The Forces Affecting your Activities

How complexity influences your organization

Social complexity is something we all experience on a daily bases. Therefore, this week we will be diving deeper into how social complexity influences organizations.

This blog will cover social complexity. If you have not yet read our previous blog on dynamic complexity, we would recommend you start there.

Social complexity arises in interaction with the environment. Particularly in the interaction economy, many stakeholders are involved, each having their own requirements and expectations. Shareholders have a different view from employees on the business, and their requirements may very well be at odds with each other, proposing almost opposed paths of optimization. Different customer segments can also have very different requirements. Moreover, sometimes even a single person may have conflicting requirements, for instance as a citizen demanding businesses to be green, and as a consumer demanding cheap products and driving an SUV. Social complexity is even more prevalent when stakeholders not only have different requirements, but also their own values and belief systems. Social complexity often goes hand in hand with dynamic complexity, with the requirements changing all the time. And we have all experienced it.

Business trends underlying social complexity include globalization and sourcing practices leading to value networks and increased market transparency. Just take a minute and try to imagine how many stakeholders there are in the project you are currently working on.

Processes of your business

Consider the following examples

  • Transportation insurance can be extremely complex, since the cargo, destination, point of departure, type of transportation and many other elements determine the insurance premiums and cover. One extreme example is supertanker transportation. Supertankers often change ownership (and associated stakeholders) multiple times during their trips overseas, and changes in the destination are not uncommon. Every time there is a change, regulatory requirements can be different based on ownership and destination. The big question is therefore how to manage such a difficult environment without sacrificing transparency or security.

  • Immigration services deal with a large variety of complicating factors. These include tens of thousands of rules, based on a country’s internal politics, treaties between countries, and supranational regulations such as those of the EU. At the same time, changes occur all the time. One immigration service estimates it has over fifty major policy changes per year to deal with. This raises the question of how that level of change can be kept up with, without loss of transparency. For example, you can use Artificial Intelligence (AI) to automate this, however, transparency would completely disappear.

  • Infrastructure projects are subject to infrastructural and environmental permits. This ranges from private infrastructure projects (e.g. home renovation) to complex public infrastructure projects (e.g. highway and railway construction). Complex public infrastructure projects can be subject to thousands of different permits. Some can be in conflict with one another. Reality may change even after granting permits. During the implementation of the project, archaeological or environmental discoveries may be made, leading to a re-evaluation of permits. This presents the challenge of managing this dynamic process without endangering the deadlines, whilst also respecting the interests of all stakeholders.

“Social complexity arises in interaction with the environment”

What are the effects of not embracing social complexity?

By its very nature, it is not possible to reduce social complexity. Furthermore, the complexity arises outside of most organizations’ circle of control or even influence while continuously evolving. At this moment there probably is an organization in the news that is facing issues due to social complexity. Being able to deal with different requirements is key to social complexity. Rigid organizations that are only optimized to deal with single stakeholder requirements, such as efficiency within the organization itself, or are overly focused on shareholders, may suffer from diminishing responsiveness. They may also miss strategic opportunities, risk non-compliance, have a long backlog of required changes, and a very high cost of change or transformation in their operations. Moreover, agile competitors leveraging the value of intelligent automation are likely to outpace these sluggish organizations rapidly. By embracing social complexity they turned it into a competitive advantage.

What is up next week?

Next week we will dive into the final type, emerging complexity. How disruptive changes and uncertainty play a key role in organizations. Interested in reading our next blog? Stay tuned by signing up below or follow us on LinkedIn, Twitter and Facebook to stay in the loop at all times. In the meantime, check our website on how Be Informed can help you with turning complexity into value.

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