asserts, “when societies, communities and organisations encounter the need for adaptive change (that is, change that departs from the trajectory of ‘business as usual’), social engineering does not work. And it never has” (Powell, 2006).
What Pascale argues for instead is an unconventional type of leadership that frames problems and then tries to tap into the ideas and practices that already exist in organizations. The implication is that leaders can leverage the self-organizing, adaptive dynamics that tend to exist in complex systems. After all, there are usually employees already solving problems in unorthodox ways. These homegrown solutions often contain the seeds to the solutions of larger problems. And these solutions – not coming from the top down or from outside the organization – often meet with less organizational resistance.
In a Harvard Business Review article, Pascale and coauthor Jerry Sternin (2005) refer to these hidden innovators among the organizational community as “positive deviants,” and they suggest ways of bringing such unorthodox ideas to the fore. But doing so requires courage, faith and innovation on the part of leaders. “Leaders must relinquish to the community the job of chief discoverer. This isn’t easy, for it requires leaders to set aside their egos and habitual identities (being the go-to guy, the decision maker who knows what to do).”
Another feature of leadership revolves around strategy creation and implementation. In a fast-changing and even turbulent business environment, traditional strategic planning probably won’t suffice to keep an organization competitive. Miguel Pina e Cunha and Joao Vieira da Cunha of the Universidada Nova de Lisboa in Portugal propose – based on ideas from complexity theory – that organizations in these environments might benefit by adopting a “minimally-structured organizational form” that allows for strategic improvisation, which in turn allows for faster responses to changing environments and greater organizational resilience. To make such structures work effectively, however, organizations need to establish a set of rules. “Minimal structures,” they write, “are constituted by a clear strategic intention, an adequate number of simple rules and ample individual freedom” (2006, p. 843).
In the complexity science literature, there’s a well-known example of how a few rules can result in a cohesive but adaptable system. It is a computer model that includes a large number of autonomous, bird-like symbols (called “boids”) that “fly” around a virtual environment littered with many obstacles. Each boid follows three simple rules, and all rules are local, meaning that they apply only to what an individual boid “perceives” in its own area. There’s no rule telling boids to flock, for example, and there’s no leader. And yet, in the computer model, flocks always form. M. Mitchell Waldrop (1992), author of Complexity, writes, “[Creator Craig] Reynolds could start his simulation with boids scattered around the computer screen completely at random, and they would spontaneously collect themselves into a flock that flowed around both sides of an obstacle, rejoining on the other side as if the boids had planned it all along.”
In business organizations, of course, rules would have to be much more sophisticated to achieve any kind of strategic purpose. In a recent working paper, Davis, Eisenhardt and Bingham (2006) outline five types of organizational rules. Boundary rules help companies determine which opportunities they should pursue; priority rules help them prioritize those opportunities; how-to rules help them figure out how to execute on new opportunities; timing rules help determine how many opportunities to pursue; and exit rules help them know when to stop pursuing an opportunity (p. 21).
Miguel Pina e Cunha and Joao Vieira da Cunha note that “simple rules can be viewed as synthesizing strategic intention, managerial foresight and organizational control” (p. 847). Such rules in combination with other factors might help organizations improvise strategic actions in fast-changing market environments. On the other hand, such improvisations also carry a number of risks, such as “organizational drift,” which occurs when actions cause a business to drift away from its original strategic objectives. Davis, Eisenhardt and Bingham find that having too few organizational rules can result in a “catastrophic drop in performance” (p. 27). Having too many rules can also result in decreased performance, but this decline occurs more gradually.
These ideas about leadership, change and self-organization remain incomplete. It’s likely, however, that management scholars will continue to elaborate on ideas from complexity theory, if only because such ideas seem to have the potential to help organizations adapt to fast-changing and increasingly disruptive business environments.
For a PDF of a working paper called “Complexity Theory, Market Dynamism, and the Strategy of Simple Rules,” click here.
For an interview with Richard Pascale, click here.
For more on “Your Company’s Secret Change Agents,” click here.
For more on “Towards a Complexity Theory of Strategy,” click here.
Documents used in the preparation of this TrendWatcher include the following:
Cunha, Miguel Pina e and Joao Vieira da Cunha. “Towards a Complexity Theory of Strategy.” Management Decision. Emerald. Vol. 44, No. 7, 2006, pp. 839-850.
Davis, Jason S., Kathleen M. Eisenhardt and Christopher B. Bingham. “Complexity Theory, Market Dynamism, and the Strategy of Simple Rules.” Working Paper, March 20, 2006.
Pascale, Richard T. and Jerry Sternin. “Your Company’s Secret Change Agents.” Harvard Business Review. EBSCO. May 2005.
Powell, Sarah. “Spotlight on Richard T. Pascale.” Management Decision. Emerald. Vol. 44, No. 7, 2006, pp. 973-979.
Waldrop, M. Mitchell. Complexity: The Emerging Science at the Edge of Order and Chaos. New York: Simon & Schuster, 1992.