Danny Miller published a paper in 1993 (in the Academy of Management Review) entitled “The architecture of simplicity”. I read it when I was in the PhD program at Arizona State University, and it immediately struck a chord. Aspects of the paper resonated with my own experiences in the corporate world and have remained with me over the years. This write-up is inspired and driven by Miller’s paper, but incorporates insights from other readings and my own experiences.
A key argument made by Miller is that the seeds of failure for an organization are sown during that very period when it is most successful. Nothing mysterious about that – multiple authors and even parables make exactly that argument. What is unique, however, is his explanation of why and how those seeds are sown in that way. Miller points out that when an organization has enjoyed success for a period of time, its leaders come to hold an oversimplified version of what led to that success in the first place. He points out that while a complex set of actions/attributes leads to success, organizations tend to credit their success to a limited number of those attributes or actions – i.e. they oversimplify success. One paragraph in his paper excellently paraphrases his paper:
“Control Data, Polaroid, and Wang Labs, for example, which had succeeded by out-innovating their competitors, turned this policy into an obsession. They began to concentrate only on technological innovation— no matter what the costs or the needs of the customer. Marketing, production, and financial considerations fell by the wayside as the departments handling these activities became less influential and the power of the R&D elite mounted. Subsidiary goals of service and market penetration were driven out by an increasing obsession with scientific progress. And the organizational culture became more homogeneous as dissenting managers left. Even corporate systems and routines came to monitor and control mainly technical matters while ignoring issues of quality or profitability…”
In effect Miller argued that organizational leaders tend to pick a very restrictive set of factors as key drivers of a firm’s success. They then make those factors their prime focus of attention. Further compounding this problem is the fact that successful organizations receive media attention, and guided by the organizational leaders, the media further establishes the primacy of these simplistic set of factors. Once these few activities are established as the prime contributors towards success they tend to disproportionately consume resources and become the focus of solutions to all organizational problems. For instance in the examples above, the firms could have become more and more focused on developing their efforts at innovation and new product development while underinvesting in complimentary activities (such as marketing, flexible manufacturing). These ignored processes, while unheralded, were probably necessary for the innovation strategies to succeed and as effectiveness of these underappreciated processes deteriorated, the firm’s innovations became less successful.
The consequences of this simplicity can be debilitating. An organization begins to view the world through this simple lens and tout its selected ‘simple’ factors as solutions to all problems. Even when decisions based on this simplicity lead to poor outcomes, the simplistic mindset views failures as aberrations (or blames factors such as poor implementation) as opposed to a need for reassessment of the basic philosophy that led to the error. Moreover, talented employees in the unheralded areas begin to leave (because they don’t see great prospects in staying with the organization) and this further diminishes organizational capabilities in the unheralded areas. Additionally the departure of these executives damages the organization’s decision processes because these individuals, who were competent in and championed the unheralded activities, were the ones most likely to effectively challenge decisions based on simplicity — a critically needed diversity of thought within the organization is thus eliminated.
So what leads to the emergence of this simplicity? I suspect the very nature of leadership is an important culprit. One of the key roles of organizational leaders is to set a clear direction and vision for the organization. Leaders need to develop a message that is clear, precise, exciting and unambiguous. And that is almost always better achieved by relying on simplicity. After all a message that states that a firm’s foundation for success lies in primarily in its innovativeness and cutting edge products is vastly more appealing and communicable than one which also incorporates the role played by risk assessment and management, flexible manufacturing routines and other factors. Based on personal observations, my guess is that early on, when the firm is just beginning to experience success, leaders recognize the difference between the stated message and the reality – and are able to separate the message from the processes they use to make key decisions. But over time, as the message is repeated frequently, it begins to take on a reality of its own and simplicity sets in and dominates thoughts in key organizational decisions.
I would argue that this phenomena may also be prevalent at a personal level. After all when an individual is successful the pats on the back often involve expressions of what qualities ostensibly led to that success. The compliments can range from ‘you are innovative’, to ‘you are a fantastic risk taker’ to ‘you are great at approaching problems with a global perspective’. As success continues, and these compliments become more frequent and consistent, the individual may develop a self-image – and feel pressurized to act in ways that are consistent with that self-image. I know that I have often felt the need to live up to these images, and friends in organizations have shared similar experiences they have perceived at work. So at critical decision points, an individual may feel it is important to live up to that image of being a ‘global thinker’ and thus force an examination of a decision situation from that viewpoint even if it really wasn’t necessary. This certainly is not a recipe for sustained good decision making.
This is not meant to be an attack on simplicity. After all, when a situation is messy, one of the most effective approaches to addressing it involves stripping it to its basic elements and finding the simplest possible solution. Rather, this is a caution that there is a difference between a simple solution and a simple mindset. An effective simple solution will usually result from a mindset that can burrow through the complexity of modern day organizational decisions. And to play on Ashby’s famous law of requisite variety: Complexity and Variety in the mindset is the best way to neutralize complexity and variety in our decision environments.