Simple decision rules, structures and relationships are not likely to be effective approaches when the task at hand involves making decisions in the context of complex systems. Ironically, many of our most embedded management practices—such as designing for optimization and for efficiency—only exacerbate the risks of things going wrong at a systems level. Somewhat counter-intuitively, the most robust complex systems are often not designed for optimization. They may in fact embed sub-optimal features, such as redundant operations, multiple paths and substitute components. To recognize the value of these seemingly sub-optimal structures, it is worth considering two questions. The first is whether an investment allows the risks and decisions to be made in a complex situation to be spread over time periods. The second is whether interdependence between components can be better managed by the way they are connected, which you can think of as ordering complexity in space.
Authors: Gökçe Sargut, Rita Gunther McGrath
Source: Ivey Business Journal
Subjects: Decision Making, Management, Organizational Behavior, Risk Management