Increasing complexity challenges strategic management, researcher finds

The changes in society and the phenomena surrounding us are becoming more unexpected and interconnected than ever before. This increasing complexity challenges strategic management, making it harder to predict trends and developments. According to a new study from the University of Vaasa, Finland, increased complexity demands new approaches to strategic management.

“In strategic management, it is essential to acknowledge the growth of complexity and understand how to influence complexity and its components in a way that aligns with the organization’s operations,” says Sami Tikkanen, who will defend his doctoral dissertation at the University of Vaasa on 22 November.

Based on the findings of the dissertation, managing complexity involves reducing uncertainties related in operations, managing organizational interconnectedness and interdependencies, and creating favorable conditions for self-organization and emergence. Emergence refers to the appearance of new solutions in everyday activities as a result of interaction.

“In practice, uncertainty within an organization can be reduced by, for example, having a wide-ranging and diverse internal and external discussion on changes in the operating environment,” says Tikkanen.

“Interdependence can be strengthened by setting common goals across units and by establishing partnerships with key stakeholders. Self-organization and emergence can be encouraged by cultivating a self-directed culture and promoting experimentation.”

Managing complexity requires many changes

According to the research findings, managing complexity from a strategic management perspective requires changes in organizational structure, processes, communication, leadership, and culture.

In strategic management, complexity management is enhanced by predicting changes in the environment, creating meaningful objectives, continuously renewing strategy, promoting experimentation and learning, coaching and shared leadership, using team and project organizations, developing adaptability, change management, and strategically important capabilities.

In his doctoral dissertation, Sami Tikkanen examined strategic management in the context of joint municipal authorities in education. He used a mixed-methods approach and explored how complexity management was identified in practice in these organizations. The study was carried out in cooperation with the Finnish Association of Local and Regional Authorities and involved a total of 27 joint authorities of education across Finland.

The dissertation identified strategic management approaches and frameworks that can partially address the challenges of complexity. The findings of the dissertation can be used both in future academic research and, for example, in the development of strategic management in joint authorities in education and other public sector organizations.