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C l i e n t R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t I T D i r e c t o r C o m m e r c i a l D i r ec t o r S e c u r i t y G u a r d C l i e n t R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t I T D i r e c t o r C o m m e r c i a l D i r ec t o r C l i e n t R e l a t i o n s R e c e p t i o n i s t I T D i r e c t o r C o m m e r c i a l D i r ec t o r C l i e n t R e l a t i o n s I T D i r e c t o r C o m m e r c i a l D i r ec t o r S e c u r i t y G u a r d n t R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t I T D i r e c t o r C o m m e r c i a l D i r ec t o r d P e r s o n a l A s s i s t a n t A c c o u n t a n t e c e p t i o n i s t I T D i r e c t o r g e r a d o f D i g i t a l c t o r a l i t y C o n t r o l S a l e s A s s i s t a n t S t r a t e g i s t S e c u r i t y G u a r d C l i e n t R e l a t i o n s P u b l i c R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t A cc o u n t M a n a g e r C o m m e r c i a l D i r ec t o r S e c u r i t y G u a r d S a l e s A s s i s t a n t S t r a t e g i s t S e c u r i t y G u a r d P e r s o n a l A s s i s t a n t A c c o u n t a n t C l i e n t R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t I T D i r e c t o r O p e r a t i o n s M a n a g e r A cc o u n t M a n a g e r H e a d o f D i g i t a l C o m m e r c i a l D i r ec t o r Q u a l i t y C o n t r o l S a l e s A s s i s t a n t S t r a t e g i s t S e c u r i t y G u a r d P e r s o n a l A s s i s t a n t C l i e n t R e l a t i o n s P u b l i c R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t I T D i r e c t o r A cc o u n t M a n a g e r C o m m e r c i a l D i r ec t o r S a l e s A s s i s t a n t S t r a t e g i s S e c u r i t y G u C l i e n t R e l a t i o n s M a r k e t i n g E x e c u t i v e O p e r a t i o n s M a A cc o u n t M a n a g e r H C o m m e r c i a l D S a l e s A s s i s t a n t S t r a t e g i s P u b o n s O S a l e s A s s i s t a n t S t r a t e g i s t P e r s s t a n t P u b o n s O e r Q u a l i t y C o n t r o l S a l e s A s s i s t a n t S t r a t e g i s t P e r s s t a n t P u b o n s O e r Q u a l i t y C o n t r o l S a l e s A s s i s t a n t S t r a t e g i s t P e r s s t a n t P u b o n s O e r Q u a l i t y C o n t r o l S a l e s A s s i s t a n t S t r a t e g i s t P e r s s t a n t P u b o n s O e r Q u a l i t y C o n t r o l P e r s s t a n t e r a l i t y C o n t r o l P S a l e s A s s i s t a n t S t r a t e g i s t S e c u r i t y G u a r d P e r s o n a l A s s i s t a n t A c c o u n t a C l i e n t R e l a t i o n s P u b l i c R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t I T D i r e c t o r O p e r a t i o n s M a n a g e r A cc o u n t M a n a g e r H e a d o f D i g i t a l C o m m e r c i a l D i r ec t o r Q u a l i t y C o n t r o l S a l e s A s s i s t a n t S t r a t e g i s t S e c u r i t y G u a r d P e r s o n a l A s s i s t a n t A c c o u n t a n t C l i e n t R e l a t i o n s P u b l i c R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t I T D i r e c t o r O p e r a t i o n s M a n a g e r A cc o u n t M a n a g e r H e a d o f D i g i t a l C o m m e r c i a l D i r ec t o r Q u a l i t y C o n t r o l S a l e s A s s i s t a n t S t r a t e g i s t S e c u r i t y G u a r d P e r s o n a l A s s i s t a n t A c c o u n t a n t C l i e n t R e l a t i o n s P u b l i c R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t I T D i r e c t o r O p e r a t i o n s M a n a g e r A cc o u n t M a n a g e r H e a d o f D i g i t a l C o m m e r c i a l D i r ec t o r Q u a l i t y C o n t r o l S a l e s A s s i s t a n t S e c u r i t y G u a r d P e r s o n a l A s s i s t a n t A c c o u n t a n t C l i e n t R e l a t i o n s P u b l i c R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t I T D i r e c t o r O p e r a t i o n s M a n a g e r A cc o u n t M a n a g e r H e a d o f D i g i t a l C o m m e r c i a l D i r ec t o r Q u a l i t y C o n t r o l S a l e s A s s i s t a n t S t r a t e g i s t S e c u r i t y G u a r d P e r s o n a l A s s i s t a n t A c c o u n t a n t n t R e l a t i o n s l i c R e l a t i o n s M a r k e t i n g E x e c u t i v e R e c e p t i o n i s t I T D i r e c t o r O p e r a t i o n s M a n a g e r A cc o u n t M a n a g e r H e a d o f D i g i t a l C o m m e r c i a l D i r ec t o r Q u a l i t y C o n t r o l CEO At the heart of organisational complexity is the battle between emergence and entropy. Julian Birkinshaw charts the best way forward. Are you managing complexity?

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Page 1: Managing Complexity | London Business School

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At the heart of organisational complexity is the battle between emergence and entropy.

Julian Birkinshaw charts the best way forward.

Are you managingcomplexity?

Page 2: Managing Complexity | London Business School

Are you managing complexity?

What is complexity?

It is easy to label big companies as overly complex. But what does this mean in practice?

When a small business receives payment for consulting work for a big “megafirm”, and it takes more than a year and a half to be paid, that’s complexity.

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Page 3: Managing Complexity | London Business School

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Are you managing complexity?

When companies become too complex to manage, they create costs for others.

Complexity is a double-edged sword. It is never easy separating out the complexity we value from the complexity we need to cut back on.

Two faced complexity

complexity

Page 4: Managing Complexity | London Business School

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Inventing complexity

There are three processes underway that collectively determine the level of complexity experienced by people in the organisation.

Are you managing complexity?

Page 5: Managing Complexity | London Business School

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Are you managing complexity?

The allocation of roles and responsibilities through some sort of top-down master plan.

Design process 1A

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Page 6: Managing Complexity | London Business School

Are you managing complexity?

A bottom-up form of spontaneous interaction between well-intentioned individuals – known as self-organising. Under the right conditions, individual employees will come together to create effective action. The role of the leader is to foster ‘emergent’ order.

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Emergent process 2

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Page 7: Managing Complexity | London Business School

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Are you managing complexity?

The gradual trending of an organisational system towards disorder. Most companies are only semi-open to outside influences. The second law of thermodynamics comes into effect: a closed system will gradually move towards a state of maximum disorder – that is entropy.

Entropic process 3entropy

Page 8: Managing Complexity | London Business School

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Are you managing complexity?

As organisations grow larger they become insular and complacent. Inefficiencies and duplications creep in. Employees become detached and disengaged. The organisation becomes aimless and inert.

The problem with entropyA

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Page 9: Managing Complexity | London Business School

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Are you managing complexity?

More and more the leader’s job is to manage the social forces in the organisation. This can take very different forms.

So what can we do differently?

Page 10: Managing Complexity | London Business School

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Are you managing complexity?

This is the equivalent of tidying your teenager’s room. It involves taking out layers of management, getting rid of old bureaucratic processes that are no longer fit for purpose, or replacing the old IT system.

Keeping entropy at bay 1

Page 11: Managing Complexity | London Business School

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Are you managing complexity?

This is the equivalent of giving a bunch of bored teenagers a bat and ball to play with. It is about providing employees with a clear and compelling reason to work together to achieve some sort of worthwhile objective.

Inspiring emergent action 2

Page 12: Managing Complexity | London Business School

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Are you managing complexity?

Leaders have to continually look for ways of bringing new perspectives into their company, and exposing internally focused procedures to external scrutiny.

Keep the company open and transparent 3

Page 13: Managing Complexity | London Business School

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Are you managing complexity?

1.The art of managing complexity

It has to be tackled in a thoughtful and holistic way. Leaders need to think about both faces of complexity – the costs and the benefits.

Page 14: Managing Complexity | London Business School

Julian Birkinshaw ([email protected]) is Professor of Strategy and Entrepreneurship at London Business School and the author of Becoming a Better Boss (Jossey Bass, 2013).

The full article was published in London Business School Review Volume 26, Issue 3 2015.

Visit the website: www.london.edu/lbsr


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