The WA Mining Club’s latest Education Series unearthed an interesting discussion on innovation and technology. But are we doing it right? More of a good thing is not always better.
Productivity and innovation are important issues for industry, not just in Australia, but around the globe.
So it is somewhat disappointing for me that the discussions around productivity and innovation are largely focused on not just technology as the answer, but yet more scale.
Information technology is a self-fulfilling prophecy, and the big data push is simply the latest example of this. If information technology is a good thing, then more of it must be even better.
As organisations get bigger, managing many small initiatives becomes increasingly difficult, and there is a tendency to look for big solutions.
Enterprise Resource Planning (ERP) is a classic example of this. Hence, the appeal of ‘Big Data’ a belief that if all of the available data is captured and analysed it can yield the insights that will solve our problems.
But based on what evidence?
The sheer size of such initiatives puts them into the ‘too big to fail’ category, justifying ever increasing expenditure to keep them going.
Surely anything that is too big to fail is just too big? Wouldn’t risk management suggest that risk should be reduced by breaking the big entity up?
History and economics when combined provide many useful evidence based insights.
Joseph Tainter’s book ‘The Collapse of Complex Societies’ suggests that the Roman and Mayan empires collapsed because they became too complex.
Early on the order (and complexity) the rule of empire brought was positive and each additional bit of complexity more than paid for itself in improved output.
However, over time, the law of diminishing returns reduced the marginal value until it disappeared completely. Eventually, any further complexity only caused problems and neither society could solve the problems.
Tainter concludes in overly complex systems, there is no way to make things a little bit simpler. The whole edifice becomes a huge, interlocking system not readily amenable to change.
Even orderly downsizing, which neither empire wanted to attempt, couldn’t address the reduced circumstances, and collapse was simply the natural method of simplification.
Put into the context of economic history, it seems we haven’t learned.
It appears to me that the corporate world has become focused on minimising risk, where the entrepreneur is focused on maximising opportunity.
Clearly there needs to be a balance, but all I can see at the moment is never ending growth in management and IT. These layers of management and systems seem to be filtering out the voice of the people technically involved with the operation.
I went back to Peter Drucker’s books on management for an explanation of the growth in management throughout the 20th Century, not looking for answers but looking for a trend, and sure enough a clear trend was described snowballing into a never ending pursuit of risk avoidance through management growth and control.
So with the premise of learning from history there would appear to be a clear need to identify when the value of complexity turns negative, and we must innovate before the situation becomes suddenly and dramatically simpler.
That is innovation needs to occur before collapse or, less dramatically for most companies, a stagnation in company performance.
It would seem clear that is where we are in Australia, and more generally in resource driven economies. Productivity struggles to improve, we may be producing more, but we are producing more with more and ever increasing complexity.
The common denominator of best practice is all about making things simpler, removing not adding, enabling not controlling, allowing the competent to do their job with a minimum of systems and interference.
Basic economics explains the economies of specialisation as the answer to the law of diminishing returns. So why do people continue to pursue scale as an answer?
Howard Thomas is founding partner of Simplicity from Complexity, a community of industry professionals and specialist companies providing access to expertise on demand.
Background
SIMPLICITY FROM COMPLEXITY
Simplicity from Complexity is a cloud based community of industry professionals and specialist companies providing access to expertise on demand.
Our focus is the pursuit of business and operational excellence with the goal of creating value, improving productivity and enabling innovation.
The quality of our associates is paramount. Our Associates are more than experts in their field; they are focused on a culture of continuous improvement with no agenda or vested interest.
Our combined intellectual capacity and experience cuts through complexity to provide not only insights but clear and concise technical and operational solutions that drive business excellence.
A collaborative approach enables the harnessing of digital disruption and the management of complexity across the entire organisation.
Proven models and methodologies, that unlock capacity and increase productivity, give us a degree of credibility beyond our own reputations.
We link leadership and competency to create efficiency, enable innovation and create real value.
Simplicityfromcomplexity.com.au
Biography
HOWARD THOMAS
Howard has a unique ability to make the complex simple for his clients and audiences.
Seamlessly combining an in depth technical background with wide ranging business experience, Howard is probably best known for his engaging style of presentation.
Technically accredited as a Fellow of Engineers Australia and a Chartered Professional Chemical Engineer, Howard has worked on hydrocarbon installations all over the world, from roles as a technician to executive consultancy.
Having starting his career on the cusp of the growth in information technology, Howard built his career around the analysis of the complexities of operational performance. But working in this space has had its frustrations, which continues to drive his quest for simplicity, and led him to explore his entrepreneurial spirit driven by the desire to innovate and improve.
He has started, developed, bought into and sold a number of businesses over the years, and continues to promote high performance and business excellence in industry via TAM Consultants and the Simplicity from Complexity community; which is best described as a modern day co-operative, part of the sharing economy.
