“The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” — F. Scott Fitzgerald
From Volatility and Uncertainty to Complexity
In my previous posts, I discussed the first two dimensions of the VUCA framework: volatility and uncertainty.
Volatility concerns the speed and intensity of change. Uncertainty concerns our inability to predict what will happen next. Both challenge leaders to decide under difficult circumstances.
Now, I want to turn to the third dimension: complexity.
Of the four elements of VUCA, complexity is perhaps the one most closely associated with the everyday reality of leadership. Organizations comprise people, processes, relationships, and competing interests. A decision taken in one part of an organization can have consequences elsewhere, sometimes in places we would never have expected.
How can a leader understand enough of this complicated web of relationships to make sensible decisions?
I believe the answer lies partly in a leadership skill we don’t discuss nearly enough: conceptualization.
Complicated or Complex? There Is a Difference.
We often use these two words as if they meant the same thing. They don’t.
An airplane is complicated. Thousands of components must function together, but engineers can understand their relationships and predict how they will behave.
An organization is complex. Its components include human beings, with their ambitions, fears, habits, and different interpretations of the same events.
And people don’t always behave as we expect.
Consider a corporate merger. The financial projections look attractive. Careful planning has gone into the technological integration. The new organizational structure makes perfect sense on paper.
Yet the merger disappoints.
It’s possible that the management teams don’t trust each other. Perhaps, employees resist changes they perceive as threats. Perhaps, customers react differently than anticipated.
Nothing was wrong with the individual analyses. What was missing was an understanding of how the distinct elements would interact.
That is the essential difference. Applying expertise to the components often allows experts to solve complicated problems. Complex problems require us to understand the relationships between those components.
Conceptualization: Seeing Beyond the Details
This brings me to conceptualization.
By conceptualization, I mean the ability to develop a mental picture of a situation, identify what matters, recognize relationships, and understand how the distinct elements fit together.
It is not simply the ability to think abstractly. Nor is it a matter of knowing more than everybody else.
I have always believed that one of a leader’s most important responsibilities is to distinguish the essential from the incidental.
In any organization, information is abundant. Reports, presentations, financial indicators, and opinions compete for attention. The challenge involves deciding what deserves attention and what one can safely leave aside.
Conceptualization helps us make that distinction.
But there is a catch. The mental models we construct are never perfect representations of reality. They are simplifications, and sometimes they mislead us.
As the statistician George Box famously stated:
“All models are wrong, but some are useful.”
A good leader must therefore be willing to abandon a perfectly convincing explanation when reality tells a different story.
What Psychology Tells Us About Cognitive Complexity
Psychology provides another useful perspective.
The concept of cognitive complexity describes, broadly, our capacity to perceive and organize information through multiple dimensions rather than simple, black-and-white categories.
A related psychological concept, integrative complexity, distinguishes between two abilities: differentiation and integration.
Differentiation means recognizing that a problem can be viewed from several perspectives.
Integration means finding meaningful relationships between those perspectives and bringing them together into a coherent understanding.
Imagine a CEO considering the closure of an unprofitable business unit.
The financial argument may be straightforward: the unit is losing money and should be closed.
But what about the employees? The customers? Could it be the knowledge gathered over decades? The possibility that the unit might become strategically important under different circumstances?
Recognizing these considerations demonstrates differentiation.
Weighing them, understanding their connections, and reaching a reasoned decision requires integration.
Both are necessary.
A leader who sees only one dimension risks making poor decisions. One who sees every possible dimension but cannot connect them may never decide at all.
This is what I mean by managing cognitive complexity: developing the capacity to consider competing perspectives without becoming trapped by them.
The Difficult Art of Simplification
Here we encounter an interesting paradox.
We expect leaders to understand complexity, yet we also expect them to simplify things for others.
Are these expectations contradictory?
I don’t think so.
There is an enormous difference between simplifying something because we understand it and simplifying it because we don’t.
The first requires considerable intellectual effort. The second is often just an expression of ignorance.
I have encountered situations in which a seemingly obvious solution became much less obvious once we examined its consequences for other parts of the organization.
And sometimes the opposite happened. A problem that appeared almost impossible to resolve became manageable once we identified the few relationships that really mattered.
The objective is not to understand every detail. Nobody can.
It is to understand enough to distinguish what is important from what is merely complex.
From Individual Understanding to Collective Action
There is one more aspect I would like to emphasize.
A leader’s ability to understand complexity has limited value if that understanding remains confined to their own mind.
Organizations don’t act through the intelligence of one person. They act through the coordinated efforts of many people.
This means leaders must communicate their understanding in ways that help others see how their decisions and responsibilities connect.
It also means listening.
Nobody, however experienced or intelligent, possesses all the knowledge distributed throughout an organization. Some of the most valuable insights come from people much closer to the problems than those sitting in the boardroom.
Conceptualization is therefore not merely an individual intellectual exercise. It must help create a shared understanding that makes collective action possible.
A Final Thought
We cannot eliminate complexity from organizational life. Nor should we expect more information or better technology to solve every complex problem.
What we can do is improve our ability to recognize relationships, question assumptions, consider different perspectives, and exercise judgment.
And we can help others do the same.
Ultimately, the test of a leader’s conceptual ability is not how much complexity they can comprehend, but how much clarity they can create without sacrificing what matters.
Perhaps that is one of the most important differences between being intelligent and being an effective leader.
Questions for Reflection
- What challenge are you currently treating as merely complicated when it may actually be complex?
- Which people, processes, or interests interact in ways your present analysis does not adequately capture?
- What consequences of a recent decision surprised you? What connections might you have overlooked?
Download the Chairman’s Playbook Worksheet — Play 62: Leadership and Complexity
📚Further Reading
- Complexity: The Emerging Science at the Edge of Order and Chaos — M. Mitchell Waldrop (1992)
Introduces complexity science through the work of researchers investigating emergence, adaptation, and the unpredictable behavior of interconnected systems. - The Logic of Failure: Recognizing and Avoiding Error in Complex Situations — Dietrich Dörner (1996)
Examines why intelligent people make poor decisions in complex situations, particularly when they overlook interdependencies and unintended consequences. - Managing the Unexpected: Sustained Performance in a Complex World — Karl E. Weick and Kathleen M. Sutcliffe (2001)
Explains how highly reliable organizations detect weak signals, challenge assumptions, and maintain effective performance under unpredictable conditions. - Leadership and the New Science — Margaret J. Wheatley (1992)
Applies ideas from complexity science, chaos theory, and living systems to leadership, emphasizing relationships, self-organization, and adaptation. - Complexity Leadership: Part 1: Conceptual Foundations — Mary Uhl-Bien and Russ Marion, editors (2007)
Explores leadership as a dynamic process emerging through organizational interactions rather than solely through the actions of individual leaders.
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