How Complex Is Your Business?

01-11-2018 06:00 by Ian Kinnery

Complexity is Chaos

As businesses grow they inevitably and necessarily become more complex. The fact is that complexity grows at an exponential rate, not a linear rate. If there are two people two relationships will exist; A with B and B with A. when a third joins, six relationships will exist; A with B and C, B with A and C and C with A and B. when a fourth joins there will now be twelve relationships and so it goes on. Linear growth gives rise to an exponential increase in complexity.

Of course, this does not solely apply to people. Sometimes it is not even about the people. Complexity in business can be a function of many things, product lines, locations, payment methods, model types, time zones, languages, culture and any and every combination of the above and there is a limit to how much complexity any individual mind can comprehend and deal with at any one time.

Part of the skill in running a business well has to be in handling, in simplifying, if you like, the inevitable complexity. To go back to the relationships example I started with, if the leader of the business only has the capacity to deal with a certain amount of complexity, that capacity is going to be reached more quickly than our business leader would have ever expected. Once the capacity to deal with complexity has been reached complexity quickly descends into chaos and chaos is not only extremely inefficient but also very damaging and debilitating for everyone concerned. Businesses teams and tribes can quickly become divided and dysfunctional. The very antithesis of what we are trying to achieve.

Clarity is power

If complexity is chaos, then clarity is power. Clarity can be the antidote to complexity. It is the leader’s job to articulate that clarity. Often they get lost in the fog of complexity. It is for that reason that Peter Drucker said that these were the five most important questions you will ever ask about your organisation:

1. What is our mission?

2. Who is our customer?

3. What does the customer value?

4. What are our results?

5. What is our plan?

Understanding the answers to these questions will provide some of the clarity needed to cut through the complexity that inevitably will have arisen as your business continues its growth journey. If you have a substantial business and feel you can answer these questions easily I suggest that either you have not given the questions the depth of consideration that they deserve and have treated them too superficially, or you have recently and hopefully regularly completed this or a similar thinking exercise, in which case I take my hat off to you.

The next question is; were you to put these same questions to your team what level of alignment in the answers would you get? Remember the words of Pat Lencioni "If you could get all the people in the organization rowing in the same direction, you could dominate any industry, in any market, against any competition, at any time.” A common purpose reduces complexity whereas the absence of a common purpose dramatically increases it and as you now know complexity eventually becomes chaos.

 

REGISTER your place on our seminar on Tuesday 20th November 5.30pm at Durham County Cricket Club. The topic will be 'The 7 new rules of business that a business degree wont teach you'. 

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