Advantages And Challenges Of ExportingBy Tekle S.
7%-38%-55% Communications MythBy Robert P.
Top 10 Big Mistakes Of Big BusinessBy Francis T.
Climate Change Is Real! Act Now!By Kathrin G.
Improving The Quality Of Decision MakingBy Niladri R.
Advantages And Challenges Of ExportingBy Tekle S.
Top 10 Big Mistakes Of Big BusinessBy Francis T.
Best Practice Benchmarking - The Path To ExcellenceBy Robert C C.
What Is A Healthy Company?By Raymond H.
Challenges And Opportunities In The New EconomyBy Alkistis A.
Also Interesting ...
Managing Bad Debt - Importance Of Good Collection SkillsBy GERARD A.
From Corporate Survival To Corporate Success: The Name Of The New Economic GameBy Anne T.
A Different Kind Of Smart Is Changing The World Of BusinessBy David L.
Dressing For SuccessBy Frank F.
How To Unleash Your Creative PotentialBy Mubeena M.
Management -The Handling Of Complexity
Complexity has been one of the most frequently used words for some years now. People talk about complex systems, complex interrelationships, complex problems etc. There is hardly a presentation or discussion among executives without some reference to complexity - for instance, the complexity of markets, products and processes.
Most people have more of an intuitive understanding of complexity. They associate it with something difficult, incomprehensible and inscrutable; in everyday life this intuitive understanding may be adequate. Yet in relation to management it is useful and, for senior management tasks, necessary to have more precise knowledge of complexity.
In a certain sense, management can almost be defined as the art of dealing successfully with complex systems, for example steering them in a desired direction and influencing their behaviour in order to achieve particular objectives. It can also be said that management means bringing a system under control and keeping it under control.
Simple systems pose no great problems in terms of their governance, regulation and handling - in short, their control. Serious problems occur - and relentlessly at that - when a system is complex.
What really needs to be brought under control is in truth not the system, as it is known for short; strictly speaking it is the complexity of the system. So the crucial questions of cybernetics are of the following kind: how can the complexity of a system be brought under control? How can a system be controlled and regulated if it is complex? How must the structure or architecture of a system be configured so that its complexity can be brought under control in the first place?
Yet that is only half of what makes cybernetics interesting and complexity important. The other half is associated with the realisation that simple systems cannot have certain very desirable abilities in the first place. As the biologist and geneticist, Karsten, aptly said: "greater abilities grow only from increased complexity."
This factor is frequently overlooked. In numerous relevant books one can find passages, the gist of which is that one would need to reduce the complexity of a system in order to bring it under control. That is only half of the truth. What is seldom mentioned is that, by doing so, one risks destroying the system itself, as well as its main features and abilities. For example, if an organism is to be able to learn in a more exacting and demanding sense, it must exhibit a minimal amount of complexity. Below a certain threshold, learning is not possible. The same applies to perception, communication and, for example, the capacities for thought and consciousness.
The greatest flaw in management literature, management training and the understanding of management is the reductionism to be found almost everywhere. However - the more complex a system is, the broader its behavioural spectrum becomes, while it can also react in a fundamentally more varied way to environmental changes in the market, at client companies and suppliers, those affecting competitors and in the political field etc. At the same time, though, it becomes that much more difficult and demanding to keep the system under control and to ensure that, of the large number of actions (or conditions) possible in principle, a correct one or even the best one is put into practice.
The game of chess is a good illustration of this; at the beginning and the end of a game, the number of moves is clearly limited. While the game is in full swing, however, each of the two players has a very large number of options for responding to their opponent's moves. This makes the game interesting one the one hand; no two games of chess go the same way, as we know. Yet it also makes the game difficult and demanding.
The game of chess nonetheless has the great advantage that the player can see his opponent?s moves. The game as a whole is completely transparent to both players; each can observe everything that occurs on the board. The pieces are well-known and their behavioural options - i.e. their specific variety of moves - are defined by unequivocal and unalterable rules. Although this means that the variety of moves for each piece is quite small - the pawns have the smallest, the queen the greatest -, the game of chess as a whole and as a system is hugely varied. The number of possible moves in the game of chess is 10^155. By way of comparison; the number of stars in our milky way is estimated at 10^11.
Management - control of high-variety systems
The economy and business are comparable with chess only under certain conditions, however. There is much talk today of "players" and the "rules of the game", but the analogy does not stretch far enough. There are substantial differences between chess and management. In the economy, neither the pieces nor the rules are defined. Both can change at any time and they do so - though generally one is not sufficiently aware of it.
The current state of the "game", which player has made which move and what significance and effect the move has etc., tends to be impossible to establish beyond doubt, even with the best market research. One must almost always operate with probabilities and presumptions. Often it is not even clear what "game" is being played. Much the same is true of the company itself, where - with the exception of the very simplest cases - it is also quite difficult to determine its state with sufficient precision and adequate speed.
One cannot often be sure what next state it will move towards when exposed to all the factors; most information is about probabilities, much is uncertain, everything is in constant flux and the variety of behaviour for each individual "piece" is not only much broader than in chess but utterly impossible to define precisely.
It is therefore no exaggeration to say that even small companies have systems that include astronomical amounts of variety - high-variety systems, as they are known in technical terminology. So the crucial question of management is: how can a high-variety system be brought under control? This is precisely what makes Stafford Beer's statement so important: "If cybernetics is the science of control, management is the profession of control - in a certain type of system." Viewed in terms of the complexity of systems, every manager is thus a cyberneticist - a "kybernetes" or steersman - whether they like it or not and whether they know it or not.
It is the astronomically large number of possible conditions that complex systems can in principle generate which makes controlling and regulating them a problem. How does nature solve this problem? Who or what governs, regulates and controls their complex systems? As banal as it is in one respect, it is equally remarkable in another: natural systems have no regulators but regulate themselves; they have no organisers but organise themselves. Two of the main cybernetic principles of nature are self-regulation and self-organisation.
In the systems of nature, self-regulation and self-organisation are abilities that are built into their structure. There are no natural systems of any other kind. In the systems made by humans, whether these are technical or social systems or hybrids, self-regulation and self-organisation do not generally occur by themselves; in fact they must be specifically "organised into" the systems. Their design must be consciously and systematically based on the functional principles of cybernetics. In so far as that is the case, one talks about system design. The basic pattern for the strategy of cybernetic management is thus: organise the company so that it can organise itself and regulate itself to the greatest possible extent.
The law of requisite variety
The last idea leads directly to the central natural law that was discovered in cybernetics, the law of requisite variety. It was discovered by the British neurophysiologist and cyberneticist, W. Ross Ashby, another of the great pioneers. It is occasionally referred to in the literature as "Ashby's Law" after him.
A slight modification makes it easier to understand: only variety can absorb variety. How is that to be understood? The extent to which it is possible to bring a system under control depends on its own complexity and the complexity of the means of regulation that one has at one?s disposal.
Simple systems can be brought under control by simple means. Complex systems require complex means. In order to bring a system under control, one needs at least as much variety (or complexity) as the system itself has. If - for whatever reasons - one has a deficiency of variety, the system is out of control to that precise extent. For example, one cannot generate three responses from a device using two commands.
With a vocabulary of three thousand words, Shakespeare cannot be translated into German; those who do not have a considerably large repertoire of behaviour can hardly manage a complex company. A football team must be at least as good as the opposing side if it is to have a chance of winning. The same applies to armies, chess players and competing companies. Banal? Perhaps. Just as banal as objects falling under the influence of gravity. On an intellectual level it is perhaps banal, though it is the key to success if one wants to survive in a competitive economy.
The widespread slogan, "Keep it simple", is therefore clearly - though only in a narrow sense - justified. If one succeeds in keeping things simple, the controlling and regulating mechanisms can also be simple. On the other hand, simple systems never have greater abilities - as mentioned before, this is the downside. If the environment is complex and if customers become ever more demanding and competitors perpetually improve, then the company must also be in a position to develop adequate complexity in order to respond correctly.
So "keep it simple" is only half of the truth, although it is effective where it is applicable. "Learn to cope with complexity" is the other half of the truth. The better one can cope with complexity, the better one can assert oneself in an ever more complex world.
What's your opinion?
54 more Articles by Albert
17 min. Over the next two decades, the country's middle class will grow from about 5 percent of the population to more than 40 percent and create the world's fifth-largest consumer market.
13 min. Talent can be bought, but the best companies develop their own.
8 min. Gen X-ers want far more collaboration with companies - both as customers and as employees. CIOs are uniquely positioned to help their enterprises meet ...
4 min. The proliferation of brands and channels is forcing companies to restructure their marketing efforts significantly.
11 min. Reasons Why You Should Speak at and Attend Professional Seminars
POP19 min. Eight emerging trends are transforming many markets and businesses. Executives should learn to shape the outcome rather than just react to it.
POP4 min. Recently, I came across a code of ethics for hackers (yes, it really does exist) that I'd like to share with you, because I think it really hits home with ...
7 min. Sometimes we can all use a friendly reminder to keep us from backsliding into old ways of thinking about selling that lead us down the wrong path with potential clients.
8 min. Foresee the future, that's what your customers expect, that's what you need to deliver.
6 min. Trying to perfect a flawless presentation can result in disaster...
4 min. How do you know if the speaker fits? How do you avoid embarrassing mismatches?
7 min. In 15 seconds, a visitor to your site determines whether or not they are interested in your product or service. Web usability experts can provide all sorts ...
3 min. The aim of this guide is to prepare you for discussions with a bureau, and to get you thinking about all the factors that affect your Facilitator choice.
13 min. Everything that we do for our clients is based on the idea that improved communications will improve an organisation's performance and contribute to the ...
POP18 min. Looking for inspired leadership, passionate employees, unsurpassed productivity, and grateful customers? Forget the dispirited corridors of corporate ...
17 min. How leading-edge companies are streamlining applications development.
9 min. The success of strategic investments depends largely on the subsequent moves of competitors. Uncertainty about competitive conduct can lead executives ...
13 min. Of all the findings on business strategy yielded by the study of the businesses in the PIMS? database, the following is one of the most controversial: ...
13 min. Employees' personal connections can be as valuable as their individual knowledge base. Social network analysis, or SNA, helps maximize a company's collective smarts.
POP10 min. To get beyond survival and to grow both profits and margins, the successful companies of the future will be forced to become true customer experts.
6 min. Once companies reach a certain size, setting realistic performance aspirations gets a bit trickier.
11 min. Lean Thinking is a highly evolved method of managing an organization to improve the productivity, efficiency and quality of its products or services. The ...
6 min. Valuable insights on using your speaker to maximise the success of your event
28 min. Surprisingly, many organizations lack a proper succession plan. One reason is that they do not have an effective succession planning process. This author ...
16 min. Services are more difficult to measure and monitor than manufacturing processes are but executives can rein in variance and boost productivity - if they implement rigorous metrics.
15 min. Operational risks are costly, but they can be conquered when high-ranking executives join the battle.
12 min. Companies that rely on IT governance systems alone will come up short.
POP6 min. Two of today's buzzwords are Team and Teamwork. Those with a particular desire to conform to the spirit of the age portray them as the polar opposite of ...
5 min. Improving the customer-centricity of your organization isn't just good business, it's also good marketing.
9 min. The global talent war has seen organisational leaders scratching their heads to understand how they can attract and retain the very best talent that is ...
4 min. US Recruiting, Retaining & Developing Talent Statistics & Best Practises
20 min. What is success, what is failure, and how can you improve your odds for success?
3 min. Over the last two years of working with hundreds of clients from all walks of life, I have noticed trends of what my clients want and need. This top ten ...
15 min. By building social issues into strategy, big companies can recast the debate about their role in society.
15 min. The CEO helps a transformation succeed by communicating its significance, modeling the desired changes, building a strong top team, and getting personally involved.
14 min. Newspapers have tried a host of measures to halt the long-term decline in their readership, but they haven't stopped consumers from turning to TV and the ...
5 min. Should work be fun? Must it be fun? Today, the answer to these questions is mostly yes. What else should it be? Yet however plausible this answer might ...
12 min. Value created by knowledge is often not captured. Five accounts of knowledge strategies.
4 min. Few companies have the skills to effectively manage procurement across all spending categories. Smart enterprises should examine their procure-ment strategies ...
15 min. Further reform will be essential if one of the world?s fastest-growing regions is to seize a broader role in the global economy
8 min. Organic search engine optimization has some distinct advantages over pay-per-click advertising. However, there are undoubtedly certain situations and scenarios ...
16 min. For GCC states, liberalizing the labor market and developing the local workforce are the keys to moving beyond a reliance on foreign workers.
31 min. There appears to be plenty of room for much greater effort and involvement by companies and organizations around the world. Here a few thoughts and pointers.
4 min. "Size is no guarantee of future success." What is strategically important is strength not size. Speed is more important than physical mass and flexibility ...
21 min. Are you on board with enterprise risk management? You had better be. It's the future of how businesses will be run.
POP19 min. The art of leading deep corporate change can be learned. The trick is to help each member of the company discover a new reality...
15 min. Five easy-to-use tools help negotiators in complex deals arrive at a negotiating position that is not only acceptable to them but also palatable to other ...
POP11 min. Somewhere in Corporate America, a human resources manager is tweaking her company's employee-incentive program. Maybe she's dumping last year's customized ...
17 min. An organization is much more likely to improve its current performance and underlying health by using a combination of complementary practices rather than ...
11 min. Growth is necessary, but size is no guarantee of a successful future! Nevertheless, growth is needed. Without growth there is no life. In a certain sense, ...
8 min. Companies based in the GCC states are using their petrodollars to expand into global markets. But in the long run, these companies will have to develop distinctive capabilities and skills.
6 min. Plenty are the professionals who are on the "front lines" of the industry, knowledgeable of the countless changes, and who are willing and able to speak ...