We like business to be simple. Many of our management practices ignore complexity. Time to re-embrace reality.
At a recent Responsive Org event in Melbourne led by Julian Waters-Lynch we were discussing the Cynefin Model. The Cynefin model is a very useful model for understanding responses to differing levels of complexity of the environment. However what surfaced in that conversation was how badly most businesses perceive their whole system and environment.
Our businesses are deliberately dumb. They exclude information to make our execution of a sustainable business model simple and efficient.
Let’s take pricing as an example. Traditional business make pricing a simple equation of cost, margin and volume to maximise shareholder return. They ignore loss growth, customer engagement, customer retention, reputation, supply chain impacts, sustainability, purpose or other systemic impacts related to changing prices.
When management began a century ago with high transportation and information costs, excluding information often had limited consequences. The competitor or customer in the next market who used that information had real barriers to overcome to make you pay for a bad decision. Pretending complex or complicated environments were simple had less impact on your business
Moving to today the global connection of customers, competitors and the universe has changed those barriers. Businesses who pretend that a complex or complicated scenario is simple will feel the effects back through their networks. It is becoming harder and harder to ignore complexity and simple strategies in complex and complicated scenarios are increasingly threatened by responses from customers, employees or other stakeholders who see the world as it is.
Harold Jarche has argued simple work will be automated and merely complicated work done cheaply. For innovation, purposeful work and creative potential our organisations need to re-embrace the complexity that surrounds them. Only by genuinely exploring emergent practice will organisations challenge themselves and their people to create sustainable value. Dumb won’t cut it anymore.