During the last session of the 5th Global Peter Drucker Forum, Julian Birkinshaw looked at the two faces of complexity.
Julian Birkinshaw firstly described how difficult it is to find the person who is accountable in the company. Oftentimes companies are so complex that they outsource the problem to the client. This approach has led to a lack in accountability of companies to external parties.
Within complex organizations, executives are often tempted simplify, in order to reduce costs and create clarity. But often it is the organizations complexity that allows them to gain competitive advantage in the market. In the speaker’s opinion, on the one hand we need big companies to deal with big problems, yet on the other hand it is often the big companies that create complexity
Drawing on research Julian Birkinshaw came up with the theory of experienced complexity which shows how executives can harness the two faces of complexity to help them achieve their objectives.
How does complexity transpire?
- Complexity may transpire from the design process. As we already know about this, we adapt to it.
- Complexity may transpire from emergent complexity. We are easily seduced by this and business schools and consultants may add to this.
- Entropy- chaos will eventually come an example of this is a teenager’s bedroom.
Academics studying companies over the past 40 years have adopted companies as open systems; therefore, we assume that they are open. Is this really the case? It is a bit of both, companies can be open, but they can also be very closed.
The role of the leader is to adopt selective interventions in order to narrow things down. The leader must also keep entropy at bay for example, give your children the possibility to tidy things up. The same principle applies in the company. Finally, leaders should foster emergent order which will enable people to collaborate in a coherent way. In order to achieve this, leaders need to create a more open system.
Value is created on the front line and leaders should think about doing less rather than more. If we get rid of all the control, we will end up like Enron that had no controls on its workforce.
Access all GlobalEd conference articles here.
Professor of Strategy and Entrepreneurship, London Business School
Julian Birkinshaw is Professor and Chair of Strategy and Entrepreneurship at the London Business School, and the former Dean of Programmes. He has written twelve books, the most recent being “Reinventing Management” which has been called a “must read for any manager who wants to make their organisation fit for the future.” His next book, “Becoming a Better Boss” will be published later this year. He has also published more than 80 papers in such journals as Harvard Business Review, Sloan Management Review, McKinsey Quarterly, Strategic Management Journal and Academy of Management Journal. He has PhD and MBA degrees in Business from the Richard Ivey School of Business, University of Western Ontario, and a BSc (Hons) from the University of Durham. He was made a Fellow of the British Academy in 2012, and awarded an Honorary Doctorate by the Stockholm School of Economics in 2009. Julian’s main area of expertise is in the strategy and management of large multinational corporations, and on such specific issues as corporate entrepreneurship, innovation, subsidiary-headquarters relationship, knowledge management, network organisations, and global customer management.