In this Gapingvoid post about business complexity, that refers to a Clay Shirky 2010 post ‘The Collapse of Complex Business Models‘, we are reminded that excessive increase in complexity often leads to collapse of organisations or societies (and not to improved adaptability).
Organisations and societies would sometime collapse because of their sophistication. According to some studies, increase in complexity is first positive, before reaching a point of diminishing returns and even becoming detrimental. And “When societies fail to respond to reduced circumstances through orderly downsizing, it isn’t because they don’t want to, it’s because they can’t.”
The issue here is not that complexity inevitably increases in organizations and societies. It does. The issue is how to ensure that this additional complexity makes the organization or society more flexible and adaptable to substantial changes and shifts in its environment – and not too rigid, leading to collapse.
In the business world I know only of one solution: allowing new activities to develop in relatively independent subsidiaries. They may one day replace the mother company as values shift, but then the accretion of new activities won’t create excessive additional complexity and the various activities remain relatively flexible and nimble. The case for the diversified group of companies as a way to be more resilient is open!
