From cookies to chaos, the problem of complexity...

“So you advocate failing fast, eh Rich?! Really, is that always the best approach? I certainly don't want Tarquin , my $400 an hour accountant, failing (though at those rates fast would be good). I'm not the person he ‘tests and learns’ with. I’m paying for a solid, dependable outcome and some broadly legal tax-minimisation.”

Well having mentioned the concept of failing fast in my last post, I must reflect (for Tarquin’s sake) a little more on its place in decision-making this week.

In an environment where there is high structure but outcomes are unpredictable/non-linear (such as the corporate or larger businesses of my last post) then taking an experimental, action oriented and ‘fail fast’ approach has tremendous benefit.

But this is not always the case – when little Charlie starts her cookie stand she is probably ‘just doing getting it done’. The process is straightforward and linear and the ‘business’ a little unstructured. We might characterize the business as ‘simple. Dig out Grandma’s secret family recipe, source ingredients, bake cookies (with mum’s careful supervision) and flog to friends, family and perhaps passers-by. Well at this point the focus is on just doing it. Decisions in a simple environment require us to quickly decide and make happen. While the business remains simple there will be no failing fast, just acting quickly.

But what happens when Grandma’s recipe is a true gem and suddenly Charlie’s whole class decides they want to buy cookies regularly, and then their families start to request batches? Charlie is facing exponential growth (and mum is facing many evenings ‘supervising’ in the kitchen). At this stage of the business then the environment is no longer predictable and linear, the extreme growth has led us from a simple business to a chaotic one. The answer; provide structure and ensure the people involved - mum (now full-time baker), little brother (drafted in to manage deliveries) and dad (chief taster) stay connected in the chaos.

A really helpful model for Charlie is that of problem/environment complexity (I have seen this in a number of guises and don't have a source to attribute it to – though if anyone else does have then let me know!).

So Charlie is fast creating her baking empire and progressing from a ‘simple’ environment to chaotic’ (and hopefully to ‘complex’ as she expands globally) but what of our friend Tarquin, accountant to the stars (or at least accountant to an unsubtle rhetorical device)?

In a structured and predictable environment then collating data, analyzing and then acting over time will likely give the biggest payoff. Providing the tax laws remain relatively consistent and their application consistent then we’ll be far more grateful for Tarquin’s data analytical approach when the government auditor come knocking!

I don't recommend a child’s cake stand that’s complicated, nor an accounting environment that is chaotic but I do still love a multinational that fails fast.