Inept Responses to Complexity

Companies face an increasingly complex world. In and of itself, this complexity is not a bad thing—it brings opportunities as well as challenges. The problem is the way companies attempt to respond to it

To reconcile their many conflicting goals, managers redesign the organization’s structure, performance measures, and incentives, trying to align employees’ behavior with shifting external challenges. More layers get added, more procedures imposed.

In an article published by HBR in Sept 2011, Yves Morieux describes how Boston Consulting Group created an “index of complicatedness” to measure how big the problem is:

The survey results show that over the past 15 years, the amount of procedures, vertical layers, interface structures, coordination bodies, and decision approvals needed in each of those firms has increased by anywhere from 50% to 350%. According to our analysis over a longer time horizon, complicatedness increased by 6.7% a year, on average, over the past five decades.

This complicatedness exacts a heavy price. In the 20% of organizations that are the most complicated, managers spend 40% of their time writing reports and 30% to 60% of it in coordination meetings. That doesn’t leave much time for them to work with their teams. As a result, employees are often misdirected and expend a lot of effort in vain. It’s hardly surprising that employees of these organizations are three times as likely to be disengaged as employees of the rest of the group—or that dissatisfaction at work is so high and productivity so often disappointing.

Companies clearly need a better way to manage complexity, but is it possible?

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