In their book Cracking Complexity, David Komlos and David Benjamin share the steps to working through any complex business problem—both quickly and using existing talent, not consultants.
When asked how they developed this groundbreaking formula, they say, “We didn’t create the formula out of whole cloth; we stood on the shoulders of both obscure and mainstream luminaries like Warren McCulloch, W. Ross Ashby, Norbert Weiner, Buckminster Fuller, Russell Ackoff, Heinz von Foerster and Stafford Beer, spanning brain research, psychology, complexity science, systems thinking and cybernetics. It took centuries of their and others’ genius thought, wisdom accrued over lifetimes and much trial and error to get to the point and the time where we were ready to pull it across the finish line.”
Once they identified the steps, they started using the formula with senior leaders from across the Fortune 500, governments, and not-for-profit organizations in 2002.
David Komlos and David Benjamin answer more questions about their new book and what makes their formula uniquely applicable in today’s business world.
Why did you write this book?
We wrote the book to spread the word to organizational leaders that there is a ‘better mousetrap’ for solving big problems—they don’t have to spend millions of dollars and months or years to get to solutions that aren’t executed. Instead, with the formula we describe in the book, they can spend an order of magnitude less over the course of a few days to get to solutions that their people believe in and are mobilized to implement. The book is designed to equip businesses and social enterprises to do far better and go much faster at resolving their weighty challenges (whether that means better consumer products, better bottom-line financial results, or better therapies for oncology patients, for example).
What defines a complex problem?
Complex problems—like doubling growth, taking out cost, merging, leading in customer experience, etc.—are dynamic, unpredictable, untidy, perplexing and don’t come with right answers, only best attempts. They require new solutions each time, created specifically for the circumstances, and you can only know that you’ve addressed them successfully in retrospect. And, they require stakeholder buy-in for sustained execution. Contrast that with a complicated challenge, where someone with expertise (you or someone you hire) can reliably and repeatedly solve it no matter the situation. Fixing a car is complicated; fixing a city’s transportation infrastructure is complex. Implementing an accounting package is complicated; figuring out what needs to change in a low-growth accounting firm is complex.
You have a formula for solving complex problems. What is it?
The complexity formula includes ten steps that leaders can apply to quickly and effectively get traction in the face of complexity. At a very high-level, after having articulated the complexity in the form of a really, really good question, a leader is guided through how to:
- Identify and convene all the right people from inside and around their organization—the people who are necessary to answer the question and whose buy-in is essential;
- Equip them to collectively decide what they need to discuss to get to answers, and then explore those topics effectively, efficiently and repeatedly;
- Have them first reach a shared understanding of the challenge, before trying to find solutions; and
- Capture the emergent insights, answers, and solutions that are resonating and reverberating across the group.
How is this different from the way leaders usually approach complex problems? What do they usually get wrong?
Leaders often approach complex problems using experts and interview-based, analytical techniques that have been honed for complicated challenges. This is what they know, and it’s worked in the past. But today, as the pace, scope and impact of challenges accelerate, organizations cannot afford to spend months and years applying costly and time-consuming approaches that don’t actually work. They’ve noticed this and are looking for something better.
Can you share an example of how the formula works in practice?
The owners of a private equity (PE) firm convene a high-variety group of people (40+) from their organization and a few acquired/integrated businesses. They ask the group the following, painstakingly detailed question: “What must we do now and over the next 12 to 18 months to grow earnings by 300 percent over the next four years while maintaining acceptable margins (20 percent or better) and continuing to be a great company to work with and for?”
The group deconstructs the question into their own agenda of topics, covering considerations like: “What are the infrastructure and technology changes we have to adopt now to achieve that kind of growth?,” “What adjacencies should we enter?,” “How can we improve employee engagement?,” “How can we grow margin?,” and so on. They then spend three distinct iterations digging into those (and other) topics, each individual playing specific speaking roles (designed to break the usual behavioral patterns) while moving from topic to topic and interacting directly with every other participant. In this way, they collectively progress from debate and story-telling around issues and opportunities, to ideas and finally to answers. All of this happens within a network that forces high-quality, high-volume interactions (what we call “collisions”) amongst all the individuals and tight connectivity amongst all the topics
And this all takes place over the course of a few days.
In this case, two years after applying the formula, they had doubled earnings before interest, tax, depreciation and amortization (EBITDA) and continued to not miss a beat. They’d won a few industry awards. The PE firm owners and leadership team used the strategic action plan that emerged from the formula to monitor and evaluate progress in quarterly meetings. They refer to the experience as “an inflection point.”
One of the most interesting things about your approach is that it doesn’t outsource the thinking work to external consultants or experts. But rather, drawing on the talent you already have in and around your organization. Why do you suggest leaders go about it this way?
When it comes to any complex challenge, with its many moving parts, your own ecosystem collectively sees everything that’s going on with more clarity than any outside individuals or firm can on their own. More importantly, when you enlist people in and around your organization to co-create the way forward, you realize some critical benefits as byproducts: you get people working across silos, instead of having someone else act as the envoy; you give people ownership of the problem and the solution, instead of disempowering them by giving it to someone else; and you begin the process of change management and mobilization, instead of treating those objectives as phase-two initiatives.
You write that the new currency of solving complex challenges is collisions, as opposed to brainpower. What do you mean by this?
We wrote a paper on this, where we answer the question this way:
Things change. The currency of solving big problems has changed. We know now that companies can’t successfully resolve their biggest challenges anymore by handing them over to the biggest brains—the challenges are too big and too complex; they also move too fast. The writing is on the wall for what worked in earlier times. You can no longer rely on a small number of smart people to figure things out and single-handedly guide everyone else to victory.
We know a lot more today than we did in the past about the importance of networks. Strong networks yield robustness, efficiency and reliability. We believe a lot more strongly today than we did in the past that there is strength in diversity. We know that agility, flexibility, adaptability and speed are survival “must-haves.” We understand that without innovation, nobody keeps up or stays ahead. What many people don’t explicitly understand yet is the vital importance of interactions. Chemical reactions happen when substances mix. Recipes work because ingredients are blended. Insights and advancements happen when previously separate thoughts are put together.
When networks connect diverse groups and rapidly, dynamically, and systematically drive high-quality interactions (or, as we like to say, collisions), “serendipitous” invention happens. The currency of solving big challenges is collisions; many, many collisions amongst the right variety of people in a connected, comprehensive, robust and exponentially-paced way.
What are the different types of problems that leaders could apply this to?
In the book, we devote an appendix to “Where Else?” and list a sample of situations that have greatly benefited from the formula. These include growing in a developing market, growing in a zero-growth industry, disrupting ourselves, creating new digital businesses, bringing a new class of medicines to market, bringing a state up the ladder of health indices and outcomes, creating the innovation agenda, developing a talent strategy, institutionalizing enterprise key account management or enterprise risk management, designing and launching a joint venture, determining and aligning the organization around its big data strategy, complying with new legislation and taking out cost. The only common thread is complexity.
Many a great strategy has died on the shelf. How can leaders make sure these plans actually get put into action?
Now, how do leaders ensure the plans developed via the formula get put into action? There are eight key success factors for execution in the complex domain:
- Sharp focus and commitment to a few clearly identified goals
- Clearly identified “distributed leaders” who are tasked with driving execution
- Shared understanding amongst “distributed leaders”, cascading effectively to everyone else
- Leadership behavior that exemplifies, recognizes and rewards the right behaviors
- Involvement of people with the right capabilities from in and around the organization
- Keeping score of performance against the right lead measures
- Coordination and optimization across silos
- Experimentation, adaptation of plan and redeployment of resources as you learn.
When you’ve approached the creation of solutions to your complex challenge the right way, the process by which you’ve done so is also a down payment on these execution essentials.
What is the single most important thing you hope readers will take away from your book?
That’s easy. If nothing else, we hope readers will take away a belief that there is a better way to solve the defining challenges they face. The formula exists. It’s proven. It works. You can boil the ocean. There is a silver bullet. Getting good at this will make you a better leader and will make your organization far more resilient and competitive. Period.
David Komlos, CEO of Syntegrity, is an entrepreneur, early-stage investor and speaker who has helped change the way many global leaders approach their top challenges. David Benjamin is the co-founder of Syntegrity and the chief architect behind its implementation of the Complexity Formula as laid out in his book, Cracking Complexity. David regularly guides leaders and their teams through their application of the formula, helping them get to decisions and action in days, no matter the industry, type of challenge, or nature of the organization.
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Categories: Best Practices FINANCES LEADERSHIP