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Organizational Complexity is the New Normal!

Well, it is official now!

It is not just supervisors and middle managers commiserating about how tough management is these days.  Global CEO’s have jumped on the bandwagon!

For these senior leaders, management and leadership is becoming as difficult as calculus!

Business complexity is a significant challenge for managers at all levels of organizations today. Click To Tweet

In discussions with 1,541 chief executive officers, general managers and senior public sector leaders,  the IBM Institute for Business Value found that the most pressing challenge facing this group is complexity (not coping with change as in previous years).

Senior leaders who do not understand how their organizations really operate are the biggest obstacles to business success. Click To Tweet

Significant findings from this IBM study include the following:

  • 78% of CEOs expect the level of complexity to grow significantly.
  • 60% of CEOs are experiencing a high to very high level of complexity.
  • Less than half of the CEOs feel they are equipped to deal with the coming complexity.
  • The new economic environment is substantially more volatile, much more uncertain, and increasingly complex.

The study found several strategies of standout organizations (companies that perform well during both good and bad economic conditions) that other businesses can follow.  They include the following:

  • Value and encourage leadership creativity (experimentation through calculated risk taking and innovation).
  • Embrace ambiguity and encourage and reward innovative thinking.
  • Co-create products and services with customers and integrate them into core processes.
  • Manage complexity by simplifying operations and products.

To navigate this organizational complexity, the study notes that managers will need to get closer to their customers to not only better understand their customer needs but also to anticipate and meet them.  For example, leveraging the information explosion that comes with social media is one important vehicle to understand, forecast, and meet customer needs.

Creating an environment that fosters innovative thinking is a challenging task. Some organizations are doing well in this area while others are lagging behind.

In assessing their ability to perform this critical area, managers should assess their organization and ask themselves the following:

  • Can we hear the voice of our customers through the vast amount of data?
  • Can we understand and act upon the information?

Where gaps exist in innovative thinking, managers can address them by first looking at their own organizational operations — how the business normally runs.  This is often the barrier to organizational innovation. Typical operations such as hierarchical organizational structures, top down communication styles, structured processes, and command and control management styles of many organizations hinder innovative thinking.  (Innovative thinking by nature requires flexibility and non-conformity.)

The study explains that managers who invite disruptive innovation and encourage others to drop outdated approaches and take balanced risks have better chances of navigating their operations through this new organizational complexity.

In assessing their ability to perform this critical area, managers should ask the following:

  • How are we challenging every element of our business model to get the most from untapped opportunities?
  • How are we leveraging new communications styles, technologies and tools to lead a new generation of talent and encourage breakthrough thinking?

Making this transformation of course requires the buy-in and sponsorship of senior leadership, but it must also include middle and lower level managers and employees.

So, the verdict is in: organizational complexity is the new normal!

The good news for many managers struggling to meet business outcomes is that this study confirms their feelings.  Leadership and management are getting tougher in organizations.

The bad news for managers is that there is no rest in sight.  Management and leadership will continue to get tougher as the pace of change is unrelenting.

This study provides some useful information for understanding the new dynamics of management and leadership in this new millennium.

If management and leadership seems to be one step forward and two steps back, this is normal. A global study finds that even CEO's are struggling with organizational complexity. Click To Tweet
Written by Robert Tanner | Copyrighted Material | All Rights Reserved Worldwide

This article is accurate to the best of the author’s knowledge.
Content is for informational or educational purposes only and does not substitute for professional advice in business, management, legal, or human resource matters.

Robert Tanner, MBA

Welcome to my leadership blog. I'm the Founder & Principal Consultant of Business Consulting Solutions LLC, a certified practitioner of psychometric assessments, and a former Adjunct Professor of Management. As a leadership professional, I bring 20+ years of real world experience at all levels of management.

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