Premise:
One of the things that is as predictable as the fact that Sun will rise tomorrow morning from the East and set in the West in the evening is the fact that once a business gains momentum, complexity will creep into the business, which will then slowly stifle the very growth that led to the complexity.
So, what can we do about it:
One of the things that entrepreneurs can do about complexity is to expect it and plan for it in advance. In a fast growing business, there could be three kinds of complexity:
- Process or systems
- Business Model
- Mental Model
Lets explore each one of these in some more detail.
Complexity in our Business Processes or Systems:
This is the kind of complexity that is a direct result of the growth of the business. The teams put together processes and systems haphazardly as and when the needs arise. We can see this in our business, when our employees start complaining about the company having become too bureaucratic. People try to side-step processes and exceptions slowly start to become much more common.
In a nut-shell, this is self inflicted complexity.
There are two ways to handle these complexities:
- Anticipate these complexities and plan ahead of time. This requires the COO of the business understand the way the business is growing and anticipate areas which need standardised processes and systems in place. When putting in place these systems, processes and policies in place, care needs to be taken that these systems are not designed keeping in mind the current need but keeping in mind the need for the next level of growth that the business is eyeing. There needs to be a balance that needs to be maintained in addressing the current needs, while at the same time the needs that the business will have when it hits the next level of growth, which comes along with its own set of complexities.
- Deal with them when and where they show up: This method requires that you empower your employees to deal with complexity as and when it arises with clear guidance about what is acceptable and what is not. This method requires a culture where it is ok for employees to make decisions about policies and processes, as long as they keep certain basic rules in mind and inform everyone else about the change in the process that they are creating. This method when used effectively can be fast and give your business a great competitive advantage or on the other hand if not done well, can cripple your business with ever more complexity and may even kill it.
Complexity in our Business Models:
This is the kind of complexity that is a direct result of changing market-place dynamics. This means that there is a new dynamic playing out in the market and while dealing with these dynamics, we create complexity in our business model. It could be complexity in any of the 9 elements of a business model as shared in the business model canvas. We could end up targeting multiple customer segment with different products offering different value propositions. It could be complexity in the way we manage our relationship with out customers. It could be complexity in the way we partner. It could be complexity in the way we utilise our resources. It could be complexity in the way we are pricing our products or in the GTM. It could be complexity in hiring and training the right kind of people that we want in our business.
In a nut-shell, this is a complexity that we create in response to the market dynamics that are playing out.
This kind of complexity is difficult to get out of. It needs tough decisions to be made. Clearly defined and articulated strategic choices need to be made. Product lines might have to be trimmed. Old partnerships let go of and new partnerships forged. Simplification of a business model level complexity is not a trivial thing but still can be managed, as long as we can decide where our future lies.
Complexity in our Mental Models:
The last and the most difficult type of complexity is when our mental models become complex. This is both a good thing and a bad thing, as with anything important.
This is a really bad thing if this is not a result of deliberate effort but has creeped up in our thinking. This is when we are unable to think clearly. We are unable to make trade-offs that need to be made. This is when paralysis by analysis takes route. We start doubting everything including our ability to steer the ship. The biggest challenge here is that it is extremely difficult to realise that we are in the clutches of this kind of complexity.
However, if this is a result of deliberate attempt on our part to cultivate our ability to engage in Janusian thinking, this is a good thing, As this allows us to not only make strategic trade-off’s, but allows us to hold opposing and contrarian views at the same time when making decisions. This gives us the ability to build in nuances in our decisions which are difficult to counter. This is when we are able to tackle multiple challenges with a single, simple and elegant solution. As F. Scott Fitzgerald famously put it:
“The ability to hold two opposing ideas in mind at the same time and still retain the ability to function is the sign of a first-rate intelligence.”
Conclusion:
Typically each one of these complexities will arrive in your business every time we grow our business by Five times. We need to be prepared and expect these complexities and be ready for them. We live in a world full of turmoil and complexity. It impacts everyone – us entrepreneurs, more than anyone else. Great entrepreneurs don’t run from chaos, they run towards it. As there is always a lot of opportunity amongst chaos.
How we manage each one of these complexities define how far we will grow as a business. I have in the past also shared a different model (Heart-beat Model of sustainable growth) of running a business which allows us to not only expect these complexities but plan and exploit them instead.
