How to Manage Complexity in Strategy

There are two kinds of problems in business and life:

Complicated and Complex

Each kind requires a different approach. Complicated problems require finding a definitive solution. Complex problems require constant management. Mixing them up is what creates frustration. 

People expect specific solutions to resolve complex problems.

Complicated vs Complex

A complicated process is predictable and adheres to a strict set of rules - if you follow the rules, the end result is no big surprise.

A complex process, on the other hand, is difficult to anticipate and is influenced by various interconnected parts.

How to distinguish between complicated and complex processes

So, are the processes you’re encountering in developing your strategic plan complicated or complex? In order to find out, use the following thought experiment:

Can you think of a specific issue or process your company is currently tackling? Now imagine it as a movie.

1. What steps led you to where you are now?
2. What steps do you need to take to resolve the issues or play out the process?

Now play that movie backward and forwards. Did it still have the same ending? If your “movie” or process has predictable results and follows a system of steps, chances are, it’s complicated. Now, if your steps act more like guidelines, with some being skipped, some being added, and others occasionally dragging on longer than expected, then your process is complex.

Examples in everyday processes

Complicated and complex processes surround us daily, both in the business world and our personal lives.

Building IKEA furniture is a complicated process. It involves following the rule book, lining up the upholstered pieces and locating the seemingly lost wooden peg until you end up with a good-looking couch. So long as your parts and rules remain the same, you’ll always end up with a couch, not a table.

The decision of where to place that couch within your living space is a complex process. This is all about trade-offs. There is no solution that satisfies every factor perfectly. There are only solutions that maximize certain factors. It’s all about optimization. Which room does the couch fit in? How are you going to use it? Do you prioritize your comfort or your guests’? Will it be used primarily for watching TV or reading? There is no “correct” location for your couch, only what serves you best according to your priorities.

Examples in business processes

Mixing the two kinds of problems in business is a prevalent mistake. Here are two different sales processes.

Call centers are as complicated as it gets. They work off of lists and scripts. When a call center representative gets someone on the phone, he follows the list. If the customer or prospect says “X,” the representative says “Y.” It is an operational “if/then” way of doing things.

Enterprise-level sales are complex processes. They’re filled with uncertainty. They require buy-in from multiple stakeholders who all have their own buying criteria. Oftentimes deals can initially appear promising and end up dwindling into nothingness. Foresight becomes much more challenging when each sale is unique.

Strategy is a complex problem

So, it has no specific, ideal solution. It requires, though, continuous management.

Take strategic planning, for example. Imagine you poured hours into crafting a thorough and detailed strategic plan in 2007. Next thing you know, the recession in 2008 rolls around and your revenue gets cut in half. Is your thorough strategic plan with all its detailed projects and goals still viable? Pouring hours into meticulously detailing your strategic plan, only to see it prove meaningless wastes time, money, and your reputation.

Strategic plans need to be simple, easily understood, and flexible when uncertainty hits. There’s a time and place for meticulous problem solving and a time and place for a more flexible approach. Knowing the difference could spell the difference between success and failure.

Complexity in strategy

Operations are complicated, but strategy is complex.

Imagine that your team is in the early stages of a 5-year plan. You’re on track and outcomes are looking promising until one day, competitors poach your entire sales team. Now your revenue milestones are looking bleak and major projects dependent on those sales can’t launch. Your team created the best possible plan with the given information. So what do you do? You could let your plan collect dust while you hastily prepare a convincing explanation for why only 30% of the goals were achieved, or you can embrace the uncertainty and adjust accordingly.

Here is where emergence comes into play.

Emergence occurs when the interconnected parts of a process, such as a sector of buyers, state of the economy, or new technology, evolve in ways that produce specific trends. Although these trends are present, they occur without any definable guiding hand. For example, your top-line revenue fluctuation depends on myriad factors and may exhibit specific trends.

However, there is no mathematical model that can predict the direction of your revenue with complete certainty.

How to manage complexity in strategy

1. Create playbooks not rule books

Due to the complex nature of strategy, finding a repeatable process that consistently produces the best solution is impossible.

That’s why establishing a playbook, as opposed to a rule book, for managing complexity is essential. Playbooks have general guidelines in place, principles, as opposed to a rule book which has an extensive set of rules that must be followed. Offer your employees guidance and the ability to manage the problem with creative solutions instead of hamstringing them with rules that frequently don’t apply.

Don’t solve the problem, manage it.

2. Don’t treat strategy as a complicated process

Again, a process is complicated when it’s predictable and produces successful results when following a rigid set of axioms.

Solving complicated problems involves establishing a robust set of “if/then” scenarios that account for everything under the sun. When applied to strategic planning, this mindset results in the development of thousands of goals belonging to only a handful of individuals. At Cascade, we find that individuals with greater than three goals or projects concurrently active in a specific period struggle to achieve positive results.

It’s enticing to solve every imaginable problem, but you need to focus your efforts and resources. When planning within longer time frames, it can feel as if there is plenty of time to tackle every goal you want to. That is not the case. Virtually ever have you enough time to focus on all strategic initiatives. You need to prioritize the items that have the highest impact. 

If it turns out you focused in the wrong direction and need to pivot, re-thinking portions of the plan will be less of a burden because you don’t have thousands of goals to sift through.

3. Don't include operational goals in your strategic plan

Including operational goals in your strategic plan is common practice but by no means best practice.

By nature, strategic plans focus on what you can do now to improve your current modus operandi. In contrast, operational plans focus on the day-to-day grind of business. The distinction is key. Too often, conversations are consumed with determining whether the “answer the phone each morning” goal should be included in a strategic plan. Although answering the phone is critical - it could be your largest client in need of assistance -, strategic plans need focus. 

Balance your long-term vision with the current conditions of the market.

4. Implement the Keep, Start, Stop Method

The Keep, Start, Stop method is a great approach to managing your complex problems and ensuring your goals have an immediate purpose.

Once per month or quarter, meet with your employees to review progress towards their goals. Once there’s a general grasp of how they’re performing, ask the following questions for each of their goals:

Keep: What have you been doing well that’s driving progress towards your vision?

Start: What could you start doing to drive progress towards your vision?

Stop: What should you stop doing that’s not driving progress or detracting from progress?

After your conversation, create, record, and track measurable action steps that should be completed before the next scheduled meeting. Once implemented, you’ll have actionable steps for process improvements and be able to focus on emergent trends, ultimately securing a process that drives results. 

To make this process effortless and save time, use a dynamic strategy execution platform, like Cascade. Our platform tracks commitments and people’s performance on those commitments. 

Complex and complicated problems are ubiquitous

Identifying and handling them appropriately will save you time, money and frustration.

If you’re in the middle of formulating your strategic plan, don’t look for the best solution. Look for the solution that fits best to your priorities. Once the rubber meets the road and your team begins to execute on its initiative, unforeseen circumstances will occur. You will inevitably have to change your course and adapt. 

You are more likely to succeed if you review and adjust your strategy over time. Be open to adapting to new situations and applying modifications to improve. Strategic planning, with all the people involved and the factors that affect it, is complex. See how Cascade can help you manage the process.