Essec Business School

A leader’s role is to make decisions, often in a hurry and on the basis of partial or more or less reliable information. Generally speaking, business leaders feel more comfortable when they focus on a small number of variables and rely on assumptions of simple relationships between causes and effects.

When a leader delegates a problem to an employee or a consultant, he expects in return a relatively simple representation of the problem and its resolution, as well as a straightforward recommendation for implementing the solution.

Indeed, the vast majority of business leaders today rely on simplified representations of the world to make their decisions and avoid complexity. And why shouldn’t they? In reality, business leaders should be breaking out of their comfort zone and embracing complexity – and here’s why: ignoring complexity always carries a cost.

For illustration purposes, let’s take the classic example of a restructuring plan. Business leaders usually assume a simple linear relationship between spending and staffing cuts and the improved profitability of the business. In fact, restructuring announcements for listed firms can even prompt a jump in stock value. Weeks or months later, however, the implementation of the restructuring plan might raise unexpected questions. Workers and their representatives might occupy the plant and sequester executives. The plant closure might bankrupt local retailers and other services. Redundancy plans may ultimately end up encouraging the most talented executives – those who would have no trouble finding work elsewhere – to move on and leave less effective staff behind. We could go on and on describing the multitude of unforeseen consequences that can result from a ‘simplistic’ restructuring but the conclusion is clear:. the costs of not taking complexity into account occur far enough down the line and are not necessarily incurred by those made ​​the decision.

Decision-makers should take complexity into account upstream, in order to ensure better results downstream. This means comprehensively mapping out the problem so that decisions can be made with full knowledge of the facts and trade-offs. While it is unrealistic to think it will always be possible to make the perfect decision that will balance the short and long term or a decision that creates a win-win for all parties, looking at problems in their complexity yields better if not perfect solutions.

In other words, just because the perfect decision is an ‘ideal’doesn’t mean the decision-maker should stop aiming for it. It’s his or her moral duty to recognize the complexity of the system in which they operate, and make the right trade-offs. Because decision making is in and of itself a simplifying process, leaders who are mindful of complexity are better equipped to deal with unexpected consequences.

The informed manager, who takes the complexity of the world into consideration, obviously isn’t going to make the same decisions as a manger who tries to keep things as simple as possible. Whether the problem is an urgent one or not, managers who understand complexity take their time in order to adequately build a systemic representation of the problem at hand. Decision-making is necessarily an arbitrary simplification of complexity, but leaders can be more or less prepared to anticipate the negative effects of the decision on the firm or its stakeholders. Leaders who embrace complexity are prepared to deal with the forces that could impede the implementation of the decision and to find compromises along the way.

So, what kinds of leaders are needed to embrace complexity? Firstly, these individuals are humble and understand that there are limits to their power and that they are one force among many others in the system. Secondly, they are purposeful. Without voluntarism, leaders condemn themselves to contemplate complexity forever and never come to a decision. Voluntarism here is not to say 'I am the leader, so I decide' but rather 'I have taken the full measure of the complexity of the situation and take responsibility for an imperfect choice’.  Finally, complexity informed leaders are wise,  understand that the world is not perfect and seek balanced decisions while keeping the common good in mind.

The following paragraph taken from the sociologist Marcel Mauss sums up the complexity of social systems, of which companies are a particular form:

A society is a being with a thousand dimensions, a milieu of living and thinking milieux, worked by contradictory currents pulling in every direction that needs a modest policy practiced by a citizen who is wise, thrifty, virtuous, and guardian of the law, especially prudent and fair.

With this in mind, it becomes clear that leading with complexity is not an intellectual option but a pragmatic and ethical imperative. It is an ethical imperative because decisions taken by leaders affect the lives of other human beings, even entire communities. Ignoring the consequences of decisions on stakeholders, especially those with little or no voice, amounts to violence. Taking complexity into account is a pragmatic imperative since it improves the effectiveness of decisions. For these reason, I hope that complexity will find its place in the education of political and business leaders.