When a homeowner wishes to add new features to their property, these often come with associated maintenance tasks or costs. Such hidden features are tacked onto upfront expenses paid and must be part of the overall consideration.
Sometimes, we can find creative ways to simplify maintenance. For instance, a swimming pool using a CO2-based system for pH balance is hassle-free compared to one that uses chemicals.
Businesses operate similarly, but at a far greater scale and with a stronger incentive to grow. If you’re thriving, you want to reinvest profits. This usually means adding new features, each with a hidden cost of complexity.
Hiring more people creates the need to train them and immerse them in your culture. New technology can improve efficiency, but someone must learn how to operate the system. Finding cost-effective suppliers means getting comfortable working with third parties from all over the world.
How does a business strive to manage this ever-increasing picture of complications?
Not all businesses view growth as something that’s unequivocally positive or beneficial. They see that part of growth must entail new processes or dimensions solely to manage the organization’s increasingly convoluted inner workings.
By seeking to avoid growth, a company might intentionally remain small. This could be aligned with a vision: to serve the local community, for instance, or to function as the owner’s lifestyle business.
Staying small might not entail the trade-offs you’d expect. In the modern world of global networks and instant information, big and small companies’ competitive gaps can be narrow or even non-existent in some aspects.
In these scenarios, avoidance can work. But there will still be occasions when a small business struggles to compete against the economies of scale achieved by larger competitors. In the event of a crisis, the ability to draw upon greater resources provided by growth can make a difference in terms of survival prospects.
The reason growth and complexity go hand-in-hand is the additive nature of this process. When an organization grows, it does so by adding elements to gain access to more resources.
Each element in an organization has the potential to interact with another. Machines require operators, who require training and managers. In turn, these may require other forms of specialist support, such as coaches or data analysts.
All those potential interactions among various elements are what creates network density and complexity. And this unfolds exponentially. Companies often organize themselves along lines that limit potential interactions, through hierarchies, for instance.
Some businesses find another way to deal with this issue by separating growth from scale. Without adding new elements, they instead seek to refine and improve their processes to expand product or service offerings, gain access to new markets, or reach wider audiences.
However, scaling is not always a readily available option. Some companies might not have naturally scalable processes, a startup culture, or exist in an industry that’s favorable to this variation of growth.
There’s an emerging line of thinking that holds that our management practices are largely outdated. Leadership models in organizations are still rooted in the Industrial Age paradigm of top-down, bureaucratic hierarchies. Meanwhile, we’ve collectively shifted from physical production to a knowledge economy.
According to the new framework of Complexity Leadership Theory, we urgently need to adapt our leadership strategy and practices. Doing so will better allow a business to flourish despite adding new elements and layers of complexity.
In the process, you can also thrive by harnessing the upsides of potential complex interactions. These include dynamic learning, greater adaptability, and fostering innovation within your organization.
To lead according to this framework, you need to map your organization like a neural network. This will help you understand the interactions and interdependencies among agents.
By identifying which people exert a strong influence on others, you can begin to leverage those elements to pull others in the desired direction. Enabling key members within your organization to operate autonomously will improve response times and limit your personal burden.
Such leadership is difficult, partly because it’s an entirely new way of managing organizations and requires you to embrace complexity.
Yet if recent years are any indication, moving forward can only bring more complexity. Businesses will steadily become rooted even further in the knowledge economy. Maybe you can avoid some complications or find ways to scale, but even so, developing complexity leadership can only help you in years to come.