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However, the major
dysfunctional source of complexity in
organizations is the leadership. A
fundamental task of leadership is
providing simplicity of thinking a
clear story that effectively
communicates the mission and
fundamental strategic path of the
business. Failure to accomplish this
yields a "cognitive complexity" that
frustrates and paralyzes organization
into inaction and failure to take
necessary decisions.
Why only global corporations? In
what way global organizations
present more complexities than
geographically bounded
organizations?
The cultural diversity in global
organizations is certainly a reality that
requires understanding and skillful
management. Respect for differing
behavioral norms and values is a
requisite for the effective functioning
of the global organization. I should
note that I consider a "global
organization" in this sense as more
than one which simply operates in a
variety of world markets. Today's
global organizations also distribute
activities and operations to
geographically diverse areas, but also
incorporate a variety of individuals
with different cultural backgrounds.
The on-going academic debate about whether corporate culture can
override elements of national culture
provides little insight other than the
fact of our inability to resolve the
issue. The essential message is that
both matter. In addition to
confronting areas of apparent
difference in values, the resolution
comes from identifying key behaviors
that emanate from these values to
determine if the conflicts exist at that
level.
My experience is that there is a ready
willingness to attribute many
organizational conflicts to "cultural
differences" when they are really
basic conflicts in business
functioning. Thus, the
unwillingness of a subsidiary to
adopt a new corporate proceduremay
be quickly attributed to cultural
issues when the basic dilemma rests
in a conflict of business interests or
goals.
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Apart from globalization what
other new business realities do you
think have heightened the
complexities of global corporations?
The introduction of new technologies
has had a profound impact on the
structure and functioning of business
organizations. While offering
innovative new solutions to existing
problems, the technology has created
a new complexity, all its own. The
"blackberry" which affords instant
communication across a dispersed
organizational group may prove to
undermine the group's normal face-toface
communication as people
respond to the incoming emails
during a meeting.
In addition, new partnering
arrangements to improve problemsolving
among suppliers, customers
and the organization have
complicated the norms and traditions
of "boundary management" between
groups. Solution of a customer
problem in Asia will be detected and
sought in Europe and the US by
others who may be informed well
before the local affiliates of the central organization. Levels of transparency
necessarily require careful
management in the existence of
coopetition that create partners of
active competitors in a particular
project.
The trends toward "mass
customization" add an essential
element of complexity. Increasing
numbers of SKU's add levels of
complexity to the management of
portfolios at product and brand levels
in many organizations. Again, this is
a complexity that obscures for many
organizations a recognition of which
products and customers are really
profitable.
Finally, I would argue that the rate of
change is a major source of the
complexity. Change is, and has
always posed a complex task for
management. As the "rate of change"
increases, there is a "metacomplexity"
that challenges
leadership substantially.
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Of the two prominent sources of
complexities internal and
external which one do you think is
likely to cause more damage to the
companies?
I return to my premise that the
fundamental task ofmanagement is to
pride a level of simplicity to the
essentially complex functioning of
organizations. Both internal and
external sources are equally
challenging. (We have not discussed
the market turbulence that add a new
complexity currently to many
businesses.) However, the fact of
complexity is a reality. The response
to this complexity remains as the
essential determinant of performance
in global organizations.
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Can you share with us a few
examples of how global corporations
were affected by internal as well as
external sources?
It is easy to see how organizational
complexity contributed to the
outcomes at Bear Stearns and Societe
Generale. In both cases, the outcomes
were not simply a result of difficult markets, but rather an inability to see
and manage the essential complexity
of their organizations. The inability to
present clearly the simple
explanation of a new General Electric
depressed the stock price well before
the impact of missing a projected
revenue number. The inability to
simply express the synergic value of
what may be exciting and positive
changes has cost Jeff Imelt greatly.
