Complicated things have knowable outcomes. You may not know it yourself - merely know someone who does - but the issue has an answer, it’s just a question of finding it. For example, we know when we’ve finished a 1,000 piece jigsaw because it looks like the picture on the box (and the picture guides us to finish it). We also know when the engine has been fixed because the rattling sound has gone. And we know we’ve finished the budgeting process because all the numbers have been plugged in and the bottom line makes us feel happy.
Complicated things have certainty. There is a clear relationship between cause and effect (if we do A + B then we get C).
Once we’ve done it a few times the process becomes predictable, though sometimes we’ll also have choice. Instead of A + B = C, we could do E + F to get G. Faced by these options a decision-maker will decide what to do through analysis (consider who has the greater experience of doing this before and/or whose cheaper), instinct (who do I trust more to do it) or self-preservation (who will I get less blame for choosing if it goes wrong).
At the start of 2016 we appear to be standing again on the edge of a cliff, looking into another financial abyss. How is it we can’t figure out something as complicated as the global economy, work out where the issues are and fix them? The answer is that we’re not facing a complicated challenge in understanding the global economy but a complex one. And the issue is that we manage complexity poorly.
In October 2008 Alan Greenspan, the ex-Chairman of the US Federal Reserve testified to Congress about the financial crisis then unfolding. He expressed “shocked disbelief” at the scale of the crisis because the models he had been using to ‘manage’ the global economy “had been working exceptionally well for 40 years.” The problem with using complicated approaches to deal with complex issues is that there is no final state in a complex world - we may ‘fix’ things for a while but, unlike puzzles and engines, they don’t stay fixed.
The greatest error we make in dealing with a complex world is to think we can impose certainty on it (e.g. by making a budget). But instead of reducing uncertainty we merely create the illusion of control where none can exist and allow the uncertain to become systemic shocks.
Complex issues instead require new management approaches. The first step is to understand when you are facing a complicated challenge - which can be solved by an expert - and when you are facing a complex challenge - where the certainty of the expert may actually blind you to what’s really happening and hinder your response. Ask yourself which description best fits the challenge you are facing:
If the last two descriptions fit best the challenge you’re facing is complicated and conventional methods should be deployed. However, if the first two descriptions fit best then the situation facing you is complex and conventional approaches will not only be sub-optimal but could actually make things significantly worse.
The first step in managing complexity effectively is to understand this crucial difference between complicated and complex issues and refrain from trying to impose certainty on what is fundamentally uncertain.
Post inspired by @cognitiveedge and @lunivore
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