How to Manage Complexity in Strategy
by Spencer Kleweno, on Feb 4, 2019 5:12:09 PM
People expect specific solutions to resolve complex problems. The thing is, there isn’t always a definitive solution, rather, some problems require continuous management. Take strategic planning for example, imagine you poured hours into crafting a thorough and detailed strategic plan in 2007. Next thing you know, the recession in 2008 rolls around and your revenue gets cut in half… Is your thorough strategic plan with all its detailed projects and goals still viable? Pouring hours into meticulously detailing your strategic plan, only to see it prove meaningless, wastes time, money, and your reputation. Strategic plans need to be simple, easily understood, and flexible when uncertainty hits. There’s a time and place for meticulous problem solving and a time and place for taking a more flexible approach. Knowing the difference could spell the difference between success and failure.
There are two kinds of problems in the world: complicated problems and complex problems. Although the two terms are commonly used interchangeably, they are distinct and impact strategy differently. This post will explain how complicated problems differ from complex problems, why complex problems must be dealt with differently, and how they impact strategy.
Complicated v Complex
A complicated process is predictable and adheres to a strict set of rules - if you follow the rules the end result is no big surprise. A complex process, on the other hand, is difficult to anticipate and is influenced by various interconnected parts. When was the last time you encountered either?
Believe it or not, complicated and complex processes surround us daily, both in the business world and in our personal lives. If you’ve ever built IKEA furniture before, then you've experienced a complicated process. It involves following the rule book, lining up the upholstered pieces and locating the seemingly lost wooden peg, until you end up with a good looking Kivik (Couch). So long as your parts and rules remain the same, you’ll always end up with a Kivik.
Now, where you decide to place that couch within your living space is a complex problem. You’ll need to consider which room the couch fits in, its purpose, and trade off the comfort for yourself and guests. Will it be used primarily for watching TV, or reading? If it’s for reading, placing it by a bright window may make the most sense. However, you may have guests that have adversity to sunlight; if so perhaps a more neutral space makes more sense. Ultimately, between your preferences, those of your guests, and the interconnectedness between the two, there are infinite factors that determine its purpose, functionality, and comfort. You have to use your best judgement and create a space to your liking. There is no “correct” location for your Kivik.
Typically, building IKEA furniture doesn’t directly improve your company. Let's apply the principles of complicated and complex to the business world. How would you categorize sales processes? If you said, “it depends”, then you’re right. Call centers, for example, are as complicated as it gets. They work off of lists and scripts. When a call center representative gets someone on the phone, he follows the list. If the customer or prospect say “X”, he says “Y”. It is an operational “if/then” way of doing things. Enterprise level sales, on the other hand, are complex processes and filled with far more uncertainty. They require buy-in from multiple stakeholders who all have their own buying criteria. Often times deals can initially appear promising and end up dwindling into nothingness. Foresight becomes much more challenging when each sale is unique.
The Complexity in Strategy
So how does strategy come into place? The operation is complicated, while strategy is complex. Each has its purpose, but strategy guides you towards achieving your vision. Imagine that your team is in the early stages of a 5-year plan. You’re on track and outcomes are looking promising until one day, competitors poach your entire sales team... yikes. Now your revenue milestones are looking bleak and major projects dependent on those sales can’t launch. You never saw this coming - how could you? Your team created the best possible plan with the information you had. There was no way to know you’d be in this predicament. So what do you do? You could let your plan collect dust while you hastily prepare a convincing explanation for why only 30% of the goals were achieved, or you can embrace the complexity in strategy and adjust accordingly right now.
In order to understand the complexity to its fullest, it is important to discuss a fundamental property known as emergence. Emergence occurs when the interconnected parts of a process, such as a sector of buyers, state of the economy, or new technology evolve in ways that produce specific trends. Although these trends are present, they occur without any definable guiding hand. For example, the fluctuation of your top line revenue is dependent on myriad factors and may exhibit specific trends. However, there is no mathematical model that can predict the direction of your revenue with complete certainty.
How to Manage Complexity in Strategy
1. Create Playbooks
Due to the unpredictable nature of complexity in strategy, finding a repeatable process that produces a solution is near impossible. That’s why establishing a playbook, as opposed to a rule book, for managing complexity is essential. Playbooks have general guidelines in place, as opposed to a rule book which has an extensive set of rules that must be followed. Offer your employees guidance and the ability to manage the problem with creative solutions as opposed to hamstringing them with rules that frequently don’t apply. Don’t solve the problem, manage it.
2. Don't confuse complex with complicated when it comes to strategy
Remember, a process is complicated when it is predictable and produces successful results when following a rigid set of axioms. Solving complicated problems involves establishing a robust set of “if/then” scenarios that account for everything under the sun. When applied to strategic planning, this mindset results in the development of thousands of goals belonging to only a handful of individuals. Here at Cascade, we find that individuals with greater than three significant goals/projects concurrently active in a specific period - struggle to achieve positive results.
It’s enticing to want to solve every imaginable problem because each represents room for improvement. When planning within longer time frames it can feel as if there is plenty of time to tackle every goal you want to. However, that is not the case - you almost never have as much time as you’d like to focus on strategic initiatives. Because of this, you need to focus and prioritize the items that have the highest impact on your organization. It may be tempting to do more, but it's imperative to only focus on those that will make the greatest difference. When you have fewer goals to focus on, you end up doing only the most important tasks. If it turns out you focused in the wrong direction and need to pivot, re-thinking portions of the plan will be less of a burden because you don’t have thousands of goals to sift through.
3. Don't include operational goals in your strategic plan
Including operational goals in your strategic plan is common practice but by no means best practice. By nature, strategic plans focus on what you can do now to improve your current modus operandi. In contrast, operational plans focus on the day to day grind of business. This distinction is key. Too often conversations are consumed with determining whether a goal such as, “answer the phone each morning,” should be included in a strategic plan. Although answering the phone is critical - it could be your largest client in need of assistance or a huge prospect ready to buy - strategic plans need to focus on your vision of what you want to become, not what you’re doing right now.
4. Implement the Keep, Start, Stop Method
The Keep, Start, Stop method is a great approach to managing your complex problems and ensuring your goals have immediate purpose. Once per month/quarter, meet with your employees to review progress towards their goals. Once there’s a general grasp of how they’re performing, ask the following questions for each of their goals:
Keep: What have you been doing well that’s driving progress towards your vision?
Start: What could you start doing that would drive progress towards your vision?
Stop: What should you stop doing that’s not driving progress or detracting from progress?
After your conversation, create, record, and track measurable action steps that should be completed before the next scheduled meeting. Once implemented, you’ll have actionable steps for process improvements and be able to focus on emergent trends, ultimately securing a process that drives results. Check out this video of our U.S. CEO, Carl Cox walking through the Keep, Start, Stop Method -
To make this process seemingly effortless, use a strategic planning platform that tracks commitments and performance on those commitments - that’s where Cascade comes into play. Cascade is our dedicated strategic planning and execution tool. If you'd like to make your strategy the real, active heart of what you do, start a 14-day free trial below!
Are your Processes Complicated or Complex?
So, are the processes you’re encountering in developing your strategic plan complicated or complex? In order to find out, use the following thought experiment:
Can you think of a specific issue or process your company is currently tackling? Now imagine it as a movie.
- What steps lead you to where you are now?
- What are the steps you need to take in order to resolve the issues or play out the process?
Now play that movie backward and forwards. Did it still have the same ending? If your “movie” or process has predictable results and follows a system of steps, chances are, it’s complicated. Now, if your steps act more like guidelines, with some being skipped, some being added, and others occasionally dragging on longer than expected, then your process is complex.
Some final words...
Complex and complicated problems are ubiquitous. Identifying and handling them appropriately will save you time, money and frustration. Strategic planning, with all the people involved and the factors that affect it, is complex. If you’re in the middle of formulating your strategic plan, don’t complicate the process with too many goals. Once the rubber meets the road and your team begins to execute on its initiative, unforeseen circumstances will occur. This will inevitably change your course of actions and consequently the goals necessary to achieve your vision. Having too many goals is hard to manage, will dilute attention from what really matters, and makes it harder to pivot.
Here at Cascade, we recommend no more than 3 goals per person, per time period. Your strategic plans are more likely to succeed if they are reviewed and adjusted over time. Be open to adapting them to each situation that may arise - modifications ultimately allow for improvement. The Keep, Start, Stop approach will assist you in this enhancement by establishing an ongoing critique of your plan. Take a few moments to evaluate which of your processes are complicated vs complex, and remember, don’t solve your problems, manage them.
Rick Nason - It's Not Complicated The Art and Science of Complexity in Business