Module MT030

Complexity Theory


Module author

Mike Valente

York University

Learning objectives

After you studied this module, you will be able to:

  • Define complexity in the organizational context;
  • Explain what the concept of complexity is about and what it tries to explain.
  • Explain why it is relevant to know about this theory in today's economic environment and management practice.
Workload units 1
Reading extract Complexity Theory in Management


Why Open School of Management believes that knowing the complexity theory is helpful

When it comes to economics and management practices in the business world, there are several theories, one of which is the complexity theory. In terms of business, the complexity theory can be related to everything from the national economy to the product line. However, what is the complexity theory, and how is it relevant to today's management and economic environment?

How the complexity theory is used in business

Businesses often use the complexity theory to encourage innovative thinking. In management, for instance, the complexity theory allows employees to self-organize, which reduces the need for these workers to be governed by management. This can be viewed as helpful since the business industry is often described as moving in a nonlinear manner, which forces employees to act quickly.

For the complexity theory to work, businesses have to be willing to give up control of their systems. They cannot micromanage everything that happens. This usually leads to management being able to observe from a distance, which plays into the ideal that more can be learned by taking a step back. What this does, from a business point of view, is allow management to stop running the day-to-day operations of a company and focus on other aspects of the business.

In "Books in Review: Are Managers Obsolete?", Thomas M. Hout writes that employees have to move quickly and don't have time to wait for management if they are going to keep up with changes in the business world. No intelligence from above (management) can compare to the solutions that are found for problems that arise every day on the ground level. The best people who come up with solutions here are the ones that deal with it every day: the employees on ground zero.

Hout is saying that old management systems are simply too cumbersome for the quick pace of the business world. Although they used to work, it's a new kind of strategy that wins in today's market. This strategy allows a company to adapt quickly, and that is what the complexity theory is all about.

Of course, the complexity theory doesn't mean that management has to give up power altogether. On the contrary; management staff are still needed for the complexity theory to work. These members still need to be a guiding light for the employees and ensure that strong values are of top priority.


Why study complexity theory for management purposes?

The business world is always changing; this requires real-time responses. In some cases, employees don't have time to wait for management to tell them how to handle such a situation. The complexity theory allows for these employees to act as a single unit without the need for management to govern their every step.

The co-author of "Open Boundaries," Ron Schultaz, explains that the complexity theory works today because it's about how ideas can shape behavior. If the ideas that employees have about the world are machine-like, they operate on a machine-like level. This works for some companies, but some of the best ideas a company can have come from these employees. If they aren't encouraged to think, these ideas can never be brought to light. Of course, management has to be willing to listen to them. This is something that usually doesn't happen in businesses that aren't using the complexity theory. Often, the ideas that employees come up with are far more organic than what management could ever develop because they are easier to apply to real situations.

The complexity theory works because most companies don't move at such a blazing fast pace so that they can keep up with the times. The complexity is relative and helpful today because it allows businesses to respond at a much faster pace thanks to a complex system of ideas that let them thrive on unpredictability.

Different Views

Not all companies believe in the idea of allowing a self-organized, complex system to run their operations. After all, they have a lot to lose. The complexity theory is centered around the belief that giving employees less management allows them to be more intelligent and enthusiastic in their work. Some business believe that more management is needed to combat fast-changing times. These are the ideas to which long-time businesses cling. After all, it has worked for years; why change now? However, it's the reshaping of companies that allows some to flourish in this new age of business, whereas some giants that have been around for a long time come crashing down.


Return to Management Theories (MT module).