Legendary American business magnate and investor, Warren Buffett, is known for his telling quotes and commentaries on the business and investment world. One of his most often quoted sayings is: “There seems to be a perverse human characteristic that likes to make easy things difficult.”
This sums up the reality of what our world has become. Instead of technology and innovation making our lives simpler and easier in every respect, they can instead become more complex. There has been a raft of developments, particularly over the past 30 years, that have contributed to this.
According to Rita McGrath, Professor and Columbia Business School in the U.S, “in 1980 there was no such thing as a personal computer. The Internet and broadband connections to it were more than a decade away. You used film to take pictures, got them developed in a photo shop, and mailed copies to relatives if you wanted to share them.
“Roughly half of the 4.4 billion people on Earth were either so poor that they were cut off from the rest of humanity, or lived in regimes so repressive that no outside communication was possible. AT&T was the only telephone operator in the United States; telephony was just one of many high-impact industries that were highly regulated and protected from competition.”
Decision makers have to look out for the unexpected
She describes how today’s decision makers face environments in which things that were isolated from one another just 30 years ago are bumping up against each other, often with unexpected results. That’s because of a host of technological and sociological changes that occurred after 1980:
- The digitization of massive amounts of information.
- Smart systems that communicate interdependently.
- The decreasing cost of computing power.
- The increasing ease of communicating rich content across distances.
- An increasingly wealthy human population, resulting in more participation in the formal economy.
- The wholesale rewriting of industry norms and business models.1
One example of this the ability of an organisation to control how information from within its walls flows to the outside world. In the past, information was restricted in its availability. Nowadays, however, technology and connectivity allow customers to share sometimes very strong views about a company on social media and provide public ratings and reviews. And employees can tell the rest of the world what it’s like to work there. As a result, the world of reputation management has become a previously unheard of, potentially complex issue for all companies.
“When things that used to be kept separate bump up against other each other (in other words, when once-complicated systems become complex) it becomes far more difficult to predict what’s going to happen next. Not surprisingly, that unpredictability creates a need for organisations to be far more aware of, and responsive to, changes in their own environment and in the world around them,” says Gunther McGrath.
Business leaders stuck in a ‘Complexity Trap’
Business Insider highlights four reasons why companies and business leaders are stuck in this so-called ‘Complexity Trap’:
- Shooting for perfection. Companies have an unending passion to be the best in class in everything that the company does. We have all heard the words: World Class, Stretch Goals, BHAG’s (Big Hairy Audacious Goals). Alas, in shooting for this perfection many companies undertake a complex project or initiative that the company is just incapable of successfully completing.
- Complexity sells. Many critical issues in business can be solved by direct focus on the root cause and expert leadership to follow the simple steps to realise the goal. But, that is nowhere near as sexy as bringing in the latest high-powered consultants. Unfortunately, top management often forgets the difficulty for the people on the front line to implement complex solutions and live with it on a daily basis.
- American Culture / American Dream. There is an American trait (which applies equally to any Western society) that lauds those who achieve success through sheer hard work. With this comes the overwhelming belief that the harder you work, the more you will get done and the better you will make your business. If some is good, then more is better. Alas, this trait often leads to excess and superfluous work to ensure that everyone is busy and working their hardest. The question that is rarely asked is whether all the extra work is justified by improved business performance.
- Bias for Action. Business leaders today are driven and love to work hard. With that comes a passion for getting things done or making it happen. As a result, business leaders have a real bias for action. If there is nothing to be done, many times they will find something to do and then do it or (better yet) delegate and insist that it gets done by their team. What leaders with this bias for action may not realise is that any action they take is multiplied 10 to 50 times further down in the organisation as the people to whom the task was delegated strive to satisfy the request or initiative while still doing all their other work.
Business success does not come from more work or more complexity. Rather, success comes from keeping things simple and focusing relentlessly on the few critical issues that need to be resolved to drive the success of the business. To overcome the complexity trap, the watchwords need to be: simplify, eliminate, prioritise and focus. 2
– – – – –