Where do you tickle a baby to make him or her smile? If you're an analytical thinker, you'd examine the parts of the face around the mouth and monitor each for a few months to answer the question. But, if you're a systems thinker, you know there is another, more impactful way. You'd tickle the toes instead, because you know it's the relationship between all the parts that count. And that's the secret to strategic complexity and its benefit for businesses.
The baby is an analogy for a containing system (a super-system that contains other systems), like a business. Ultimately, a business isn't just the sum of all its parts. The relationships between the parts produce most of the key traits of the organisation. Dr Morné Mostert, Director of the Institute of Futures Research and course convener behind USB-ED's Strategic Complexity course, says understanding these relationships is imperative for businesses to withstand the exponential complexity of our world today.
“It's important to give context for the increase in complexity. Firstly, the pace of change is different (hence the rise of change management specialists). Secondly, the sheer number of elements in the system has gone up - we have more staff, more customers, and international businesses cover more geographical areas, etc. Not only is that number higher, but everything is connected – and that creates the complexity."
He says the third driver of complexity is an increase in rules and regulations. The fourth, is an increase in choice. “To Gen X, it was never obvious that this choice existed. People stayed with one employer and were loyal to particular products their whole lives, for example. For millennials, it's different. Choice is assumed."
The fifth factor is speed; everything's faster. That's changed customer expectations dramatically. And it hasn't always made our lives easier. Think of email. Yes, it's made communicating simpler, saving time. But, counterintuitively, it's also led to each of us receiving hundreds of emails a day, which consumes our time.
In the 1970s, a business had a relatively long horizon to make a decision. Now, the pace of change means strategic decisions must be made much faster. If companies don't keep up, they'll simply be overtaken by the competition… yes, there's more of that too.
So, how do you build a sustainable business to compete in an era of complexity?
Mostert says, “more businesses need to adopt a systems thinking approach. We have to transcend the 'classification and box-thinking' of an analytical approach."
There's a common misconception that by breaking something into its parts and improving each part, you build a better whole. That's simply not the case. “For example, we've got better at being cost-effective with salaries in developing economies. But, in doing so, we've worsened social exploitation. The complexity lies in the circularity and interconnectedness, and in how relationships influence the containing system."
Pattern recognition and strategic complexity
Mostert says a big part of systems thinking is recognising emerging and potential patterns and understanding these to see how they impact the evolution of the business ecology. A company needs to explore these patterns and be willing to admit their implications. For example, if instances of corruption keep popping up, chances are they're not isolated cases, and shouldn't be dealt with as such. Another common pattern is for companies to say they're customer-centric, but the patterns show they're barely customer-tolerant. To identify whether your business falls prey to these risks, ask yourself when you actually last incorporated customer feedback into a design process.
Businesses need to be able to identify both enabling and disabling patterns. Of course, sometimes patterns that seem positive can have destructive results. Mostert elaborates, “Here's a simple example. Eating a chocolate every day seems pleasurable but can have long-term implications for your health." How to spot a seemingly good pattern that might be heading for disaster? Study the future.
“You have to be able to explore multiple scenarios. This means anticipating what a pattern may do to a business in the future. It's obviously problematic if a business works to short-term horizons. It's difficult to have mature organisational foresight when you're stuck thinking in terms of a 92-day-cycle, as business often are."
Mostert says that companies need to start thinking about the quality of the relationships between their organisational ecosystems. To get this right, leaders need to have the time and expertise for strategic thinking. “Any senior decision-maker should be empowered to learn systems thinking, along with team members who work in innovation or strategic roles. These vital business skills ensure a greater probability of sustainable competitiveness."
USB-ED offers a master class in resolving strategic complexity. Visit USB-ED.com to explore how this course could transform your business and benefit your bottom-line – and long-term relevancy in a time of immense complexity.
Dr Morne Mostert is the Director of the Institute for Futures Research, a strategic foresight advisory unit at Stellenbosch University.