Hugh MacLeod wrote an interesting post about complexity, citing complexity as the difference between success and failure. It’s simple to fail, but you must manage complexity to succeed. He applies this theory to organizations:

So when I see a small but insanely-successful
business suddenly implode overnight [it seems to happen quite a lot in
Silicon Valley], I’m guessing chances are it wasn’t inability
to manage growth per se that destroyed the business [a favorite reason
cited by those writing business obituaries], but the inability for the
business to manage complexity.exponentially with growth, most small companies can culturally only handle incremental increases in complexity. As I’m fond of saying, "Human beings don’t scale". Complexity increases

Which is why walking around the hallways of large, successful
companies can often seem so oppressive to somebody new to it. All that
cultural regimentation is there for one reason only: To fight "The Complexity War".
Sure, it might feel a bit ghastly to the more idealist and
free-spirited among us, but until somebody can come up with a better
way to win this Complexity War at a Fortune-500 level, I don’t see it
ever going away.

Interesting theory. Ironically, he might be over-simplifying a bit, but I like the idea of assuming growth requires managing more complexity, and I’m particularly interested in the idea that we need more regimentation to deal with the complexity that goes along with large organizations.

One thing I think of is the idea of best practices. We all want sample models and policies, or we read Good to Great to pull out the lessons for our organizations, but how relevant is a model from a 10,000 person organization to my staff of 10? According to Hugh, the larger the organization, the more regimented it becomes. I’m extrapolating here, but this means we need more rigid structures and policies to manage complexity at the larger level.

But it’s larger organizations that are our models in general. They’ve been around. They are successful. So whatever they do is what we should do. But not if they are operating at the 10,000 staff level of complexity. Your staff of ten doesn’t need that. I’m beginning to think that the staff of ten doesn’t need what the staff of 20 needs either. There are lots of levels here. At one level, we probably already know this, but I think at the same time we are continually surprised when we have to shift to meet the next level of complexity. I also think this is why we fail miserably in strategy so frequently. Traditional tools for doing strategy work don’t tend to be adequate for or even recognize the increasing complexity of the operating environment.

I also hear a challenge in Hugh’s point: is there another way to deal with large amounts of complexity OTHER than the regimentation that is "a bit ghastly" to the free-spirited among us. I think places like W.L. Gore are interesting–where they create a new organizational unit if it gets to be more than 150 people because that’s the natural limit for you to feel like you know everyone in the group. I’d bet there are more ways to do this than what we have out there as models.