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A view from the top: the complexity of managing complexity

Management science in the Internet Age: The embarrassing fact is that this information-drenched world is too complex to manage. Computer-based decision support tools can help. But we must be sure to control them, says Helga Nowotny

Helga Nowotny, President of the European Research Council
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For the past four years, Helga Nowotny, Professor Emerita of Social Studies of Science at ETH-Zurich, has been running one of the world's largest fundamental research programmes, as President of the European Research Council. Here, as she prepares to step down from the post, are her reflections on the bewildering complexity of our modern world and our growing over-reliance on numbers rather than human judgement to make critical policy decisions. 

The embarrassment of complexity begins when we realise that old management structures are no longer adequate and the new ones are not yet in place. Currently we are in a transition phase. The old never yields to the new at one precise moment in time and this is what makes transition phases exciting, risky – and sometimes embarrassing.

The sheer multiplication of networks of various kinds and the unprecedented density of interactions generated thereby has opened access to information and information-sharing to a multitude of new users.

So has the spatial expansion of every type of activity around a rapidly globalising world. And the flood of ever new technologies and the novel gadgets is proof that more can be done in less time.

As we joyfully engage in the benefits these developments bring, at times we also feel overwhelmed by a massive, unmanageable complexity that seems to come with them.

But neither technology, nor globalisation, is the cause of this feeling per se. Doing more things in less time – the division of labour – was at core of industrial revolution and has spurred management ever since.

The truth is that complex systems are beset and energised by the phenomenon of non-linear dynamics. What produces complexity is not so much the presence of many direct cause‐effect links which operate with subtlety versus precision, but rather the presence of indirect, non‐linear relationships between the variables, parts, and dimensions of the whole. 

The embarrassment of complexity

What make complex systems so complex are their multiple feedback loops and indirect cause‐effect relations which, moreover, play out at different speeds and on different time scales.

These are the reasons why we arrive at “the embarrassment of complexity” – when it dawns on us that the categories we normally use to neatly separate issues or problems fall far short of corresponding to the real world, with all its non‐linear dynamical inter‐linkages.

Compounding this, managers have to act as if they could look at the whole, when what they see is only a part. 
As a result, managers have developed models and mechanisms to reduce complexity. The fewer variables there are, the more direct the cause‐effect relationships, the easier it becomes to make decisions. Thus, complexity reduction is a familiar way for any organisation to cope with complexity.

But what, if these models and mechanisms no longer seem to suffice, as more and more issues follow the unpredictable trajectories of non‐linear dynamics?

One factor that has made our embarrassment much more acute in the past decade is that we have come to rely much – maybe too much – on instruments and tools that a dynamic information and communication technology sector has bestowed on us. Computers - and the modelling that can now be done through them - have become indispensable. They permit us to collect, process, store, and transform the new precious raw material of our age: information. 

But there is an indisputable downside to this growing digital reliance, in that numbers, indicators and algorithms take on a life of their own. They acquire an Eigendynamik, a dynamic of their own, nobody can control. And there is another, unintended consequence. The more numbers are introduced, the lower becomes the priority placed on training, cultivating, and rewarding independent human judgment. 

Human judgement takes a backseat

When decision‐support tools become too powerful and ubiquitous, when continuous monitoring, benchmarking, ranking, and other performance technologies allow governance by numbers to take over, the human faculty of independent judgment takes a backseat. Figures speak for themselves only to those who understand how they have been constructed and in which context they are to be used.

Faced with the densely compressed information that numbers, algorithms, and indicators offer, managers increasingly tend to rely on what they suggest as action to be taken. Time‐starved administrators, policymakers, and decision‐makers grow less confident to challenge them. 

Given the plethora of benefits, human subjective judgment begins to look like a quaint, if not obsolete, survival trait of human evolution.

And it’s no wonder, then, that indicators and related numerical instruments take on a life of their own. Their promised utility seems beyond doubt: they do reduce complexity. 

The embarrassment of complexity should make us more humble. It should cautions us to be much more careful regarding the consequences of our actions and decisions. It shows us the limits of what we can predict, and the power of unintended consequences.

So, can the embarrassment of complexity lead to the emergence of new ethos, adapted to and capable of coping with complexity?

Such an ethos would be based on the acknowledgement that complexity requires integrative thinking, the ability to see the world, a problem, or a challenge from different perspectives.

Reach across the domains

As each perspective has an epistemic claim of its own, thinking them through requires us to acknowledge their entangled relationship, even if we are far from understanding it. We are dealing with a system which at best offers only glimpse of the whole. Reaching out across different domains and adopting different perspectives to achieve some kind of synthesis, synergy, perhaps even some kind of synchronicity in the ways we perceive, analyse and interpret the world, we begin to realise that we are part of dynamic complex systems. Any such system is open and evolving.

Open – towards an unknown and unpredictable future which is not deterministic but full of potential that we are far from grasping. 

Evolving – in the sense of diversity and variation continuously giving rise to new configurations which are selected and transformed depending on the specific features and contingencies of the fitness landscape in which this process occurs.

Numerical complexity reduction alone will not suffice to cope with increasing complexity. It has unintended consequences. It leads to a certain kind of conformity in thinking and in how people see and interpret the world. The ability to induce independent human judgment in young minds becomes ever rarer in our educational systems.

Overwhelmed by the increasing reliance on computational instruments, our faculties to discern, to raise critical doubts, to judge between alternative interpretations, are devalued and they deteriorate.

Let me be clear: No human group can survive, let alone effectively cooperate, without being able to develop a shared outlook on the world which is the precondition for acting together. But it is also the case that social groups thrive by making room for plurality, dissenting voices, and different perspectives. This is why management continues to advocate diversity as integral part of any successful organisation. This is why ‘competent rebels’ are needed everywhere: individuals who are able to combine the necessary professional
capabilities with the fresh, challenging outlook required for progress. 

Confronted with the embarrassment of complexity and faced with the challenge of overcoming inter‐domain complexity, let us remember that integrative thinking does not spring out of models, indicators, or computer graphs, unless we put it into them. It requires the ability to combine parts of the whole, however crudely, into an approximation of the look at the whole which we will never see entirely. It requires us to draw on the faculty of human judgment to focus on the smaller picture in order to comprehend the larger one. It requires a sense of
being part of the whole. Perhaps, this is the beginning of an ethos of how to manage complexity.

This is an edited version of the address given by Helga Nowotny, outgoing President of the European Research Council, to the 5th Global Drucker Forum 2013, Managing Complexity, Vienna, 14‐15 November 2013

Literature
Lee Smolin (2013) Time Reborn. From the Crisis in Physics to the Future of the
Universe. Boston‐New York: Houghton Mifflin Harcourt.
Carol Tavris and Elliot Aronson (2007) Mistakes Were Made (but not by me). Why
We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts. New York: Houghton
Mifflin Harcourt Publishing Company.

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