Is it us creating (enterprise) complexity?

Without substantive governance agility has no value

Written by Hans van Bommel and Bard Papegaaij regarding 'Cycle to Accelerate' on the 20th of January 2022

Organisations are complex entities. One part of this complexity is a necessary consequence of and requirement for the way organisations exist and operate in this complex, unpredictable world of ours. Let's call this 'requisite complexity' or 'organic complexity'. But there is also a considerable level of unnecessary, counterproductive complexity in our organisations. Let's call this 'unnecessary complexity' or 'gratuitous complexity'.

Gratuitous complexity causes many of our enterprises to be unpredictable in delivering impact when planned for and quite fragile when forced to respond quickly to forces outside their direct control. The main reason for this type of complexity is a lack of understanding and wisdom at middle and top management about their own enterprise substance and how it is constructed and produced.

Enterprise substance consists of the products delivered to your customer base and the operational assets required to produce them via business capabilities. Enterprise products (= services) are constantly undergoing state changes and enterprises need to constantly adapt to the interval of state changes related to production activities. Common state changes - besides the product being constructed correctly and running as planned - are: Product Improvement, Product Innovation, Product Creation, Product Deletion, Product Technology Refresh or Product Infrastructure Refresh. 

What is needed to deal with these dynamics effectively is essential knowledge about product construction and production activities, something which can only be gained and understood by practicing it yourself for at least 5 to 10 years. In addition, we need deep understanding of and experience with five essential transformation capabilities needed to deliver these state changes as a continuum. Only a constantly learning enterprise, with these transformation capabilities deeply embedded in the enterprise, evolving and aligned with the competences evolving in their workforce, can hope to stay on top of their game. 

These capabilities are:

Collaboration: The human factors needed for enabling and facilitating the necessary social innovation and transformation in your enterprise.

Governance: The enablers and constraints necessary to create organisational flow and supporting work structures.

IT Production: A process based on architectural thinking throughout the complete life cycle of your IT landscape, designed to continuously deliver business impact.

Technology: Technology designed to adapt to changing requirements whilst managing transience.

Infrastructure: An infrastructure that supports operational excellence.

None of these capabilities have value without all of the others. Together these capabilities are needed to be able to deliver high performance required to thrive.

Failure to understand these production activities, how they relate to the five essential transformation capabilities, their logical order and the context in which they take place, often leads to the creation of unnecessary high dependencies inside the fabric of our organisations. These high dependencies become obstacles to further change and create fracture points that fail when closely coupled elements need to move at different speeds or in different directions.

To realise state changes of our essential enterprise substance without tangling things up into a big ball of over-complicated dependencies requires substantive governance: the wisdom about the construction and production of products to be delivered, along with the knowledge and understanding of how the information that flows within the enterprise interacts and influences our substance. 

Enterprise Flow occurs when an enterprise experiences High Performance - doing the right things right - while feeling so relaxed it doesn't feel like an extraordinary effort at all. Flow gives the feeling of being able to achieve even more, without the pressure of needing to do so. An enterprise in Flow experiences High Performance as a healthy, sustainable state, rather than a forced effort causing burnout and depletion of energy and resilience. This creates the space to focus on positive things instead: strengthening social connections; exploring, experimenting and innovating; reflecting and learning.

The context within which a product is produced can always be defined as a strict production system. There is a logical order of activities to be conducted and necessary constraints to deal with. We design, gather materials such as selecting a set of programming languages, produce sub components and assemble the end product, whether it is physical or virtual. Ignoring the logical order or misunderstanding the dependencies between activities and constraints puts a strain on the enterprise's ability to keep changing as needed. Creating unnecessary high dependent activities in and around the product state changes creates friction and overhead within the production system. Attempts to manage these symptoms of unnecessary high dependency, rather than the dependencies themselves, causes more complexity to be added. As a result, the more the enterprise tries to get their change processes under control, the harder it becomes to actually change. 

Since enterprises usually deliver more than one product, scale and diversity come into play as well. When cross-product and cross-capability dependencies are added to the mix, gratuitous complexity accumulates as well. Management methodologies are poorly equipped to deal with these construction dependencies. Instead, this issue should be addressed as an enterprise design issue. Trying to 'manage' one's way out of gratuitous complexity disrupts the production systems even more, leading to a strong urge to add more management, which complicates things even further, leading to more management effort being added, in a forward-feeding cycle of complexification. Gratuitous complexity caused by misguided management efforts cannot be 'managed' away. The only way out of this kind of complexity is to tackle it with simplicity: less management overhead, less dependencies, less entanglement of mutually contradictory constraints.

Fighting complexity with gratuitous complexity only leads to more gratuitous complexity, disrupting, stifling and often breaking the organic complexity needed to keep an enterprise resilient and adaptive.

Managing 'at scale' in an organisation riddled with gratuitous complexity is almost impossible. The overhead in dependent elements and activities prevent oversight and blocks insight. Without oversight a sense of panic quickly sets in, leading to reactive, defensive behaviours, such as worrying about cash-flow and consolidating the status quo. Lacking insight, the experts and advisors are invited in, in the hope they will bring salvation. With few exceptions, these experts tend to come up with a narrative about best practices, standardisation and ever more levels of control. Adopting 'best practices' - practices that may have served other enterprises but seldom transfer well - or following the latest hypes - that seldom live longer than half a decade - just adds more complexity to an already overloaded enterprise. Combined with the mounting pressures of a changing environment, the result is enterprise chaos.

Trying to fix the 'mess' without understanding the substance and essence of the enterprise's production system is doomed to fail. What is needed is a deep understanding of how the enterprise's substance should be moved forward in a continuum. Sustainable growth is based on an evolutionary approach: adding small new activities to see what happens; making small mistakes to produce short learning cycles; moving forward under the guidance of an overall direction and purpose.

So, yes, we are the creators of a lot of unnecessary, gratuitous complexity around us. But we don't have to be. We can go back to the essence of our core production systems and move forward from there. Growing our understanding as we are growing our systems, constantly observing, constantly learning, increasing our ability to pick up the weak signals and early warning so we can course-correct in time and in small doses instead of massively overreact after the fact.