Coping with Complexity and the Sensemaking Paradox

Coping with the complexity of today's business environment is not about predicting the future or reducing risk. It's about building the capacity, in yourself, your people, and the organization to adapt continuously and learn speedily, in order to maximize the chances of seizing fleeting opportunities.

Three articles in the May/June 2010 issue of Ivey Business Journal are devoted to the tricky issue of managing complexity in today's global business world. The above quote is from "Coping with Complexity" by Niels Billou, Mary Crossan and Gerard Seijts.

As business leaders, policy makers, the academic community, the media and an outraged public search the rubble of the global economic crisis for clues as to what went wrong, all fingers point to a common perpetrator, poor risk management. But while risk management, or lack thereof, played its part in the disintegration of the world financial system, we contend that another culprit played an even bigger role: complexity, and an inability to cope with it. The unpredictable, unstable, non-linear, and fast-paced nature of the complex interrelationships between nations, firms, and persons that shape the global economic landscape are at the root of today's risk-management challenges.

In "Managing under complexity: Where is Einstein when you really need him?" Gokce Sargut and Rita Gunther McGrath highlight the dangers of reacting to complexity with simplification and warn of the "sensemaking paradox." Instead, they say, managers will need counterintuitive practices and no small amount of humility.

The reality is that to understand any situation at all, we have to make sense of it. We do this by imposing filters on the noisy signals of messy reality. Filters serve the purpose of telling us what is important and what we should pay attention to. Sensemaking is vitally important – without it, we would have no framework for viewing and understanding the world. Sensemaking is also, however, a potential trap. As we filter information through the lens of our existing experiences, key interrelationships and new pieces of data may be missed, leaving us with a poor interpretation of reality.