Organizations as complex systems:
Why organizations must understand and know how to respond to complexity.
What would be an organization?
According to Mary Jo Hatch (2011), in her book “Organizations: A Very Short Introduction”, an organization exists when people decide to work together to achieve any desired goal. This can happen through intentionally designed activity, spontaneous improvisation, or even a kind of combination of both. Either way, its success always depends on a coordinated effort. She says that there are two different ways of visualizing the organization, portraying included characteristics, either looking at, for example, the organization’s building and its landscape, or visualizing the organization’s chart, including its people and the relationship between them. The only thing we can say is that there is not one way that is simply better than the other.
William Richard Scott (2003) states that organizations play an important role in the modern world. Still, he claims that all sectors of contemporary social life can be affected by these organizations. However, organizations were present in older civilizations such as the Greek, Indian and Chinese, but only now in modern, industrialized and connected society we see many organizations engaged in carrying out many and diverse tasks.
Despite his studies dating back to the last century, the logic used by Scott is still very valid. In his book “Organizations: Rational, Natural, and Open Systems” he provides a coherent introduction to the sociological study of organizations. Rather than presenting a single definition of organization, it outlines core elements that include social structure, participants, goals, technology, and environment. It can be said that a broad definition of organization is any intentional arrangement of social activity that implies control over human relations ordered for private ends. This social activity can be presented in systems perspectives:
Organizations as “Rational”, “Natural” or “Open” systems.
To distinguish one phenomenon from another, most definitions of organizations emphasize the distinguishing characteristics of organizations, the phenomenon that distinguishes them from related social forms. Whenever we see the organization as “Rational Systems”, i.e., with a focus on scientific management, it is possible to understand that organizations are collectivities that present a high degree of formalization due to the cooperation between their participants (Scott, 2003).
However, this view goes against what Alvin Ward Gouldner (1959) defended in his book “Patterns of Industrial Bureaucracy”, which stated that evaluating the differences from one organization to another through the simple distinction of the characteristics of a phenomenon may not show the totality of what really characterizes it and, to make matters worse, these may not be the most important ones. Thus, organizations as “Natural Systems” focus attention on the behavioral structure that produces a very different view of organizations, since the pursued objective becomes more complex, diffuse and subject to change. With this view, according to Scott (2003), participants — like employees — seem to be motivated by their own interests and seek to impose them on the organization in which they work, resulting in a rather chaotic relationship.
Even the definition of organizations — “Rational” and “Natural” Systems — being very different from each other, both tend to see the organization as a Closed System, separated from its environment, encompassing a set of stable and easily identifiable participants. However, we can state with some security that Organizations are not Closed Systems, watertight and without borders with the environments of which they are a part, but rather open ones. From an open perspective, connections to external elements can be more critical than those between internal components, and this happens for several reasons. However, according to Scott (2003), each perspective agrees that an organization needs to induce a variety of participants to contribute their time and energy to survive.
Still on how to look at an organization, the authors Terrence Deal and Lee Bolman (2008) state in their book “Reframing Organizations: Artistry, Choice, and Leadership” that there is a different way of looking at the organization through the eyes of the leaders. They argue that leaders must look at and approach organizational issues from four different perspectives:
Structural, Human Resources, Political and Symbolic Perspectives.
The author’s idea is not to restrict the leader or anyone who wants to evaluate a certain organization with only one perspective. Leaders need to make their own judgment about the most appropriate behavior according to the moment and/or the organization, generating greater responsiveness in their analysis. However, it is important to point out that what has been brought up here is only a fraction of the different ways of seeing organizations. Could we therefore say that the fact that there are many perspectives on the same object (organizations) makes it something complex?
According to Keneth Boulding (1956), Organizations are at level 8 on his 9-level scale of systems complexity. Thus, he concluded that the organization is among the most complex systems imaginable. We will talk about “responsiveness” and “adaptability” of organizations in more depth in other articles, but considering everything that has been said so far, it can be said that Ralph Stacey’s view (1996), that Organizations are Complexes Adaptive Systems, seems to be quite acceptable. Still, Stacey states that using this feature, it is possible to design them to generate good results.
Now, how do we understand and confirm how complex an organization can be? According to David Snowden and Mary Boone (2007) an organization is surrounded by four different market conditions — and/or any other important “driver” — characterized as Simple, Complicated, Complex and Chaotic, and which require their own tactics, timing and expectations (see fig. 1)
According to the authors, the main difference between the right and left side of fig. 1 is that in the first one it is possible to reuse a solution from a different context to a new one using the best — and good — practices. However, in the left side — Complex and Chaotic — no previous solution could be used, at least without any adaptations, due to differences in context regarding the many different factors involved.
After this basic explanation about organizations and the justification for its complexity, we can say “YES”, organizations that seek competitive advantage should be considered a complex system, regardless of the market in which they are inserted, as they have different actors and stakeholders — internal or external — that guarantee that the context will always change from time to time. However, how to deal with complexity is still a recent and very latent search, evidenced mainly by the phenomenon of the “creative economy” led by the creation of organizations such as startups, which produce knowledge-based services and not just physical consumer goods.
Soon we will talk a lot more about these organizations. Do you want to know a little more about complex systems, innovation, startups, creative economy, and other relevant and contemporary subjects with a knowledge-based vision to make you capable of doing your own analysis? So, give this a “like” and I promise this is just the first of many.
REFERENCES
Hatch, M. J. (2011). Orgnizations: a very short introduction Oxford: Oxford University Press, 2011. 156 pp. £7.99 (pbk). ISBN 9780199584536.
Gouldner, Alvin W. (1954) . Patterns of Industrial Bureaucracy. Glencoe, IL: Free Press. __ (1959) . “Organizational Analysis, “ in Sociology Today, 400–428, ed. Robert K Merton, Leonard Broom, and Leonard S. Cottrell, Jr. New York: Basic Books.
Snowden, D.J., Boone, M.E. (2007). “A leader’s framework for decision making”, Harvard Business Review, 85(11), pp. 68–76. [online] Available at: <http://hbr.org/2007/11/a-leaders-framework-for-decisionmaking/> [Accessed 25 July 2008]
Bolman L., G. and Deal T., E. (2008) — Reframing organizations, Artistry, Choice, and Leadership, THIRD EDITION
Scott W. R., J. (2003) — Organizations Rational, Natural, and Open Systems, Stanford University.
Boulding, K. E. General systems theory: The skeleton of a science. Management science, 1956, 2, 197–207.
