In a fluid and fast-changing environment, the leaders we interviewed recognize that they cannot set strategy and control decision making as directly as they might have in the past. They are delegating duties downward so that the people closest to the market—closest to the complexity—can solve problems.
“It is really about leadership and not just at the top end of the company, but also leadership pretty far down,” Bindra said. “The firm must have the maturity to empower people—and that takes lots of courage.”
Simplification. Delayering is part of the solution to complexity. The six leaders all agreed that organization structure should resist rather than reflect the complexity in the outside world. They are trying to create an environment without structural and procedural “complicatedness”—one in which employees can exercise personal judgment. Standard Chartered, Natura, and the Malaysian government all are undergoing transformations in order to empower employees. “As you keep growing aggressively over the years, organizations can get quite complex,” Bindra said.
When Martin Richenhagen joined AGCO as CEO in 2004, the company had 26 brands. He reduced the number to four and decentralized operations so that local managers have the authority to make decisions. “We are very decentralized, and we try to have the units tailored in a way that they’re not too big and unit management is completely in control of running the unit,” Richenhagen said.
Agarwal built Vedanta Resources through acquisitions and determination. He is equally committed to keeping his organization from growing bureaucratic and sluggish. “I’ll keep my business very simple, trust people, and empower them,” Agarwal said. “I am not going to allow things to get complicated.”
Collaboration. AGCO, for example, is increasingly relying on networks that extend outside the company in order to address the growing expectations of farmers. As agricultural equipment becomes more sophisticated, the company works closely with dealers and suppliers so that its tractors and implements can communicate with other products. “[If you are a farmer, y]our dealer can communicate with you in order to tell you that you’re maybe running too fast or don’t have the right torque,” Richenhagen said.
Natura wants its customers to influence the development of future products and is investing heavily in technologies to make that happen. “We believe that we really can transform our business and become very close to the customer so the customer is only one click away,” Carlucci told BCG in an interview held before he left Natura in September of this year.
Networks of public officials and private-sector executives also have a crucial role to play in helping the public sector address complexity. “The government of the twenty-first century will need to be much more sensitive to what is happening around us and be able to respond quickly to the needs of the people as well as the private sector,” Najib said.
To ensure that the government is more responsive, Malaysia has created a transformation of civil service that is paying dividends. The country’s Ministry of International Trade and Industry, for example, has helped generate record levels of foreign direct investment in recent times.
This public-private collaboration is especially important as such issues as sustainability gain ground. In order to engage in sustainable mining practices, “we have to sit down together with government,” Agarwal said. “There is no question about the importance of sitting down across the table.”
The Gates Foundation tackles complex social issues by collaborating with a wide array of public and private organization. "We have what to some might seem like large financial resources, but relative to the scale of the problems that we’re taking on, they’re a small percentage of what is needed. So we have to think in a very catalytic, very leveraged way—engaging partners and getting aligned along outcomes," Raikes said.
Big Data. Ironically, the leaders cited big data as both a prime cause of complexity and a potential solution. By drawing inferences and interpreting probabilities from streams of data, executives can come to make sounder judgments. But ultimately they say that they still must make tough decisions on imperfect information.
“However much that you rely on data, nothing beats the power of conversations,” Bindra said. “People tell you more than they will ever write. When people look you in the eye, you get a gut reaction or at least a track record of belief or distrust.” In other words, people networks are as important as computer networks.