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Managing Complexity (Working with complexity (Weick model (Dysfunctional…

- - - - Weick model works well when org is functional
        
        • An organisation may become so complex that autonomous units may self-organise.
        • Their self-developed aims may be dysfunctional and damaging to the organisation as a whole.
        Need to develop and reinforce a sense of corporate values to counter this threat
    - - CBLRPSAC
        
        passcard diagram!!!!!
  - - - turn resolving complexity into a competitive advantage
        
        Understanding the problems that your customers are struggling to solve can be an advantageous market differentiator and value proposition for an organisation, providing that it has the
        tools and the skills to deliver simplifying services to those customers. This is one of the major roles increasingly played by large accounting and consulting firms, where traditional services such as accountancy and management advice expand to include consulting and advice on enterprise-wide technology solutions and sustainability issues.
- - - - An example of a wicked problem is the development of a modified car design. Each change in the design will impact on other design elements; each change has cost trade-offs; not all end-results can be estimated; and success or failure cannot be known until the car is released to the market. The design also involves the expertise of a range of disciplines, including designers, engineers and marketers
  - - - passcard diagram!!!!
        
        A messy problem has the following eight attributes: IBIOPIUM
        
        1 Its boundaries are unclear. Its beginning and end are not obvious.
        2 The exact nature of the problem is ill-defined. There are many different perspectives and definitions of the problem.
        3 Messy problems are comprised of a number of smaller, interrelated problems whose interactions are often fuzzy or unknown.
        4 Actions to remedy a messy problem often have unforeseen consequences, some of which can be negative.
        5 Messy problems overlap in obvious and in unknown ways with other messy problems.
        6 Messy problems cannot be solved in isolation from other messy problems.
        7 The solutions to messy problems require a mix of technological, social, economic, paradigm shift and value examination activities.
        8 The solutions to messy problems require paradoxical solutions at micro and macro levels as well as redefinitions of institutional and personal responsibility. Messy problems cannot be solved from the inside, nor can they be solved unless individuals take responsibility for them.
- - - - Skill development
        
        3 journeys passcard!!!!
      - Making decisions
        
        Some of the ways to develop good professional judgment include: SOG
        
        • seeking out and hearing the stories of how other accountants have encountered and successfully dealt with a complex situation;
        • being an opportunistic learner from mistakes (Cialdini, cited in Ostergaard 2009); and
        • participating in or sponsoring decision games (Klein 2009, p. 281) where key leaders are presented with a scenario or story of seemingly intractable problems and they talk through what they might do.
      - Modelling
        
        As with the leader who must behave differently in the face of complexity, the accountant will need to modify expectations in modelling for complexity. Models: CCM
        
        do not need to be completely accurate—they must just be able to support a decision to make an incremental step forward;
        
        will need to change over time, so they should be designed with modification in mind; and
        
        will be more or less useful. Sometimes, there will be no identifiable reasons for past events; sometimes, there will be equally probable future outcomes. The accountant should not become discouraged if the model is discarded, because reaching the stage where a model is discarded is a significant and progressive step when dealing with a complex problem.
        
        One of the approaches to complexity involves conducting experiments that are safe-to-fail, sensing what the results are indicating and cautiously responding. The notion of safe-to-fail has become increasingly important to many organisations since the GFC. While an organisation cannot be made fail-safe, they can make elements of their operation safe-to-fail so that their failure does not disrupt or put at risk the entire organisation. This approach encourages a leader to move forward incrementally, conducting experiments that are safe-to-fail (probing), sensing what the results are indicating, and cautiously responding. In this way, the patient leader allows the path forward to emerge from the many possible states. In this approach, experiments that do not lead to desirable results can be shut down, without major impact, and those that prove to be effective can be reinforced and expanded.
- - - - Emergent complexity
        
        Interactions between entities may give rise to something completely unexpected.
      - Non-linearity
        
        The concept of linearity is well established (e.g. if 1 unit costs $10, 20 units cost $200).
        However, many issues, such as rates of change, are non-linear in nature.
      - Complexity of an entity
        
        Defined by the amount of information that is needed to describe the entity.
        Operational excellence is correlated to an ability to simplify complex entities.
        
        There is a range of accounting tools used to understand complexity and to simplify activity, including: BAB
        
        –– business-process analysis and redesign, which focuses on mapping, analysing and simplifying the sequence of tasks and activities throughout the organisation;
        –– BSC reporting, which highlights cause-effect relationships between different facets of performance; and
        activity-based costing, which focuses on providing more accurate costing data to support understanding of the resources consumed by products, services, customers and departments.