Complexity
Complexity thinking asks risk managers to consider feedback, interdependence and change when choosing controls. The Cynefin approach emphasizes adapting to the kind of system involved and creating conditions in which useful responses can emerge.
THE IDEA
In his writing, the naturalist John Muir ponders how,
“When we try to pick out anything by itself, we find it hitched to everything else in the universe.” (21)
In risk management our predisposition is toward analysis and control. In doing so we resort to reductionism in setting objectives, in identifying sources of risk, and in controlling them. In the process, we lose sight of how the system is more than the sum of the parts. Consequently we inadvertently transfer methods helpful in one territory (or metaphor) to another – where they might be less helpful, and at times devastatingly unhelpful.
The pathways to the wrecks of policies and strategies are littered with position papers, roadmaps, plans, counter-plans, and task teams who have focussed on better analyzing “problems” in order to “solve” them. This focus on ‘solving problems’ loses sight of the dynamic, messy, fragmented, and at times incoherent nature of the real world, where today’s ‘solutions’ often set up the conditions for tomorrow’s ‘problems.’ (22)
Such unintended consequences are everywhere. Some risk controls constrain valuable organizational agility when it matters most. Some amplify the source of risk being controlled (due to unanticipated feedback loops). Indicators that become management targets, can cease to be effective measures of what is really happening in the system. (23)
To the risk practitioner, it can at times feel as if the ‘whim of the gods’ and the ‘forces of nature’ prevail.
Perhaps then our pursuit of mastery must lead us elsewhere. Perhaps mastery lies in better understanding the kind of territory we are in and how we should act in it.
There is immense beauty in complexity, if we choose to see it. Complex adaptive systems are open, irreducible, non-linear, sensitive to initial conditions, and carry their history with them. They are constantly changing, display path dependency, and are fundamentally unpredictable. In complexity, the pursuit of mastery leads us to choose to play an ‘infinite game’ rather than a ‘finite game’ that has clear solutions and end points. (24) As risk practitioners, our work becomes focused on setting up conditions for beneficial emergence – rather than attempting to ‘solve’ problems – or to ‘control’ outcomes.
The Cynefin Framework helps us to appreciate that ‘complexity is not simply greater order complicatedness.’ (25) Working with complexity is also not reliant on more complicated tools to analyze and control cause and effect. When we develop an appreciation for complexity, and for the limitations of deterministic thinking, we begin to see the world very differently.
“Both the dream of omnipotence and the nightmare of impotence in a fully knowable but deterministic world dissolve with complexity science, which in many ways represents an important cultural awakening.” (26)
Perhaps the mastery of risk begins with such an awakening.
When to use it
Using complexity thinking to design adaptive project management processes that allow for emergent solutions rather than fixed milestones.
In public policy, applying complexity principles to avoid unintended consequences from overly prescriptive regulations.
In business strategy, shifting from a 'finite game' of beating competitors to an 'infinite game' of sustaining organizational resilience and innovation.
In personal development, recognizing that habits and goals operate in a complex system and focusing on environment design rather than sheer willpower.
FROM THEORY TO EVERYDAY LIFE
In practice
Unintended consequences of risk controls
A lender tightens its criteria and ends up lending mainly to borrowers in a single industry. Individual loans may look safer, but the portfolio becomes more exposed to a downturn in that industry. Examining the portfolio reveals a risk that a loan-by-loan assessment can miss.
Performance indicators as targets
A call center uses average handle time (AHT) as a key performance indicator. Agents rush to end calls quickly, reducing customer satisfaction and increasing repeat calls. The indicator ceases to be a valid measure of efficiency and instead drives behaviors that harm the system.
A MOMENT TO REFLECT
Put it to work.
In what areas of your work or life do you treat a complex system as if it were merely complicated? What might you be missing?
Recall a time when a 'solution' to a problem created new unintended consequences. How might a complexity perspective have changed your approach?
How would you start setting conditions for beneficial emergence in a team or project rather than trying to control the outcome?
Often confused with
CONTINUE THE CONVERSATION
Source texts
- Cynefin - Weaving Sense-Making into the Fabric of Our World ED02 (Dave Snowden Sonja Blignaut Zhen Goh)