The Idea in Brief
In just a short time, most businesses have gone from complicated to complex: They contain numerous diverse, interdependent parts. This makes managers’ jobs much more difficult.
• They can’t predict what will happen when various parts of the business interact; the same starting conditions may yield different results.
• Seemingly simple actions produce unintended consequences.
• Human beings’ cognitive limits mean that no manager can understand all aspects of the business—but many refuse to acknowledge those limits.
• Rare events can be more significant than average ones—and may occur more often than we think.
Managers can navigate these difficulties by making fundamental changes to how they approach key tasks:
• Forecasting
• Mitigating risks
• Making tradeoffs
• Ensuring diversity of thought
Managing a business today is fundamentally different than it was just 30 years ago. The most profound difference, we’ve come to believe, is the level of complexity people have to cope with.
