Complexity and defence management

1. Complexity and defence management Professor Trevor Taylor Cranfield University at the Defence Academy Shrivenham

2. Complexity? • Complex • Multiple links among multiple variables • Change within system components • Difficulty of full system comprehension • Small changes may cause large effects • Modelling system operation gives wide variety of possible outcome Simple Complicated Complex

3. The traditional approach to dealing with complexity • Ignore it • Many human achievements reflect a capacity to build and use models • Simplifications of reality • Incorporating key features • Dörner’s stress on human use of ‘supersignals’ to extract key elements of reality • Underpinned by Newtonian thought that universe is at heart ordered and predictable, even mechanical

4. In the face of growing complexity • Some management thought says avoid complexity, especially regarding the product range offered • Complexity of range of product offerings can push up cost disproportionately • Recommendations • Find out what your customers truly value • Reduce the variety in corporate offerings • Monitor creeping complexity within the business • ‘For every new product or service your company adds, eliminate or streamline one from your existing portfolio’ (M.Gottfredson & A.Schwedel, ‘Cut complexity – and Costs’ Harvard Management Update August 2008)

5. But growing management literature • Building on complexity science • The universe (and business) is non-linear • Small changes can matter (do not always average out) • Unlikely events occur • Fooled by Randomness • ‘Rather than living with the heightened anxiety created by low-probability risk, people simply write off the residual risk to zero’ (Marc Gersten) • World is becoming increasingly complex • The ‘perfect storm’ of technology, demographics and global economics • Tapscott & Williams

6. Growing management literature Some sources of modern ‘business chaos’ (Rowley & Roevens) Higher customer expectations Rapid technological innovation and obsolescence Cross cultural misunderstandings Rapid organisational growth and extinctions in some business units Stringent environmental legislation Talent bleeding and skill shortages Volatile world stock markets Newtonian consultants

7. Growing management literature Six things among others drive increasing complexity for businesses Rapidly interconnecting networks of ideas and people Disruptive technology Explosion of choice for consumers Increasing intangible desires of the market: customer need for emotional fulfilment ‘Increasing complexity of technology, systems and processes: complexity begets complexity’ Legislation: financial transparency, safety, the environment, human rights etc Peter Sheahan

8. Growing management literature • Building on complexity science • The universe (and business) is non-linear • Small changes can matter (do not always average out) • Unlikely events occur • Fooled by Randomness • ‘Rather than living with the heightened anxiety created by low-probability risk, people simply write off the residual risk to zero’ (Marc Gersten) • World is becoming increasingly complex • This needs to be recognised and new behaviours adopted • Formal processes • Clear rules • Bureaucratic approach • Especially if there is a need for rapid/continuous innovation Cannot cope with much contemporary complexity

9. Summary of management-related complexity theory in six minutes?

10. Disturbing news for defence? • The new art and science of wikkinomics is based upon four powerful new ideas • Being open and transparency • Peering • ‘Though it is unlikely that hierarchies will disappear in the foreseeable future, a new form of horizontal organisation is emerging that rivals the hierarchical firm in its capacity to create information-based products and services, and in some cases, physical things’ • Sharing • Acting globally • Tapscott & Williams Export controls Ineffective collaboration Prime contractors The national DIB

11. Disturbing news for defence? • Rupert Murdoch as ‘flipstar’ • July 2005 News Corp bought MySpace for $580 million • ‘The precise business model for sustained profitability from our digital investments is still uncertain at this point. Consequently, in some ways, we are embarking on a period of trial and error’ • News Corporation Annual Report 2006 • Vastly profitable exploitation of the acquisition within 18 months • Peter Sheahan, Flip: how to succeed by turning everything you know on its head, p.35 Initial Gate Business cases Main Gate

12. Disturbing news for defence? • ‘Most large corporations are still too much like monarchies and too little like democracies’ • ‘To reduce the costs of change in your organisation, you must embrace the principles of devolution and activism’ • ‘These management principles – variety, competition, allocation flexibility, devolution and activism – stand in marked contrast to those we’ve inherited from the Industrial Revolution. That doesn’t make the old principles wrong, but they are inadequate if the goal is continuous, pre-emptive strategic renewal’ • Gary Hamel, HBR, February 2006 • Complexity guidance includes • Act before you know precisely what you are doing • Accept that there will be failures: progress by evolution • Short term flexible plans • Entrust to self-organisation of motivated people

13. Complexity behaviour illustrations Gary Hamel HBR February 2006 • 1968 US credit card industry – proliferation of cards • Need for an effective brand while still allowing banks to compete for customers • A design team led by a Dee Hock concluded that a system needed to be guided by some (radical) principles • Power and function in the system must be distributed to maximum extent possible • System should be self-organising • Governance must be distributed • System to seamlessly blend collaboration and competition • System should be malleable yet durable • ‘These principles owed more to Hock’s fascination with Jeffersonian democracy and biological systems than to any management textbook’

14. Complexity behaviour illustrations Gary Hamel HBR February 2006 • 1968 US credit card industry – proliferation of cards • Need for an effective brand while still allowing banks to compete for customers • A design team led by a Dee Hock concluded that a system needed to be guided by some (radical) principles • Power and function in the system must be distributed to maximum extent possible • System should be self-organising • Governance must be distributed • System to seamlessly blend collaboration and competition • System should be malleable yet durable • ‘These principles owed more to Hock’s fascination with Jeffersonian democracy and biological systems than to any management textbook’ • Result Visa – ‘an organisation whose product was coordination’

15. Defence management qualifies as complex:a single machine Foreign Policy Generate capability Today Future Air Training Prepare Moral Equipment Project Land Effects-based, comprehensive approach Personnel Defence Policy Protect Conceptual Infrastructure Sea Inform Doctrine Command Space Organisation Physical Operate Information Cyber Security Policy Sustain Logistics Execute operations

16. Defence management qualifies as complexa single machine Foreign Policy Generate capability Today Future Air Training Prepare Moral 90% of global R&D as ‘civil’ Equipment Project Land Effects-based, comprehensive approach Personnel Defence Policy Protect Growing importance of information Conceptual Infrastructure Sea Inform Doctrine Command Space Organisation Physical Operate Information Cyber Security Policy Sustain Logistics Execute operations

17. The extent, variety and complexity of the individual tasks which are required to produce modern military capability makes detailed central control or management both exceptionally difficult and very inefficient. Responsibility for individual components of capability and for supporting and administrative tasks is therefore delegated …. MoD recognition of complexity management?The Departmental Framework

18. The extent, variety and complexity of the individual tasks which are required to produce modern military capability makes detailed central control or management both exceptionally difficult and very inefficient. Responsibility for individual components of capability and for supporting and administrative tasks is therefore delegated …. The need for central strategic direction both for military operations and for the peacetime creation and maintenance of military capability requires a hierarchy or vertical command and management structure MoD recognition of complexity management?The Departmental Framework MoD enthusiasm for Wikkinomics concept of Ideagoras? (people are seduced into working for you for nothing!)

19. MoD recognition of complexity management thought • Grand Challenge for robotic surveillance • 23 teams entered • Seven reached final • Team Stellar winning • ‘The MoD will now consider which parts of the technology it can put on show, but all the winners got was a trophy and the satisfaction of knowing they did their bit for Queen and country’ • The Independent 20 August 2008

20. Conclusion • Many questions about • The validity of complexity management thinking? • Writing marked by anecdotes and illustrations • Not statistical evidence • The coherence of complexity management thinking • Its relevance for the public sector? • Its relevance for defence? • Does defence need the rapid innovation of much of the private sector?