Embracing complexity as a threat and opportunity amidst organisational change

What strategies can directors apply when faced with complex issues?

Embrace complexity as threat and opportunity. In its simplest form, it suggests the decision maker is struggling to reliably predict the outcome of their actions. Contrast this with complication, which you may solve through analytical capability.

A different mindset

Wrestling with complex decision-making calls for a mindset dedicated to continuous learning through experimentation.

Build a fast-learning loop consisting of piloting new ideas, then learning and applying the outcome. Hire this way, strategise this way, negotiate commercial contracts this way.

Things are complex

The success of a strategy hinges on understanding how groups of people will respond to an input. Prioritise understanding the perspective of people with a role in your success. Start with your workforce and leadership, then customers, competitors, providers, partners and regulators. Get better at stakeholder/influence mapping.

Strategise in real time

The days of annual “batch processing” strategy, 1980s-style, and expecting remarkable results are gone. Strategy must transition to real-time reflection and learning at board and executive level. Prioritise discussing and understanding the system as a whole. Make it a natural part of discourse between executive and board. Build agility to respond to what you learn.

Gather intelligence

Most importantly, learn to recognise a transforming insight — watch who is doing what with AI. Reward the workforce for becoming your eyes and ears, and prioritise the flow of key intelligence through the organisation. This also enables you to capitalise quickly on opportunity and respond to threats.

Practise “framing the problem”

This is often the Achilles heel of inexperienced boards. They fail because they are solving the wrong problem or are paralysed by an inability to articulate the problem coherently. Learn to see interdependencies and how logical sequencing of responses might de-risk complexity.

Be ambitious

This also means being courageous. Build a culture of resilience to the idea of “failure”. Work hard to communicate to the workforce you will reward behaviours that lead to unique insights. Intelligence gleaned is often subtle. Learn to tune in.

Balance autonomy and control

Hierarchical, rigidly run organisations don’t do well with complexity. A natural desire for control overwhelms the autonomy required for a learning culture. If you have the workforce talent and the latitude to increase autonomy in how the organisation works, you have a better chance in dealing with complexity. Rigidity might give you a sense of comfort that you have control, but an inability to see and respond to the effects of complexity might make you more “brittle”.

Bigger isn’t always better

The temptation to be bigger by adding more different “bits” is pervasive, particularly in for-profit organisations. The traditional drive to become a dominant player, especially in an Australian context where oligopolies are common, is understandable. But size brings another dimension to complexity, adding risk and loss of transparency. The observations of former CEO Ross McEwan CBE about focus and clarity on leaving NAB are worth reading.

Conclusion

Complexity, over time, kills organisations not properly tuned in to the world around them. The solution is to develop a mindset, an organisational culture and structure, which prioritises attentively watching, listening and learning while rewarding organising principles agile enough to implement what you learn fast enough.

This article first appeared under the headline 'The Fix’ in the May 2025 issue of Company Director magazine.