Managing a business today is fundamentally different than it was just 30 years ago. The most profound difference, we’ve come to believe, is the level of complexity people have to cope with.
Complex systems have always existed, of course—and business life has always featured the unpredictable, the surprising, and the unexpected. But complexity has gone from something found mainly in large systems, such as cities, to something that affects almost everything we touch: the products we design, the jobs we do every day, and the organizations we oversee. Most of this increase has resulted from the information technology revolution of the past few decades. Systems that used to be separate are now interconnected and interdependent, which means that they are, by definition, more complex.
Complex organizations are far more difficult to manage than merely complicated ones. It’s harder to predict what will happen, because complex systems interact in unexpected ways. It’s harder to make sense of things, because the degree of complexity may lie beyond our cognitive limits. And it’s harder to place bets, because the past behavior of a complex system may not predict its future behavior. In a complex system the outlier is often more significant than the average.
Making matters worse, our analytic tools haven’t kept up. Collectively we know a good deal about how to navigate complexity—but that knowledge hasn’t permeated the thinking of most of today’s executives or the business schools that teach tomorrow’s managers. How can we bring that knowledge to the fore? Let’s take a close look at what complexity is, the problems it raises, and how those problems can be addressed.