Companies as complex systems

networkby jurvetson

Seeing Your Company as a System
[Via Ackoff Center Weblog]

Much-needed guidance on making companies more employee-centered, adaptive, and capable This is an article from Strategy+Business by Andrea Gabor: … No matter how disparate the causes of failure, there is always a common thread: somewhere, somehow, management has let its attention slip…


Many of the failures we have seen over the last few years – the financial industry, the housing industry, the oil industry – have arisen because the organization involved are being run like a ‘machine’ – push lever X to get result Y. A better approach in these complex setting is to view the organization as a living organism – where small changes in initial conditions, coupled with network effects, can result in disparate, somewhat stochastic, outcomes.

We have done a great job over the last century solving the problems that could be attacked with a ‘machine-based’ management approach. What we have left are the really complex problems where a wide variety of levers can be manipulated with often unexpected outcomes.

Few problems involving complex processes can be solved by moving a single lever. One point of attack will not provide a solution. In fact it often create problems elsewhere in the process.

Today’s complex world requires a different approach, one that overcomes the faults of the ‘machine-driven’ management approaches. This article serves as a nice introduction to the works of Russell Ackoff and others that describe a systems-based approach to management.

Key to this approach is a view of employees that seems to be anathema to many:

All the works mentioned in this guide have been linked to higher performance. Yet their focus on the expertise of ordinary employees remains a hard sell in many companies, because it requires an enormous long-term commitment to training and to local control and knowledge sharing.

Moreover, employee-centered systems organizations need to develop trust — between supervisors and employees and among employees who have to work together to understand and improve the system. Making this work takes skillful management. Indeed, many quality improvement efforts in the U.S. failed because they absorbed rigid process guidelines but failed to build in flexibility.

Management approaches utilizing complex systems thinking require a relationship with employees, especially those most directly engaged with complex problems, that few companies seem to be able to foment. Yet those organizations that can accomplish this will be able to successfully deal with much more complex problems than those that can not, producing an advantage that will be hard for ‘machine-based’ thinking to overcome.

Part of what SpreadingScience tries to do is educate organizations about human social networks, helping them understand how to leverage new technologies to identify and empower the people they need in order to solve complex problems. We help them understand how to adapt their tools to make it easier to support a network-driven management style, and allowing the organization to solve a greater range of complex problems.

The companies that can accomplish this will have a selective advantage over those who can not.

One thought on “Companies as complex systems”

Leave a Reply