Nodes, Complexity, Growth
Imagine a system – say a galaxy – that is not replicating or multiplying as the universe expands. The space between planets and stars increases, the system inevitably loses density, the same amount of matter is now stretched and spread over an expanding space – its gravitational pull, the amount of light it emits, etc., are all diluted – meaning it eventually falls apart or freezes or disintegrates into the fabric of the expanding universe.
Now, replace “galaxy” with “business.” Growth destabilizes existing systems, introducing new challenges that the current system may not be equipped to handle. If your company starts experiencing increased demand for products or services, an influx of new customers, expansion into a new geographical market … the whole organization might start to feel “like butter scraped over too much bread” (thanks, Tolkein).
One reason growth can destabilize an existing system is that it can lead to increased complexity. For businesses, complexity often means more departments, more employees, and more processes. And, if you’re used to running lean and simple, this new complexity can make it difficult to coordinate activities and ensure that everyone is working towards the same goals. As an organization becomes more complex, it also becomes more interdependent, with different parts of the organization relying on each other to function effectively.
Try this exercise: Think about the complexity, interdependence, and capacity of different organizations as a number of nodes of leadership. A one-node system – where all decisions are made by a single leader – is structurally simple. But that simplicity comes at a cost. One-man-bands have capacity limits. A three-node system (three leaders with distinct areas of responsibility) may be more complex and interdependent, but it may also have greater capacity to handle growth. A seven-node system has even greater capacity to handle growth, but the interconnections and interdependencies get knottier with every increase.
With an increase in complexity comes a higher likelihood that things may not affect each other in the way we think they will – the nodes connect and collide in unexpected ways. Sometimes, complexity means more safety nets and escape hatches. But more complex systems, processes, and org charts also mean that small factors can have outsized impact, and things once considered “big” may not move the needle. Worth noting, too, is the fact that complexity, when not handled with care, obscures things. Complex systems are harder to manage, more likely to break down, and leave more space for fraud and mistakes to go undetected.
One way to address these challenges is to reorganize the organization as you continue to grow. Think creating new nodes of leadership or breaking down silos between departments. Let’s say your organization has grown to the point where it has multiple locations. An option for dealing with that increased complexity (and the increase in number of nodes) is to create a regional management structure to coordinate activities across those locations. Alternatively, if your business has grown to the point where it has multiple product lines, you’ll want to create a product management team to ensure that each product line is getting the attention it needs.
Another way to address the challenges of growth is to professionalize certain aspects of the organization. This means some combination of hiring more experienced managers and investing in new technology to improve efficiency. And, knowing that you need to professionalize an organization as it grows is one thing. The issue, instead, is understanding where the resources for growth hiring and technology sourcing and implementation will come from and how much investment you need to sustain and feed the growth.
Everyone wants their business to grow. But expansion for the sake of expansion – and without a related commitment to hiring, new technology, professionalization, and/or restructuring can leave you destabilized, spread too thin, or with a complex system that simply doesn’t make sense. Yes, as an organization grows, it will need to become more complex and interdependent in order to handle the increased demands of the business. But the issue with complexity is this: Sustaining it gets harder, too.
In practice, that means you’ve got to ensure that, as the organization scales, expands, and branches, it has the capacity to handle the complexity — to sustain it or reorganize it in some way. And, it can be lonely out in an expanding galaxy growing business, but you don’t have to tackle the knotty problem of expansion alone. Working with a trusted partner or investor may add another node to the system, but that node can bring necessary resources, expertise, and experience to sustain scale, add thoughtful structure, and wrangle complexity.
