Complexity

The aim of this paper is to critically evaluate the rationale behind Giddens theory of social practices and offer in depth of complexity and its complex adaptive systems in relation to managing strategic discourse. Several views and ideas have been expressed by many authors and practitioners concerning complexity and strategy. Therefore the scope of the paper is limited to how strategy evolves in a complex adaptive system. In this context, complexity will be explained, highlight on core competencies and resource-based view of the firms; then debate on strategy while discussing the characteristics of strategic thinking and planning and those involved in it. The paper is concluded having critically analysed the kind of leadership style suited for managing diverse human behaviour and its surroundings during the strategic actions.

Mitleton-Kelly (2002) linked social practices to a self-organisational context, whereby group of individuals suddenly congregate to perform a task, the group decides on what to do, why they should perform that task, who will be involved and how will it be done. So there is an interdependency and inter-connectivity among the entities involved (Kauffman, 1993). According to Wenger and Snyder (2000) social practices evolve from community of practice which shows how people interact with their surroundings and solving problems through human relationships. So Giddens’ (1979) opine that “social practices are situated activities” brings to bare the social interaction of human actions within a structure and the system.

According to Cooper et al. (1992) the increasing competition, rise of global markets and growing economic integration has brought dramatic change in industrial developments and management. And these have increased uncertainty, greater conflict and even complexities running across all organisations. Citing example is conflicts between profit maximization within the industry an organisation operates and care for the environment. This is causing organisations to constantly redefine their mindsets (Senge, 1990) to radically rethink of how to gain competitive advantage in the dynamic business environment (McHardy, 1997). Mitleton-Kelly (2001, p. 3) viewed organisational complexity as

“being associated with the intricate inter-relationships of individuals, of individuals with artefacts (such as IT) and with ideas, and with effects of inter-actions within the organisation, as well as between institutions within a social ecosystem”.

Holland (1975) who impelled Complex Adaptive System (CAS) viewed it as “non-linear systems whose behaviour is determined by the interaction of its adaptive parts”. The interaction is between the organisation and its environment (Sherif, 2006). Cilliers (2000) stated that the non-linearity of the interactions in a system is a precondition for complexity. According to Mitleton-Kelly (2001) the ideology on strategy and changes in management is due to the fact that organisations is observed as a complex evolving systems whereby the interacting agents changes with time (Cillier, 2000).

Today, businesses faces more challenges because of the intricacy global network of organisations which propels managers to take pragmatics decisions (Pathak, et al., 2007). According to Choi and Hong (2002) the structural complexities of the supply chain interconnectedness and ability for an organisation to rapidly learn and get acclimatized to the dynamic environment to ensure long-term survival (Brown and Eisenhardt, 1998) has been the embryonic themes that managers usually encounter in decision making.

Amaral and Uzzi (2007) commented on the complexity in the managerial context, stating that complex systems occurs when more interacting agents are impel to act on their limited resources and local information. The agents may be individuals, group, specialized knowledge, organisations, industries, etc, (Holland and Miller, 1991: Allen, 1997). Author such as Kanter (1989) acknowledged the significance for an organisation to endeavour to do more with less, stating that “the imperative to do more with less is a common management theme across a range of industries”. Thus becoming productive and efficient with fewer resources.

According to Bovaird (2008) the complexity theory which demonstrates the concept of planning in an open system is abstractly embedded with elemental difficulties. The implementation of CAS oriented approach and behavioral adaptive system helps organization to improve their decision making that will increase the efficiency and the awareness of competition and as much as preparing for external uncertainties (Abell et al. 1999). Example of a company that have benefited from implementing the CAS principles into their operational activities include; Boeings move which reduced its risk of expensive tumble supply networks delays by redesigning of the 787 Dreamliner supply network. Equally, companies such as Nokia, quickly learn to be adaptive in their behaviour in ‘hyper-competitive’ environment. In the case of Nokia and Ericsson, a fire outbreak to their sole supplier (Philips) for particular chip interrupted the supply of chips to both manufactures. Whiles Ericsson suffered an estimated loss of $2.34 billion, Nokia quickly connected with Philips to create an alternative supply options that will ensure regular supply of the chips to Nokia (Sheffi and Rice, 2005).

Barney (1991) identified the economic and ‘hyper-competitive’ environment as drivers of resource-base viewed which requires strategic and self-management of the cost and scarcity of resources (Griffiths, 2004) so as to generate superior returns (Priem and Butler, 2001). So the hyper-competitive environment also influences the frequency and level of strategic activities (Eisenhardt and Santos, 2002). Mintzberg (1987) defined strategy in five terms: plan; ploy; pattern; position; and perspective. Similarly, Abraham (2005) viewed strategic thinking as identifying possible business models that results in customer value. According to Pryor et al. (1998) the traditional way of strategic planning was familiarize to quantitative analysis where the strategies were planned based on results or analysed data without strategically thinking of the implementers (low level employees) of the strategic plan.

Mintzberg (1994) and Boar (2000) distinguish strategic planning or action as the progeny of strategic thinking. Thus, whereas the thinking involves synthesis – encouraging intuitive, innovative and creative thinking at all levels of the organisation, the planning is concern with analysis – establishing and formalising systems and procedures (Heracleous, 1998). This is shown in figure 1. Mintzberg (1994) and Boar (2000) concluded that good strategic planning can only be implemented after strategic thinking had occurred. Mitleton-Kelly (2001) express that the ideology on strategy and changes in management is due to the fact that organisations is observed as a complex evolving systems whereby the interacting agents changes with time (Cillier, 2000). Kauffman (1997) and Maturana (1997) argue that strategies should be designed as an adaptive move towards the changing business environment. However, adaptive organisations encounter conflicting constraints within their internal organisation and the environment within which it interacts. This Kauffman refers to as ‘complexity catastrophe’ (Kauffman, 1993). Kauffman and Macready (1995) identified Information Technology (IT) and the growing of social network as the major constraints to adaptive system. Therefore, modelling of complexity requires the strategist and practitioners to model organisations especially how human and structural capitals interact with the use of IT systems as well as modelling of the environment to overcome the complexity catastrophe (Sanderson, 1998).

Masaaki Imai, a leading Tokyo based management consultant argued that identifying an organisation’s resource-based view such as its resources and capabilities is critical in determining its strategic action (Imai, n.d). In support of this, Hitt et al. (2009) express that a firm’s chosen business strategy should be made to exploit its core competences relative to the anticipated opportunities in the external environment. According to Porter (1996) an organisation will survive in this dynamic business environment when it is able to differentiate its strategy by creating its core competency that gives the organisation a competitive advantage over its competitors. Porter re-emphasise that an organisation can boast of good strategy only when it’s difficult for its competitors to catch up/imitate what it does. He argued that a business model that does not offer an organisation a sustainable competitive advantage is not a good strategy since its competitors can offer the same product to the market.

Bonn (2001) suggested three core attributes as the prerequisite for the successful occurrence of strategic thinking. These include recognising the linkages and complexity of the relationships existing between an organisation and its environment in a holistic way, creativity by reviewing the old ideas and practices and merging it with new ideas and having a vision for the organisation. Nonetheless, a viable vision and mission of an organisation should be flexible so as to conform to an ever-changing business environment (Wilson, 1998). Besides the outcome of managing the firm’s tangible and intangible resources will be the firm’s strategic competitiveness (Hitt et al., 2009). The diagram illustrates the outcome of strategic actions.

According to Abraham (2005) the strategy is all about winning and can only be achieved through strategic thinking and planning. Strategic processes have shifted from the processes of strategic learning by organizations (Crossan and Berdrow, 2003) to an increasing strategy as a social practice (Jarzabkowski, 2005). Similarly, Eisenhardt and Brown (1998) argue that modern strategy has shifted from the traditional way of building long-term defensible positions to a continuous adaptation and improvement into the business environment. Abraham (2005) pointed out that differentiation in terms of finding a technique/innovative way to obtain a sustainable competitive advantage (increasing customer value and profit) is one of the challenges of strategic thinking. However, Sanderson (1998) claim that in this modern era, the ability for an organisation to manage knowledge and the resultant changes in organisation is the main key to think of and obtain strategic advantage and become successfully competitive. On the other hand, the complex changes and continuous quest to gain competitive advantage (Abraham, 2005) has led to the growth of co-operation such as strategic alliances and joint venture to respond to the hostile and turbulent environment (Sanderson, 1998).

In a keynote speech by the president and chief operating officer of Coca Cola Company Munich, Kent (2008) stated that the sustainable future of an organisation is not achievable without sustainable leaders and leadership. Moreover sustainable leadership will necessitate organisations to build strong culture of sustainability. Leadership plays a major role in affecting decision processes (Chung and McLarney, 1999) since members within a structure mostly depends on powerful leaders to initiate decisions (Schneider and Shrivastava, 1988).

According to Hambrick and Mason (1984) strategy is usually made and executed at the upper hierrarchial levels. Thus the most strategists within an organization is the Chief Executive Officers (CEO’s) and their top management teams and the board of directors of which Whittington (2006) classified them as practitioners. Simultaneously, their profession which includes writing, presenting, communicating, meetings, consulting, etc also requires certain practices such as thinking, analyzing and acting (Angwin et al., 2009). However, Macus (2008) perceive the boards as a strategic resource of an organization that influences its performance. Figure 3 illustrates strategic as practice approach.

Boar (2000) stated that a strategist thinks about many issues in multiple dimensions at many levels of abstraction and detail over time (past, present and future) whiles the planning or action processes of the strategy requires cost and time of which all strategists must take that into consideration (Linn, 2008). So the role of strategists is to instill a sense of vision that the staffs of the organisation will work towards (Hamal and Prahalad, 1993) and not to specify every move in advance.

According to Simpson (1998) strategy is centered towards the future, hence an effective and efficient strategists is to understand the history of the organisation, its leadership and the industry it operates, then study the successful and unsuccessful initiative the organisation has engaged over the past 5-10 years as well as to enable plan for the future years. In the situation whereby different entities engage in an interaction to undertake a project, a complex inter-relationship is created (Mitleton-Kelly 2001). In this case, a consultant can be hired to help both entities in strategising the planning of the project in order to reap mutual benefit ( ). Also the transfer of knowledge and information to accomplish any task is determine by the level of connectedness and relationship within the actors (Kauffman, 1993). However, Mitzberg (1994 ) criticize the proponents of strategic planning stating that it is deceptive for strategists who are detached from the business operations to forecast occurrences for an organisation and its industry of operation and that formalising procedures to produce strategy is also a fallacy instead of operationalising on already existing strategies. Equally Collins and Parcas (1994) argue it is a myth that “successful companies make their best moves by brilliant and complex strategic planning”. Instead the moves made by visionary companies is through series of experiments, trials and error and then take opportunity on those that work perfectly for them. In view of this, Mitleton-Kelly (2001) also stated that trying different strategies exposes organisations to risk.

Wenger and Snyder (2000) suggested setting up of “communities of practice” as one of the best structures for developing strategic thinking. This structure creates thinking environment which involves experienced managers and employees from different sectors and geographical areas to share their skill, knowledge and experiences to develop strategies or business models that influences the future of the company considering the three timing dimensions- past, present and future (Boar, 2000). This structure is similar to the multi-disciplinary project team. Bonn (2001) identified strategic forum as another structures for developing strategic thinking. She argued that this proactive approach should involve successful managers with a proven track record in their own disciplines to focus on areas that will benefit the long-term health of the organisation.

According to Kennedy (2005) the diverse cultural values of employees’ makes managers grapple with complex issues and systems which requires many intangible aspects as tangible ones. Mantere and Whittington (2007) stated that understanding human behavior in a system is really complex. MacGregor‘s (1960) classical division in management theories distinguishes human beings into Theory X and Y. The former are the individuals who are self-interested, work-avoiding and passive whiles the later refers to those who are responsible, communitarian and willing to learn. McGregor (1960) re-emphasize that strategic action will successfully be implemented only when the managers are able to determine the behaviours of the subordinates, the value system and their confidence in the subordinate (Tannenbaum and Schmidt, 1958) and influence them to achieve positive result. Argyris (1956) argue that subordinates who are immature (Theory X) requires an autocratic leadership style whereas the matured ones (Theory Y) require a democratic leadership style. Morison (1967) on the other hand re-emphasized that organisation whose management flexibly gives its staff lot of latitude to plan strategically are better-off than organisations whose managers are autocratic in making decisions. In view of this, Fiedler’s (1967) contingency model suggest that the ability of the managers is to carefully assess the situation and choose a suitable dominant style to improve their leadership role in revitalizing the vision of the organization. However, Calder et al. (1977) argued that despite complexity involves managing human being; the existence of leadership is only a perception.

Simpson (1998) identified communication, performance measures, reward systems and training programs as the main driving force that influences strategic actions. Effective communication through knowledge and information sharing in an organisation will enable the strategy to be acted upon in the appropriate direction. Hopkins and Hopkins (2002) stated that interactions among group of people simultaneously influences their group actions and is observed as the key predictor of group performance (Kanki et al., 1991). Tziner and Vardi (1983) pointed out “higher quality of problem solving, greater productivity and efficiency, better achievement and greater group satisfaction” as the benefits of smooth interactions among members of a group. However, Ziegler et al. (2000) argues that the effectiveness of group interaction can be negatively affected (Steiner, 1976) in the situation whereby a single person is dominating a group interaction to solve complex task. Simpson (1998) continue to express that measuring the performance of the executed plan will assist the organisation to spotlight on the most important whiles improving upon the performances. Rewards and compensation on the other hand motivates the staffs to make the strategic plan a reality by achieving positive results. Moreover the organisation should organise training programs to psychologically work on the staffs attitudes and skills whiles executing the strategic plans.

Furthermore, Stasser et al. (1989) made an interesting comment that most of the best contribution and supports to solutions or complex task is normally generated from ad hoc informal board interactions which occurs outside committee or board meetings among the directors. Ruppert (2009) also emphasise that informal discussion among board members, top management and stakeholders, occurs at the golf course, spending sometime at the beach, pub or restaurant when drinking beer. According to Coutts et al. (2005) the aforementioned places by Ruppert (2009) leads to social development and contributes to team performance within an organisation.

D’Avani and MacMillan (1990) suggest that managers should not dwell much on previous success because of the dynamic business environment as it is easy for such managers to fall prey to what Duhaime and Schwenk (1985) term as “illusion of control”. In addition Ansoff (1984) argue that general managers who perform satisfactorily and succeed in an environment does not give them the assurance of succeeding on a different environment where there is lower or higher level of business turbulence (cited in Mantere and Whittington, 2007). According to Linn (2008) one of the concepts that organisations must consider during strategic planning processes is the SWOT analysis. This gives detailed account of the organisation strengths and weaknesses as well as the opportunities and threats of the competitive environment. Mantere and Whittington (2007) claim that the SWOT analysis is one of the most popular strategic tool that has been adopted as business policy to flexibly develop and shape strategists and practitioners. The outcome of strategic actions from interacting with the environmental forces provides the platform for organisational learning when the experiences of these outcomes is then feed back into the scanning and interpretation processes (Chung and McLarney, 1999). In support of this, Ashby (1969) re-emphasise that an organisation can survive in a complex system by exploring its space of possibilities – thus continuously scanning the landscape and encouraging alternative strategies. On the other hand, the feedback helps in identifying one’s strength and specifity of asset (Sherif, 2006). Furthermore, Prigogine and stengers (1985) claim that feedback from implemented strategic plans either being positive or negative helps to create stability in complex system through a precise prediction of the agent’s behaviour and planning accordingly (cited in Mtleton-Kelly, 2001).

Strategic processes have some shortcomings (Tavakoli and Lawton, 2005). The authors argue that normally the knowledge and experience of the front line employees are not incorporated into the information gathered during the strategic thinking process. On the other hand, the authors argue that the absence of the senior management may also mismatch the mission of the organisation. Even though strategic planning usually occurs at the top of organizations (Christensen et al., 1982), Bourgeois and Brodwins (1984) claim that organizations perform better when strategic thinking and planning is delegated downwards so as to benefit from the information gathered at frontline. Moreover, Hambrick (1987) argue that strategic success is assured when the entire top management team share common values and posses qualities that robustly fits into evolving competitive environment.

To conclude strategy is recognized as an organizational phenomenon which is significant for organizational performance and growth. Strategic practices never ends so long as there continue to be complex evolving system hence understanding the nature of complex system is important. Therefore adapting to such systems which has been challenged by practitioners requires good leadership that will promote knowledge sharing and learning in engaging into strategic thinking and planning. Finally in solving a chosen set of problem(s), strategists must sample its strategic ideas and apply the ideas from the past, present towards the future so as to fit into the organizations vision.

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