Understanding trade-offs in system optimisation
Unlike many naturally evolving systems, organisations are consciously created and designed to fulfil a purpose. In pursuit of this purpose, people will drive the system towards optimisation of performance, robustness and resilience. We can define these as:
- Performance – maximising outputs of a system in the current environment
- Robustness – maximising the ability of a system to continue its current configuration
- Resilience – maximising the speed with which a system can transform to a new, optimum configuration
However, the tension between these goals creates a trilemma – a situation in which only two outcomes may be achieved at the same time. This is the complexity triangle, similar in concept to the iron triangle of project management. For example:
- If you focus purely on performance and survival, you will inevitably sacrifice your adherence to purpose in search of that environmental “sweet spot”
- Optimising for a static position in the environment where you can deliver high-performance outcomes is not a good strategy for long-term survival
- To be influential and stable enough to preserve your positioning until you can adapt to the future on your own terms, your organisation will be a behemoth and not a high-performing one
Most organisational structures exhibit the properties of complex adaptive systems. Organisational behaviour is dynamic and non-deterministic, but with constraints that mean (as Dave Snowden puts it) “the system lightly, but not fully, constrains agent behavior, and in turn the agents through their interactions constantly modify the nature of the system”.
Defining what “performance” means in the context of an organisation, and setting the relative balance between these three outcomes is arguably the two most important strategic choices a CEO will make during their time in charge of an organisation. There is not a right or wrong answer, but knowing that it is a choice, and communicating this choice clearly will set the priorities and motivations of almost every other decision made by employees.
Also published on Medium.
