Complexity in Organizations - Economics and Adaptation - Assignment Example

Complexity in Organizations - Economics and Adaptation INTRODUCTION Organizations by their very nature are complex. In recent years, due to the increase in the scope and breadth of the role of the organizations and the kind of functions they perform, there has been a movement towards increased complexity. Though the mind boggling nature of complexity has presented its own set of issues to be dealt with by the managers in these organizations, there has been no marked movement towards lessening the element of complex structures and frameworks by which the organizations carry out their activities. The main challenge that is being faced by managers is to ensure that complexity of systems, rules and procedures do not get out of hand and hence the persistent efforts to simplify procedures and reduce the complexity of the system. It has to be mentioned that complexity is an inherent property of any system and the study of adaptive systems has shown that complexity is an emergent property as well. Hence, this central tension between complexity and the human tendency to simplify or derive meaning by simple expositions lies at the heart of the debate over complexity. Hence, the paradox of simplifying complex systems is the theme of this paper. The paper attempts to answer the question: How can we form simple theories if organizations are so complex? This question carries with the implication that simple theories of organizations are difficult to achieve in the face of increasing complexity. This paper takes the position that though complexity is ever present and increasing, there can be ways in which the system (the organization in this case) can be described or theories can be made about the organization by adopting a two fold approach. These are treating the organization as an organic whole and forming theories about the whole. The second approach is by taking the constituent parts and then formulating theories about them. In no way does this author assert that simple theories about essentially complex systems can be made. On the other hand, the theme of this paper is that theories about the organization can be formed that can reflect some level of simplicity by following the approaches mentioned above. ANALYSIS As Macintosh and Maclean point out in their paper, there is a three stage process of organizations “conditioning” the outcome of the transformation process by articulating and reconfiguring the rules which underpin its deep structure; second, it takes steps to move from its current equilibrium and finally it moves into a period where positive and negative feedback loops become the focus of managerial attention. They argue that “by managing at the level of deep structure in social systems, organizations can gain some influence over self-organizing processes which are typically regarded as unpredictable in the social sciences” (Macintosh et al, 1999). The above passage makes it clear that a micro approach towards studying so-called unpredictable layers of the organization structure may well guide us in formulating a theory of organizations. Though the point here is not that this leads to simplicity but a nuanced approach towards organizational study that takes into account the multilayered complexity of organizations can indeed throw some light on the way in which theory formulation can be done. Further, there are some set of cultural attributes that contribute to how we understand complexity. For instance, the eastern view of cyclical processes and the nature of time lends itself to organizational study when it has been found that “The Chinese have historically preferred to absorb complexity by absorbing it (through dense interpersonal linkages within tightly bounded communities) instead of reducing it via codification and abstraction” (Anderson, 1999). The paper goes on to state how Westerners prefer to reduce complexity through rule systems and legal institutions. Taking the point forward, the authors argue that Western Multinationals operating in China have to make a crucial strategic choice: they can either try to cope with a complex environment by reducing complexity through standard operating procedures and policies or they can absorb it by building a relational network of allies. This captures the dilemma faced by researchers and managers when studying complex systems like organizations. Whether they should try and look for the organic whole and absorb the inherent complexity in the system or prescribe rules and procedures that compartmentalize the system and hence break it down into parts. It is the contention of this author that chaotic conditions that often are the defining characteristic of much of the developing world make the study of complex systems interesting and that managers from these countries are often better at managing complexity than the rule bound westerners who like to break down the problem into constituent parts. However, this is not to generalize the point as the Japanese have proved that they are very good at re-engineering. The inference from the above is that study of the whole is as important as studying the parts. Hence, the point that complex organizations do not lend themselves to simplicity should be re-examined in this light. To turn to the research of the managers and CEO’s who are “aware” of the present and the future when making decisions as well as “plugged in” to the interlinkages in the system, the authors Brown and Eisenhardt provide models where CEO’s who were making fast decisions retained a simultaneous awareness of the present and the future and attention to the present and future gives direction to change. The authors also cite the examples of managers who developed the core capabilities needed for understanding complexity by focusing on current projects and getting rid of their lock step and bureaucratic processes. They also increased the communication between tiers of production teams and added project level responsibilities (Brown, 1997). What these instances prove is that managers with cross functional expertise are often an asset to complex organizations and their value lies in recognizing the “hidden connections” between their domain and the other domains in the organizations. Hence, any manager who has the aptitude to realize the consequences of his or her actions on the whole organization and beyond the immediate project that they are handling can be said to be a “complexity aware” manager. CONCLUSION This paper has so far discussed instances of organizations that thrive because they are good at operating in silos as well as interdependent wholes. This very flexibility and adaptability of the organizations to function as self directed units as well as organic wholes are what give the study of complex organizations its meaning. As pointed in the above paragraph, the simple theories of organizations do not suffice when dealing with non-linear organizations that operate vertically as well as horizontally and move backwards and forwards in time. However, what the theories of organizations can very well do is to consider the web of connections that bind together the disparate parts and seek out the “hidden connections” between these parts that is an emergent property of complex adaptive systems. Only by knowledge of the constituent parts can we study the whole. To refine this further, only by knowledge of the constituent parts and by recognizing the tangled web of connections can we appreciate the richness of the complex web. Hence, the study of organizations cannot subscribe to simple theories if they lack these ingredients. In the same way, studies of the organization as a whole by means of grand theories do not suffice if they ignore the layers and the wrinkles in the organization. A comprehensive theory of organization would take into account both the interdependent and independent nature of complex systems to arrive at a theory for the same. Reference List Brown, S.L & Eisenhardt, K.M. (1998). The art of continuous change: Linking complexity theory and time-paced evolution in relentlessly shifting organizations. Administrative Science Quarterly. 42: 1-34. Macintosh, R. & Maclean, D. (1999). Conditioned Emergence: A dissipative structures approach to transformation. Strategic Management Journal. 20: 297-316 McKelvey, B. (1999). Avoiding complexity catastrophe in coevolutionary pockets: Strategies for rugged landscapes. Organization Science. 10(3), 294-321 Quinn, R. E., & Rohrbaugh, J. (1983). A spatial model of effectiveness criteria: Towards a competing values approach to organizational analysis. Management Science, 29(3), 363-377 Williamson, O.E. (1979). Transaction-cost economics: The governance of contractual relations. Journal of Law and Economics. 22(2), 233-261 Read More