Tag Archives: complexity

You give complex diagrams… a bad name

Death by PowerPoint

It’s not often that a Powerpoint page makes it to the front page of a national newspaper.  The story goes like this.  Leaders were discussing the complexity of American Military strategy in Afghanistan.  Someone prepared a PowerPoint slide after lots of work.  The slide was shown to Gen. Stanley A. McChrystal, who leads the US and NATO forces.  There was a awkward pause, broken by his observation that “when we understand that slide, we’ll have won the war.”  The audience lets out a roar of laughter.  The presenters and diagram-preparers are embarrassed.

Perhaps you’ve seen this page.  It’s become its own meme.  It was ridiculed by many, including Jon Stewart and probably many of your Facebook friends.  It confirms what many of us have seen with our own eyes: there’s a fine line between trying to communicate a memorable story and drop-off-the-cliff absurdity, especially when you are dealing with a complex story.

As a stand-alone, this is a horrible picture.  Many pictures that try to tell a complex story do not do well by sitting by themselves.  Your audience may be familiar with the topics and may even agree with what you are trying to communicate.  But in general, our audience needs a guided tour through something like this.

There’s a certain fluency required in understanding a complex causal loop diagram.  What makes it worse is that without a guided tour, your audience is misled into thinking that since they can read parts of the diagram, they can also read the “whole diagram”.  This is faulty logic.  You don’t want to make the audience seem dumb.  Your audience may be very smart, but when confronted with a diagram like this, they are likely to ask some practical questions.  Where do I start?  What does this mean?  If there are no grips or footings to stand on, your audience will fall, or at least feel like they are slipping.  So they ridicule the diagram, say nothing, or wait until someone says something funny.

So what do you do if you have a complex story to tell that’s best represented by a causal loop diagram?

You should first establish some “basic rules” of how something like this is read.  There are many ways to do this depending on what you are discussing, how many diagrams are in play, your relationship to your audience and a host of other factors.  Sometimes a one-page introduction with a description of what the following diagram shows, along with one loop or a few links does the trick.

You can show things in chunks.  Do you notice the colors?  There are subsections or subsystems.  You can start with an overall subsystem diagram that shows the stakeholders and links… maybe this has only 5-10 actors and only 10-15 links.  All we’re doing is establishing that there are many players and different relationships… not enough detail to be useful, but enough to engage and prepare the discussion.  Then build out details, chunks at a time.

Never forget to explain WHAT you are trying to do with the diagram.  Also notice that it’s “what YOU are trying to do”, and not “what the DIAGRAM is trying to do”.  The diagram does nothing.  Except confuse and amuse.  Human beings (like you or the audience) use, show, debate, decide, tell stories, and understand.

Ecologist Eric Berlow presents a good approach to stuff like this at a TED conference.  He starts with the whole, then gets rid of stuff.  The key is that he gets rid of stuff to fit a certain sub-story.  I call this “collapsing” the diagram… not a great use of the terminology, I admit, but useful in helping the audience feel a bit of relief from the task of dealing with everything.

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Business Complexity and the Global Leader

Why do companies fail?  We have smart people, lots of data, lots of resources, and sometimes even a successful track record.  Can we learn something from how cities have grown, Rome prospered and fell, Sahara villages sustain (or decline), flocks of birds migrate?  Are there underlying similarities across customers who buy your stuff, people who elect leaders, fish that flee prey, termites that build mounds, and cells that build organs?

These were some of the questions discussed recently at the Business Complexity & the Global Leader Conference, hosted by The Institute for Executive Education, Sawyer Business School at Suffolk University, last week in Boston, MA.

If you are interested, you can download some of the presentations here.  Complexity is hard to describe, sometimes uncomfortable to discuss.  Sometimes, it’s frustrating if the conversation turn into nothing more than overlapping descriptions of how bad something is, or the descriptions (or solutions) seem too academic.  Somehow we managed to avoid those pitfalls during the 2.5 days of presentations, workshops and networking events.

Business is complex, and it will continue to get more so.  We have to have ways of discussing and managing this ever-growing complexity.  Are you ready?  Is your organization equipped?

Why Your Construction Project Estimates are Wrong

According to WSJ’s The Numbers Guy, most infrastructure projects end up with very large overruns.   Surprised?   Probably not.  This is one of those casual conversation topics where many of us can point to a project close to home that have “busted the budget”.   New Jersey’s rail tunnel to New York City, Boston’s Big Dig, Sydney Opera House, your local sports stadium, the highway project on the other side of town… what you have been suspecting (that these big projects become more expensive) is correct, at least according to people who study these things.

So why is this the case?   Like many complex situations, there are several elements at play.  Estimating is always a tricky task.  Even experts cannot estimate as well as they think they should.  In fact, having expertise often affects your estimates in two (bad) ways.  According to Professors Magne Jørgensen and Dale Griffin, there is a link between forward looking perspective and irrational optimism.  You are an expert, you are asked to provide an estimate, you feel optimistic about the future, and give a favorable estimate.  According to Nassim Nicholas Taleb, author of The Black Swan, expertise gives you an unwarranted sense of certainty in situations where such certainty cannot exist.

There are other factors at play.  For example, the larger the project, the more likely that there will be more stakeholders and more ideas.  The public may want better aesthetics.  Public projects expand as other smaller projects are folded into the original project.  Also, the longer the project, the larger the risk of labor and material cost increases.  Some projects also end up paying for “externalities cost” that may not have been originally planned.

If there are other bids involved, the winning project was more likely to be the most optimistic.  This is the so-called winner’s curse.  Yipee, we won the project… And we’ve also convinced the public, officials (and ourselves!) that our estimates are correct.

Finally, there could be misrepresentation and outright lying.  The articles acknowledge this, but does not go into research findings.  I suspect, as the article implies, that there is very little systemic large-scale lying in the industry.  It’s most likely the other factors described above.

Big estimates are big numbers, and we do not deal well with big numbers, experts included.  We remember numbers incorrectly.  For example, we may remember that a project was supposed to be $100MM, but forget that with the additional approved budget, the project eventually was set at $126MM.  It’s easier to remember something like “$100MM”.   Also, we don’t like to deal with ranges and uncertainty, and this is exacerbated with the large numbers we are dealing with.

So, is it wrong to be optimistic?   Are we just lying to ourselves?  Is it possible to have expertise and accuracy?

You give complexity…a bad name

Complexity was the topic of the lead article in NYT’s Week In Review this Sunday.  The accompanying picture was a 4x4x4 Rubic’s Cube with a somewhat-hidden dollar sign made from the white tiles and a not-so-hidden message of how things are connected.  It’s an apt picture-analogy (IMHO, it’s not perfect… more on that in the comments).  If you’ve ever tried to solve a Rubic’s Cube (or other similar puzzles), you know the frustration of trying to put the pieces in the right place.  Moving ONE piece into the right place is easy.  That, of course, messes up other things out of place, hence the curse of the connected world of complexity!

During the course of the article, David Segal mentions a range of today’s complex problems, from the wars in Iraq and Afghanistan, finance industry’s collapse, our health care system, and the recent oil spill in the Gulf of Mexico.  “Complexity used to be so simple”, he writes several times.  What happened?  Are we doomed to go the way of the Roman Empire, undone by our self-made complexity?

I agree with him that “just about every profession has become complicated in recent decades”.  This alone is not a bad thing.  The reality is that we live in a more networked, interdependent, larger-scale, faster-moving world.  Keeping things artificially simplistic may work if you can keep your world simple, but most of us cannot will our world to be or stay simple.

Many of our business problems are mired in complexity.  Solving one aspect of the problem shifts a burden elsewhere (like the linked tiles on the Rubic’s Cube).  The complexities of regulations and contract terms are such that you need a room full of “subject matter experts” just to see what’s even possible.  Data is never as clean as you’d like.  People change minds.  Our own organizations sometimes work against us in solving problems we all want solved.

So what can we do as managers (in a business setting)? I have been fortunate enough to see some things work in business settings.  Although there is no single solution, there are some tools and best practices that, with some modification at your end, may be helpful in addressing the complexities of your business.

Welcome to Your World

This is an exciting time for business and management.

The rules are changing. Access to tools and information has made it easier for you to know more and respond faster.  No longer are you limited by your size, pedigree, title, technology or other constraints.  Information, tools and methods that were only available to a select group of individuals and organizations are now becoming more accessible.  You can connect with partners & customers, access and analyze competitive data, and tap into efficient resources in ways that only a few years ago may have seemed futuristic.

The rules are changing, being re-written by smarter customers and new competitors.  The current ride through your industry’s cycle probably feels different from previous cycles.  Your past experience, while still valuable, must be combined with new insights and execution nimbleness.

How exciting!  As business gets more complex, opportunities to win exist across all levels.  Entire industries & organizations are redefining what it means to build and manage partnerships, taking advantage of economies of scale.  Individuals are charting bold career-propelling paths by riding the wave of complexity.

Exciting!  Or maybe it’s more strange and risky than exciting.

For how can we make decisions when the old rules don’t apply?  How do we know what rules are still “good” and which ones need to be modified?  Can we rely on past experience, something that has worked well in the past?  How is it possible to understand the relevant interdependencies in this new world?  Data is cheap and vast, but how do we overcome volume with insight?  Has the complexities of today’s business surpassed our ability to make sound decisions?

This blog is a meant to be a resource for practitioners of business analytics. “Business Analytics” can mean a wide range of things. This blog will use the term as it pertains to solving complex business problems (more on “complexity” later).

Armed with the right tools and methods, there are many organizations and individuals who are taming the complexities of their ever-changing world. We may be familiar with the Amazons and the Googles, but there are plenty of other organizations, big and small, who are doing some amazing things.

We’ll cover stories, talk about tools, and provide some examples. Hopefully we’ll also provide some diversions along the way.

Welcome!