Complex Times

Both the IT and business sides can learn something from complexity theory, which allows us to view the intricate business landscape through a wider lens.

• By Laura Wonnacott
• 09/01/2001

Yesterday's complexity related to systems we understood-even massively multi-tiered systems with distributed databases, application servers and extensive networks were well within our framework. Today's complexity involves more than just the systems: It requires knowledge of the business and the ability to foresee a return on technology investments. These changes point to a new truth in business today: We must expand our horizons to expand our business. But change (and accepting change) comes slowly.

It's common for professionals in both business and technology to think in a linear way, supported by cause and effect: If we buy this new router or build a faster application, we'll be able to accept X number of connections, which translates to X transactions or X revenue. It's a traditional equation. It's also very wrong.

Why? Because it's too predictable. We should all take a lesson from complexity theory. Complexity theory acknowledges what exists between stability and chaos and reminds us that everything can't be controlled. Other principles of the theory remind us that small changes can sometimes have big consequences, and that unpredictable changes will occur.

Management, in particular executive management making big, costly decisions, can learn something from this theory, which emerged from the biological sciences. Most business majors I knew in college did everything possible to avoid biology. Most business majors I know now are working on the premise that business thinking is linear and that business itself is predictable. If business is really that predictable, then traditional return on investment (ROI) measurements are still useable.

First, consider what happened to ROI during the past year. It wasn't that long ago that we couldn't spend enough on Internet-based technology. E-business was so strategic to traditional business that long-established ROI computations didn't seem to apply. ROI actually became a barrier to keeping up with Internet time. It seemed obvious what needed to be done, and ROI fell by the wayside.

Well, it turns out we were wrong, and as we return to calculating returns on investment before we spend, we should consider this: Things are much more complex than they were and that affects ROI. Acknowledging this complexity allows us to create an ROI projection that's more in line with the real world. As ROI returns to the decision-making table, paying mere lipservice to it does the business a major disservice.

The rebirth of ROI must include the nonlinear complexities that traditional ROI is not accustomed to counting. Focusing ROI solely on direct revenue initiatives should be a punishable crime. Overlooking the ROI of indirect revenue opportunities or failing to acknowledge return value for intangibles, such as customer satisfaction, is downright wrong. ROI has to become something that's more than dollars and decimals; it needs to incorporate the intricacies of today's business world.

Complexity theory applied within the organization takes to heart the importance of relationships at all levels. In the book, The Soul at Work: Listen ... Respond ... Let Go: Embracing Complexity Science for Business Success, by Roger Lewin and Birute Regine, the authors claim that people must "become the new bottom line." How we interact and relate to each other determines what gets done. The relationships define the culture, and ultimately the productivity. The application of complexity theory simply allows us to see the business through a different lens.

If you understand and stay aware of complex systems and theory during the ROI process, you can help your business create ROI plans that, rather than evoking a predictable world of business that doesn't exist, are appropriately real and complex.