How Your Company Can Keep Up in a Complex World
One of the first business management consultants was Frederick Taylor. Taylor was an industrial-era management thinker who worked with factories to ensure maximum efficiency in their production processes. By assigning highly-specialized tasks to the employees in the factory, he managed to shave off significant amounts of time from overall production.
Taylor applied scientific principles to his observations about the production process. From those observations, he then wrote The Principles of Scientific Management, published in 1911. In the process, his ideas helped shape current management theory.
As managers, we are descendants of Taylor’s conceptual framework, which has been widely influential in management. We value productivity and efficiency and doing the most with the resources we have. However, Taylor was alive in a world very different from the one we inhabit today. The speed of communication and the interconnectedness of the world mean we can do more, but this also makes us more interdependent and therefore part of a complex web.
I work in a property management and development firm in Honduras called Celaque. For the first apartment building we developed, we selected a supplier for the countertops in our kitchens who had worked with a factory in Colombia for decades. This factory supplied them with the creamy white quartz countertops we used in our kitchens.
A few months before the end of the project, the factory went bankrupt. The event had nothing to do with us or with our selection of supplier and was wholly unexpected. It was out of our control, but it impacted us profoundly. We held weekly updates and meetings with the supplier to ensure we were responding to the problem as quickly as possible. The factory failure meant we had to order a replacement from a different factory in Spain and get the quartz shipped as soon as possible. After much back and forth, the kitchens were finally installed — three months later than scheduled.
Before modern communications and the Internet, it might have been hard to find a local supplier who could sell us quartz from a factory in Colombia. We might not have been able to negotiate the price with our supplier so that they, in turn, could negotiate with the factory to ensure we were able to afford the new countertops. We would not have received images of the available products and quotes on demand. At the same time, however, this advantage also makes us more vulnerable. The links between different parties across the world that now exist are nothing short of miraculous, but they are also more fragile because we all depend on each other. If one of the links in the chain breaks, the consequences are hard to foresee because of that interdependency.
The context around us now can be described as complex instead of complicated. A complicated environment may be difficult to understand, but it responds to cause and effect. An example of a complicated endeavor is designing a building. A team that includes architects, different engineers (civil, electrical, hydraulic, geotechnical, and structural), property managers, and finance experts, among others, come together to design a building. All this collaboration requires special knowledge and training, but with the proper education, the causes and effects are discernible, and a building’s design can be completed.
On the other hand, a complex environment is affected by many different factors. The housing market, for instance, depends on the individual actions of all its actors. They respond to each other and the actions of one move with the actions of the next actor, which makes it impossible to predict what the next move will be.
How do we deal with this complexity? Responding to it doesn’t mean we have to throw out the concept of efficiency. Our work is to do a combination of both: create strategies that are aimed at improving efficiency in the parts of our work that reside in the complicated context and create strategies whose goal is to respond to complexity. Some approaches for dealing with complexity include sharing information across the board and empowering the teams. Autonomous teams work best. Decentralizing as much as possible is a strategy that will help those who are encountering the context respond to it effectively.
First, we must recognize that the world around us has changed and is also constantly changing. The world’s evolution has many advantages, such as the ability for information to travel anywhere, but also numerous challenges, including its vulnerability. With that knowledge in hand, we can devise ways to respond to the world around us proactively.
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