Uncertainty and Complexity: The New Normal and the Status Quo

Not long ago, I dusted off a relic. While researching for a project, I found myself reviewing cases and management models. To update myself, I unearthed a book I had purchased at a book bazaar shortly after graduating from university — a 1954 edition of “The Practice of Management,” by Peter Drucker. The models, principles, and ideas remain relevant despite the passage of time.

Seventy years ago, corporate executives made decisions primarily based on empirical rules, intuition, and guesswork. They had only vague notions of how to analyze even the most basic decisions: how to build a team, what type of structure best serves the organization’s purpose, what kinds of decisions they face, and how to address them. There were no frameworks to tackle risks and uncertainties, such as the increasingly shorter cycles in public policy aimed at stimulating growth, consumer perceptions that can cause sudden shifts in brand loyalty, or the intensifying natural disasters disrupting supply chains.

Certainty had a time frame; today, we operate within a fraction of it — at the speed of a "like" and with the mobilizing power of a meme. Compared to when Drucker conceived his ideas, almost everything is different. And yet, it is not.

Corporate executives now have tools, models, and processes to measure and assess these new risks and even turn them into opportunities for profit. These new instruments are essentially old concepts, only accelerated, atomized, decentralized, diversified, and dynamically powered by technology.

Thinking Outside the Box  

The challenge lies in disentangling cause from apparent consequences within a sea of data. One can choose which risks to take and, in some cases, mitigate or cover those that cannot be avoided.  

Appreciating the nature of this wave of change is not easy for several reasons. First, the sheer volume of information we consume is overwhelming. We absorb fragments of data that weave a superficial understanding of what is truly happening, both inside and outside organizations. If we read between the lines, the problem might also be that we address solutions at a surface level. Those seeking to develop innovation can quickly lose themselves in articles and books that essentially repeat the same ideas with different wording.  

The events defining us are intersections of various themes; there is no single apparent cause, but rather a series of consequences triggering a chain reaction. The key is to weigh and prioritize when making decisions. Most cutting-edge ideas are born from multidisciplinary teams focused on building by dismantling previous paradigms.  

In 1952, Nobel laureate Harry Markowitz, then a graduate student specializing in operations research at the University of Chicago, mathematically demonstrated why concentrating all bets on a single option is a long-term riskier strategy and why diversification is the most profitable answer. This concept continues to permeate fields ranging from finance and management to talent development and product marketing.  

Complexity serves as an external alarm, waking us up to the reality that our comfort zone has ended, signaling it’s time to become creative, resourceful, and ingenious again. Complexity is an external resource to be managed and potentially exploited, not a problem to be faced only when cost-cutting and plan cancellations are the last resort.  

The bet is to diversify while anticipating resources and allowing controlled risks of the new strategy to gain traction. The uncertainty stemming from adverse scenarios must be viewed as an opportunity to develop latent competitive advantages: in the market, by eliminating bottlenecks in processes, or through leveraging talent and knowledge combinations. Properly managed, this represents an experiment that can no longer be postponed — a measure of resilience through improving adaptability as the starting point for a new growth concept.  

Where to Begin?  

The first aspect is self-imposed complexity — what we call institutional complexity, encompassing structure and hierarchy, processes and their measurements, guidelines and their formal and informal communication, and formulas defining what has been and what must be challenged. This complexity is a result of past decisions shaped by criteria suited to a context that is no longer certain. It defines the management model, the change model, and the resulting capacity for adaptation and evolution: innovation.  

The second aspect is cultural complexity, divided into two dimensions: that of the organization toward its members, and that of the members forming parallel organizations within the institutional framework. These parallel structures bridge gaps, shorten timelines, and navigate around processes. This represents the complexity of personal leadership — the way employees and executives experience and address their environment and its changes, the fears and frictions generated, and their consequences.  

Most companies, in our experience, focus solely on certain aspects of institutional complexity, often at the superficial layer of opportunities to generate quick wins. This is a legitimate response to denial or paralysis, but it falls short when faced with the severity of decisions required ( eliminating areas, rewriting processes, exiting a product or market, for example).  

A second approach centers on strengthening culture, architects, and change agents: redrawing structures with reporting and organizational lines, developing skills and capabilities, and fostering feedback spaces and creative experimentation. Unfortunately, during crises, budgets are often saved by cutting learning and knowledge application capacities, resources that are essential for reinterpreting and repurposing assets and seeking value in new strategic challenges.  

What Generates Value?  

It is not about prioritizing between institutional or personal contributions but rather creating creative tensions that challenge how each plays a role and in what order their resources are best applied in the new context. Institutional complexity determines the speed of response; leadership determines the capacity for reaction. Complexity can thus be exploited to develop new sources of value, latent or emerging, and build resilience within the organization.  

Proper organizational design can minimize vulnerability by decentralizing, granting autonomy to certain areas, and reducing bureaucracy. These measures can only succeed with talent that understands responsibility and acts with extreme accountability — not compelled by circumstances, but through personal and group capabilities to create opportunities, using risks intelligently, creatively, and assertively.  

A disconnect between processes and the new reality is a straitjacket. Processes, norms, and management systems are the primary accelerators that turn external complexity into an internal nightmare. Without correctly understanding that processes serve to create value for the end consumer rather than catering to internal intermediary interests, even the most brilliant and talented individuals become ineffective and clumsy in countering mismanagement.  

In emergencies, changing course makes sense. Designing processes that start in adversity, continue during benefits, and consolidate a new phase of value capture — from clients or mobilizing knowledge to develop growth opportunities — is vital. It is not change for change's sake but a commitment to leveraging the change and using the momentum to redefine what has been postponed. Companies must identify where complexity lies within their organization and define core and collateral roles to develop the capabilities to manage it.  

The first step is determining where and how self-imposed complexity manifests and how it is reinforced by culture and leadership. Complexity and uncertainty from the external environment determine the forms and timelines to which responses must be designed, managed, and led.  

Once a company identifies its complexity and uses structure and mechanisms to minimize friction and interaction costs, it must develop the people who will take on roles to manage and influence change. The company must foster a culture that challenges beliefs and encourages collaboration with bold goals.  

Uncertainty is the new normal, and complexity is the daily status quo. Responding to this does not mean reducing and simplifying at all costs. Organizations must create the processes, skills, and culture necessary to manage it. Accepting complexity at the institutional and individual levels (not just strategically) can generate a competitive advantage. Companies that grasp this concept will create more value than their rivals, be more resilient, and make it harder for others to replicate their successes.