Embracing Change for Better Outcomes: Navigating Complexity in the Digital Age

In today's rapidly changing world, executives often find themselves frustrated with the inability to achieve desired results and employees equally frustrated with their work and ways of working. They wonder why it is so hard to get things done. I had this exact discussion with a senior leader over coffee a couple of weeks ago. While the answer may vary depending on the specific context, there is a common root cause that hinders success in many organisations. This article aims to explore the need for change and provides compelling insights on embracing complexity and organisational transformation.

Challenging the status quo

I came across a fantastic, illustrated book by Niels Pflaeging a few years ago, called “Organize for Complexity”. In this book Pflaeging shares his perspective on organisational design in the face of modern complexities and challenges the thinking around traditional hierarchical organisational systems by advocating for adaptable systems that thrive in rapidly changing environments. Rather than trying to manage complexity using traditional managements methods, Pflaeging suggests practical alternatives that embrace the complexity we face in this digital age we are in and enable organisational success.

Drawing from personal experience, I have had success by applying the principles learned from Pflaeging's book to influence leaders at Capital One. By challenging and guiding leaders to rethink their approach to organising people and resources, cross-functional outcome teams were formed. These teams demonstrated improved focus, autonomy, and an increased ability to respond to change. This example highlights the transformative power of embracing complexity.

Complicated versus complex

In the book, Pflaeging discusses the idea of complicated and complex systems. Taking definitions directly from the book;

Complicated systems operate in standardized ways. In complicated systems imprecision is diminished and non-objectivity and uncertainty are reduced as far as possible. Such a system can be described through non-ambiguous cause-and-effect chains. It is externally controllable.

Any high-precision machine is complicated: everything is done to avoid imprecision/to increase precision. A watch, for example, is calibrated to diminish mistakes and uncertainty. It is configured to supply objective data, certainty and a minimum of illusion.

Complex systems produce surprises. They have presence or participation of living creatures. They are living systems – that’s why they may change at any moment. Such systems are only externally observable – not controllable.

A complex systems’ behaviour is non-predictable. In a complex system, it’s natural that there is a level of error, uncertainty and illusion that is much higher than in complicated systems. A complex system may possess elements that can operate in standardized ways, but their interaction would be constantly changing, in discontinuous ways.

The fundamental mistake organisations make

In his book, Pflaeging goes on to say that “to treat complex systems as complicated systems is a fundamental thinking mistake, an over simplification”. This is a perfect point to anchor this article around. The common root cause I mentioned at the beginning of the article is that many organisations are setup using traditional 20th century management thinking, for an organisational design suited to complicated problems, not complex. These organisations are making that fundamental mistake. There is a misguided belief that things are predictable and can be externally controlled which manifests in things like detailed plans, contracts with highly defined and managed scope and budget, high levels of governance and control and so on. If we assume our goal is to realise more value from our organisational systems, I have observed on countless occasions management respond to complexity in the wrong way. When an issue arises from something unknown, management often puts in place more controls to manage the risk of further issues. Examples of these controls include status updates, meetings, reports, change control and a vast array of tools and processes to manage. Management now feels happier that they are in control, but are they really? I have seen that this is often a false sense of control whereby they have just added more work to the system which will get in the way of teams delivering real value. They are addressing symptoms, not real problems.

Addressing the root problem

To navigate the complexity of the digital age successfully, organisational change must be driven from the top. The kind of change we are talking about here is cultural, and it needs to be transformational. We need to transform from that 20th century management thinking to something suited to the 21st century and the digital age where complexity is the norm. See my recent article “Wide asleep in the age of digital” for more information on this.

In the image below I have tried to illustrate what I see and hear when it comes to how organisations are structured in relation to the complexity they must deal with. The left-hand side of the scale in the diagram represents the complicated domain, and the right side the complex domain. A lot of organisations who are struggling to get the outcomes they desire look and feel like the current state representation, which has an org structure suited to complicated domain, but a system that is a manifestation of the complex domain.?

You will likely have heard that famous quote from Drucker; “culture eats strategy for breakfast” and it couldn’t be truer. So what do we do to influence culture? We need to make structural changes that will enable realisation of aspirational culture. You can see in the future state representation in the image above that we need to focus on closing the gap between org structure and the system when it comes to complexity. For example, you can’t be truly customer centric and respond to change quickly if the organisational design doesn’t allow that to happen. If there are multiple silos and layers upon layers of management to navigate when making decisions then the kind of culture you will get will lead to less value, longer lead times, low accountability, lacking innovation and probably very disengaging for everybody involved.

The role of Leadership

Leadership plays a pivotal role in cultural transformation. Structural changes often require decisions and actions that only leaders can influence, such as budget allocation, strategic thinking, and hiring practices. Leaders must understand the need for change and actively create an environment that nurtures an aspirational culture capable of handling complexity. Their support and conviction provide the necessary safety for experimentation and investment in the journey of transformation.

In my experience, unless there is very senior sponsorship for cultural transformation then it is unlikely to succeed. Without executive level sponsorship, you will likely only get bubbles where transformation happens. In such cases, the transformation efforts tend to be confined to isolated pockets within the organisation, creating limited impact. Most organisations are like networks with interconnected teams, and so when these isolated pockets come into contact with other areas of the organisation that have not undergone transformation, the overall progress becomes hindered by the slower pace of those unaffected parts.

It’s a marathon, not a sprint

Cultural transformation is a long and challenging journey, often spanning multiple years. It is complex, which means there are unknowns. Therefore, we adopt an agile approach to transformation and we experiment. We amplify what works and dampen what doesn’t. When we grasp our current reality and understand how much opportunity exists for re-organising for complexity, then we should design experiments and make steps towards the target future state.?

The journey is not linear, so although we may feel like we take a step backwards from time to time, we are always learning and therefore always advancing. Leadership has a very important role to play especially when things get hard, they create safety for the experimentation and provide support based on their conviction that the journey of transformation is worth the investment.

I have trodden this path, and I have experienced the challenges and breakthroughs. Is the juice worth the squeeze, absolutely, but it will be hard work. If you find that this article resonates with you, and you’re interested in exploring how you and your organisation may benefit from any of what I have covered then get in touch. I’d also love to get your thoughts on the elements of the organisational structure that you think could be experimented with to organise for complexity, so please share in the comments.?