Managing with complexity: a pragmatic and ethical imperative

By Professor Hamid Bouchikhi, ESSEC Business School

A leader’s role is to make decisions, often in a hurry and on the basis of partial or more or less reliable information. Generally speaking, business leaders feel more comfortable about their decision-making when they focus on a small number of variables and rely on assumptions of simple relationships between causes and effects.

When a leader delegates a problem to an employee or a consultant, he expects in return a relatively simple representation of the problem and its resolution, as well as a straightforward recommendation for implementing the solution.

Indeed, the vast majority of business leaders today rely on simplified representations of the world to make their decisions and have a negative, wrong, view of complexity. As long as they can afford to ignore complexity, why should they do otherwise? In reality, business leaders should be breaking out of their comfort zone and embracing complexity – and here’s why: ignoring complexity often comes with a high cost.

For illustration purposes, let’s take the classic example of a restructuring plan. Business leaders usually assume a simple linear relationship between spending cuts, lay-offs, and improved profitability. In fact, restructuring announcements for listed firms can even prompt a jolt in stock price. Weeks or months later, however, the implementation of the restructuring plan might raise unexpected questions. Workers and their representatives might occupy the plant and, in some parts of the world, sequester executives. The plant closure might bankrupt small local shop owners. ‘Voluntary’ departures of redundant staff may ultimately end up encouraging the most talented people– those who would have no trouble finding work elsewhere – to move on and leave less effective staff behind. We could go on describing the multitude of unforeseen consequences that can result from a ‘simplistic’ restructuring plan. The conclusion is already clear: the costs of not taking complexity into account occur far enough down the line and those who make decisions are often not the ones who bear the brunt of its effects.

In brief, decision-makers should take complexity into account upstream, in order to ensure better results downstream. This means comprehensively mapping out the problem so that decisions can be made with full knowledge of the facts. While it is unrealistic to think it will always be possible to make the perfect decision that will balance contradictory interests, looking at problems in all their complexity will minimize the counter-productive consequences of decisions and help generate gains for all stakeholders or, at least, minimize losses for some.

In other words, just because the perfect decision is an ‘ideal’, this doesn’t mean the decision-maker should stop aiming for it. It’s his or her moral duty to recognize the complexity of the system in which they operate, and make the right trade-offs. Because decisions are not possible without some simplification of a problem, leaders who are mindful of complexity know the trade-offs they had to make in the decision-making process and are better equipped to deal with unexpected consequences.

Managers who understand complexity always work from a systemic mapping of the problem at hand. Because decision-making is necessarily an arbitrary simplification of complexity, leaders who practice system analysis are more prepared to anticipate the negative effects of the decision on the firm or its stakeholders. They are prepared to deal with the forces that could impede the implementation of the decision and to find compromises along the way.

So, what kinds of leaders are prepared to embrace complexity? Generally speaking, these individuals are humble and they understand that there are limits to their power and that they are subject to the forces within a dynamic system. They are modest, yet non-the-less purposeful. Without voluntarism, leaders would indeed contemplate complexity forever and never make decisions. Voluntarism here is not to say ‘I am the leader, so I decide’ but rather ‘I have taken the full measure of the complexity of the situation and have the responsibility to choose, even though my choice is likely imperfect.’ Modest and purposeful, this leader is well informed regarding the complexity of the situation. He or she has the wisdom to understand that the world is not perfect. Decision-making is ultimately about finding a balance while keeping the common good in mind.

The following quote from the French sociologist Marcel Mauss sums up the complexity of social systems, of which companies are a particular form:

A society is a being with a thousand dimensions. It is a milieu populated by living and thinking beings and is worked by restless and often contradictory currents tearing it multiple directions. It needs a modest governance carried out by a citizen who is wise, thrifty, virtuous, and guardian of the law, especially prudent and fair.

With this in mind, it becomes clear that leading with complexity is not an option but a pragmatic and ethical imperative. It is an ethical imperative because decisions taken by leaders affect the lives of other human beings and even entire communities. Ignoring the consequences of decisions on stakeholders, especially those with no voice, amounts to injustice and violence. Taking complexity into account is a pragmatic imperative since it improves the effectiveness of decisions. For these reasons, it is hoped that complexity will find its place in the training of future political and business leaders. ESSEC Business School is taking its part in the movement with the recent inauguration of the Edgar Morin Complexity Chair.

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