We often say that the world has become complex, but what does that really mean? Has the world really changed, or is it our understanding of it that has evolved?
Perhaps it is that the world has always been complex and it is our epistemic progression that now allows us to see reality closer to as it is, rather than as we wish it to be. Basically all traditional strategic management models are built on the assumption that someone or something has special abilities to understand where we are going and what needs to be done to get there. However, the rules of complexity challenges this assumption.
Understanding reality often has assumed that most events follow a normal distribution, but this approach doesn’t capture the complexity of the real world. When we consider the impact of outliers, we often see a Pareto distribution emerge, where fewer outlier events have a disproportionate impact on the system as a whole. We also now understand that the whole is not defined by the sum of its parts but by the interactions of its parts. Interacting with a problem will inevitably change the nature of that problem. A consequence of this is that the symmetry between risk and reward needs to be reviewed since uncertainty is in its nature asymmetric.
Many frameworks have emerged to help us think about complexity. Dave Snowden’s Cynefin framework emphasises the importance of understanding the nature of the problem before deciding on an approach. Didier Sornette’s concept of Dragon Kings highlights the potential impact of rare and extreme events that can disrupt traditional ways of understanding and managing our world. Nassim Taleb’s “The Black Swan” emphasises the importance of understanding the impact of outliers. Taleb also proposes the concept of “antifragility,” which refers to systems that not only withstand shocks but also thrive on them. And there are many many more.
While these frameworks have value, they also require a high level of intellectual understanding and might not be suitable to communicate to everyone. In more practical terms, embracing complexity requires a fundamental mindset shift. Instead of assuming that ordered systems are the norm and preferable, we must recognise that events emerging from complexity are the origin of positive outcomes. Rather than trying to remove uncertainty with prediction models or blaming unintended outcomes on incompetence, we should modify our strategic playbook to build systems that become stronger in uncertainty and switch to more explorative methods and exploiting positive outcomes whenever possible.
Given the limitations of traditional approaches and the intellectual density of current available models on complexity, I propose that as a rule of thumb it is increasingly preferable to work from the assumption that we are always in a complex state and therefore better off acting as if we were. This means recognising that the relationships between cause and effect are often unclear, emergent behaviour is common, and rare and extreme events can have significant impact.
When we earlier talked about a Normal state and later a new normal and quite recently even a new new normal. Maybe it is time to recognise that we now are (and really always have been) in a no-normal state. Understanding and managing complexity has become increasingly important, simply because we now realise that the unfolding of reality behaves in complex ways. Our traditional approaches to strategy and management are no longer sufficient in the face of the unpredictable and emergent behaviours of complex systems. Dealing with complexity requires a fundamental shift in mindset, away from the idea that we can predict and control the world, and towards the idea that we must adapt and respond to the world as it unfolds. By recognizing the limits of our knowledge and embracing uncertainty, we can build systems and strategies that are better equipped to thrive in complex environments.
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