Escalating Complexity and the Fourth Industrial Revolution

Things are changing in the business world. In fact, change itself is becoming the new constant and this shift has brought with it many challenges that are disrupting the way business is conducted. To make matters even more challenging, at the same time that businesses must grapple with change itself, the rate of change also is accelerating. Moreover, there also seems to be more of everything.

Businesses cannot just focus on one thing that is undergoing change, they must also deal with multiplicity – there are many things that are changing at the same time – new products, new services, and new features to everything. The Internet has become the shopping mall of the 21st Century, which, a few decades ago, replaced Main Street. Brick and mortar retail businesses are closing stores and filing for bankruptcy one after another. For instance, Sears, once the largest company in the world, is teetering. Sears Canada has already filed for bankruptcy protection. Newspapers are on the endangered species list and often look like skinny, physical shadows of the tomes we used to find on our doorsteps. Automobiles soon will be driving themselves. “Uberization” has already transformed everyday transportation in just a few short years. Practicalities change, tastes change, styles come and go, and choices proliferate. Businesses often are under pressure to innovate, to bring out new products or services or new versions of older products. There is no resting on success. Success can be here today and gone in a flash tomorrow as markets shift and change quickly, and new, upstart competitors emerge with new business models that obviate those that formerly seemed sure to bring success.

In 1996 Charles H. Fine at MIT introduced the concept of clockspeed. He used the notion of the Industry Clockspeed as a way to classify to classify the dynamics of an industry and the speed by which changes are taking place within that industry. For example, according to a KPMG study [ref?] the clockspeed for consumer electronics is 2-3 years. The automotive industry has a seven year clockspeed; commercial aerospace has a 20-year clockspeed. These clockspeed numbers continue to shrink year by year. Thomas Myers and others at KPMG point to a clockspeed dilemma facing major industries now. Typically, in the past, each major industry was subject to a legacy clockspeed driven by capital intensity, new product development costs and competitive intensity. However, Myers and his team believe that industries are facing not only faster clock speeds, but sometimes multiple clockspeeds simultaneously as new entrants enter their industrial ecosystems and bring with them disruptive innovations.

Things get even more dynamic with multiplicity on the rise. Not only are businesses straining to keep pace with change and its hectic pace, in many instances they are juggling many different things that are going on simultaneously, multiple projects, multiple units, many different customers and stakeholders. An example is a high tech electronics components producer with many different product lines and units in forty-two different locations around the globe! Multiplicity makes achieving focus problematic. And to add further to the challenges, the multiple products, services, units and locations often are interconnected and interdependent in ways that must be addressed. Complexity is a good one-word, catch-all for the circumstances with which enterprises must cope. Things are not merely complicated; they are complex in terms of multiplicity, uncertainty, change, interdependencies, and speed. How to manage the ever-increasing complexity of business today?

The toolbox of management and leadership tools is barely adequate to meet the demands. Most of the tools in the toolbox were developed at a much less complex and hectic time. In many respects, this leaves businesses attempting to manage complexity with tools and techniques better suited to the Nineteenth Century than to the Twenty-First. For example, the organization chart, a mainstay of management for the better part of two centuries, was devised as a tool for specifying division of labor and coordinating work. With the chart, one can specify who does what and who will coordinate with whom and, at least in the past, where people who must interact will be located. Who knew in the Nineteenth or early to mid Twentieth Century that teams composed of people doing interdependent work might be spread out across three continents? There wasn’t a chart for that. The functional organization chart gave way to the product organization chart where, at least, people working on a particular product or product line would be co-located. But, as complexity picked up, the matrix management structure as defined in an attempt to deal with multiple interdependencies. But, to work well, things cannot be changing all of time.

There cannot be multiple functions, products, locations and markets to coordinate. What sort of chart could be devised to handle all of this? With the sort of complexity with which we are dealing now, dividing up the work – specifying a division of labor and responsibilities is essential. No one has the knowledge, skills, and bandwidth to handle it all. But, dividing stuff up is just the beginning. The rest of the challenge cannot be handled by drawing more lines and arrows on an organization chart. To cope with the extreme complexities of business now takes much more than an organization chart. It takes a mindshift – a new way of thinking tuned to complexity. Some portion of the talent in an organization must have a particular mindset geared to track multiplicity, change, and interdependence. That mindset must be of a kind that can hold multiple thoughts and priorities in mind, in real time. It is the kind of mindset in which one sees a big picture – a mindmap, so to speak – that is a dynamic, moving picture in which the parts are in motion and are mutually influential. Impossible, one might think! But, fortunately, that is not so. There are people for whom this is a natural way of thinking.

Most likely, they have always been there noticing differences, variations, trends and possibilities. In the past, there likely was the need for this kind of thinking was limited. Businesses had to strive for efficiencies needed to produce stuff and keep costs down. That kind of focus is still needed. But, with the rise of complexity, this new mindset is much more in demand. In a way, this is another form of multiplicity. Inasmuch as we are dealing with multiples of most everything – products, locations, and markets – we need multiplicity in the way that people think. This means we need diversity of thinking – the kind of diversity that cannot be embodied in any one individual. Instead, we need teams composed of people with diverse mindsets, diverse ways of thinking.

The particular mindset we mentioned a moment ago combines big picture thinking with what we call multi-focused thinking. Ideally, these qualities of thinking coexist with interpersonal skills or behaviors needed for dealing with diverse other ways of thinking. These thinkers must grapple with diversity in both things and people.