Talking to… Jorgina Pereira about the Complexity of Organizations
Jorgina Pereira started at LOQR in March 2019 as part of the Finance & Accounting Department. She graduated in Business Sciences at IPP, where she also had her Master in Management and Internationalization of Businesses. In her dissertation, she discusses the complexity of organizations, which will also be the topic of this conversation.
Jorgina, since this is a topic of your interest, tell us a bit more about the complexity of organizations.
This question was the one that I focused on most during my investigation. Talking about complexity means inevitably recognizing the coexistence of three key concepts:
– Interdependence, because the organization is built from the development of relationship networks, becoming interdependent on the parts it relates to.
– Unpredictability, due to the instability of the hostile environment that surrounds the organization (internally and externally) and in which it competes, and even the impossibility of predicting the actions taken by the parties that comprise it and with which it interacts.
– Adaptability, due to the need for competitive organizational restructuring and continuous corporate adaptations.
From each of these key concepts, it is possible to understand the dynamics of complex systems better and transpose it to a better understanding of the contemporary organization. So, associated with the concept of complexity in organizations, rises, inevitably, the cooperation and competition between the parts that interact, demanding organizational polyvalence.
What makes an Organization Complex?
As an open system, the organization develops relationships to generate business to subsist and prosper in the market on a global scale. The intensification of relations with the rest of the world also leads the organization to act in different geographic areas, submitting itself to international normative standards, unequal legal systems, and significant cultural barriers that make “Complexity” the watchword of business.
In this sense, there are several variables, and of different natures, that contribute and/or influence the complexity of organizations, such as age, culture, and degree of internationalization. However, the size of the organization is considered a primary cause and predictor of complexity because the larger the organization, the greater the number of agents involved who interact and interrelate dynamically.
How can an organization tackle contemporary complexity?
There is no single solution or rule to deal with complexity – Thinking complex is the key! Given that companies face different challenges in a complex environment, and the implementation of the same action or strategy may lead to different results.
I believe that the organization must deal with complexity as a strategic factor in achieving sustainable competitive advantages.
It will be particularly interesting to analyze and deal with contemporary complexity as a “double-edged sword”: if, on the one hand, complexity creates uncertainty, unpredictability, and management difficulties, on the other hand, complexity can be analyzed as an opportunity to outwit the competition and obtain sustainable competitive advantages.
The construction of barriers to imitation is one of the positive externalities of complexity. To imitate the leading company, the following company will have to replicate the business models and the multiple interactions that naturally and unpredictably take place between its elements, making it a time-consuming process.
Nevertheless, the resistance to change and the management’s inflexibility to foresee the unpredictable make dangerous barriers in constructing effective strategic actions since they distort the observed reality. Thus, dealing with complexity implies not only proactive decision-making but also renouncing traditional management paradigms.
How important is Complexity Management Overview?
Managers’ leadership influences organizations’ adaptation to their environment. Identifying the organization as a complex, dynamic, and non-linear adaptive system leads to new ways of understanding organizations and their management. Corporate know-how and experience should be used to increase the sensitivity of observation and interpretation of reality so that the organization implements effective organizational responses to constant challenges and market tests.
A small decision can lead to surprising results. Increasing complexity often appears as a happy consequence or result of success. However, management based on limited chaos is essential so that complexity does not become an obstacle or difficulty for growth and success. This means that it is vital for the organization to “resist change” to enable internal efficiency and “promote change” with a view to continuous adaptation. This ambiguous organizational positioning – between order and disorder – becomes the grand challenge for the management and internationalization of companies.
What about the importance of digital transformation in the digitalization of processes and consequently in managing complexity?
Digital transformation accompanied by the modernization of organizational management processes is an essential tool in the process of constant adaptation of organizations, capable of renewing business strategies, solidifying their competitive advantages, and improving the company’s performance.
The digital transformation emerges as a response to the need of reimagining the business, imposed by the chaotic pressures of the current market, making it, therefore, very important in the management of complexity and decisive in the solidification and strategic sustainability of organizations.
This phenomenon has revolutionized companies’ performance in the most diversified sectors, emphasizing the organization’s digital relationship with its customer, which has gradually become a digital customer, informed in real-time, closer, and more demanding.
Therefore, outlining an effective and sustainable competitive strategy in a complex environment means thinking, rethinking, reinventing, and innovating traditional management methods, with the main objective of adding value to the products and/or services offered, fulfilling the mission of customer satisfaction.
Jorgina, if you had to define LOQR in one sentence, which would it be?
LOQR is a driver of digital transformation, which through innovative solutions, impacts the life of modern society and makes a difference due to its vision: “Empowering digital Lives.”