A complex path to the digital future

Howard Gross / Founder and Principal, HG Communications, LLC; former Senior Director of Global Communications, The Nielsen
Company / March 15th, 2016

In a world in which information, capital, and labor are no longer confined by time nor distance,
nearly everything has an impact on practically everything else. As traditional barriers to entry
crumble, organizations that once operated in separate universes now bump up against each
other, competing, collaborating, or both in newly defined markets. The tag team of digital and
complex systems is slamming business models and upending corporate cultures, nowhere more
so than in the realm of communications. Individuals and organizations need more than merely
manage technology. They have to master complexity. That means being able to step back and
consider all of the critical components of a system.
Scores of businesses have spent much of the past year obsessing about digital transformation.
For good reason. According to one survey of 941 leaders across 12 industries, by the Global
Center for Digital Transformation, respondents believe roughly four of the top 10 companies in
each industry will be displaced by digital disruption within five years. That is a sobering
prospect; and yet their apprehension is somewhat misdirected. Granted the world is being
digitized as billions of individuals, organizations, and devices link online. However, these are the
same reasons life is becoming ever more complex; which presents an equally formidable
challenge.
There are times when trying to explain something confusing or hard to understand we casually
label it complex and move on. But it is a mistake to reduce such an important concept to a
throwaway line. Complex systems comprise multiple interacting parts. When even the simplest
components converge they produce new phenomena that are qualitatively different than their
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original ingredients. (As when gases hydrogen and oxygen combine to form water). Moreover,
the process is nonlinear, so input and output are not proportional to each other. What may first
appear small and inconsequential can quickly become big and burdensome. For every event that
occurs, there are any number of possible causes, with no clear connections between them. And
said systems can learn and change in response to their environments. All of which means they
are extremely difficult to control, and their outcomes are often too uncertain to predict.
By these measures, our social, political, and economic institutions have always been complex; as
has society as a whole. So what is different now? To start, there are a great many more of us with
whom to interact. The planets population has grown three times larger over the past century than
during the previous nineteen hundred years combined. An increasing majority also live in cities,
which by their very nature engender complexity. Further, todays most pressing issues, whether
immigration, climate change, dysfunctional governments, or a fragile worldwide economy are
not only intricate in and of themselves, but are deeply entangled with each other. Global risks
are interconnected, and that can create unexpected consequences, warns the World Economic
Forums latest report on the subject. Plus the situation will surely intensify, thanks to our ability
to translate just about anything into strings of ones and zeroes.
In a world in which information, capital, and labor are no longer confined by time nor distance,
nearly everything has some sort of impact on practically everything else. As traditional barriers
to entry crumble, organizations that once operated in separate universes now bump up against
each other, competing, collaborating, or both in newly defined markets. For evidence, look no
farther than the recent machinations between Ford and Google as to the future of the automobile.
The digitization of products and services also enables disrupters to deliver the same or better
value while dodging many of the obstacles incumbents had to confront. Thus, it is the tag team
of digital and complex systems that is slamming business models and upending corporate
cultures. Nowhere more so than in the realm of communications.
Communication is at the core of complexity
Every time there is an improvement in the technology with which people and ideas come
together, major change ensues. British science historian James Burke uttered those words some
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thirty years ago, and time has only amplified the process. As the connectivity within systems
expand, it is the interactions rather than the parts themselves that ultimately define those systems.
Since all complex systems involve the exchange of varied types of information, these
interconnections are actually modes of communication, and digital networks are the high speed
conduits through which disparate elements travel in the form of news, entertainment, social
conversations, and data. Lots of data. The Internet and the slew of apparatus attached to it have
begot massive databases, whether residing on single servers or distributed within clouds of
computing resources. Currently, cross-border data flows are 45 times higher than in 2005, and
are expected to balloon another nine fold by the end of the decade.
No doubt the rate of datafication converting objects into data form is accelerating. Much
of the transition is being driven by people across social media, soon to be substantially
augmented by myriad gadgets arriving via the Internet of Things. Like the telescope, which
opened the universe to intellectual exploration, and the microscope that revealed organisms once
too minute to imagine, this deluge makes it possible for data scientists to discover new insights
by collecting, dissecting, tabulating, and analyzing trillions upon trillions of bits of information.
But more and more detailed data bring with them added complexity, especially as companies
seek to extract value from numerous sources. In a study of 1,500 global executives by digital
consulting agency Bluewolf, close to half admitted having a hard time reconciling data with
different origins. Not surprising considering analysis by the Aberdeen Group and Ventana
Research, which found that over 70 percent of firms rely on at least six sources, with some
exceeding twenty. What is more, though the number of data sources may grow in linear fashion,
how they interact increases exponentially. Online ad markets, for example, are estimated to
generate 100 billion impressions daily, with each one measured against as many as 100 separate
variables, culminating in countless possible outcomes. And because variables frequently change,
so do outcomes, forcing marketers to regularly rework their models.
Indeed, the fact that content traverses networks in various formats and audiences can receive
it when, where, and however they want is reshaping the entire media industry. Where the
New York Times, CNN, and National Public Radio previously operated in ostensibly separate
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domains, these days they directly compete for attention online, relying on comparable
combinations of text, sounds, and images. The same goes for communication professionals, as
those in public relations assume roles that were formerly the exclusive province of journalists,
while defending their own turf against an onslaught of content marketers.
For their part, consumers are both adapting and contributing to the intricacies of a digital world.
Once generally passive and apart from each other, they now readily interact, influencing the
manner in which they access, understand, and use information. Cheap yet capable systems have
also made it possible for virtually anyone to produce content and distribute it, either on their own
or in collaboration with others. The resulting complexity, according to research by corporate and
marketing communications recruiter, VMA Group, is the single most important challenge for
the communication function.
Still, the problem is hardly unique to individuals or organizations. For developed nations, whose
economic and political hegemonies are already in question, this liberation of information and
communication technologies is further eroding the status quo. At the first BRICs Media Summit
held in Beijing at the end of 2015, leaders of media establishments from the five emerging
economies declared they were no longer willing to allow the worlds mass media to be
monopolized by the West. They vowed instead to pool their resources and strengthen ties among
their countries so they may come together and tell stories that truthfully reflect BRICs
cooperation.
Not all transformations are equal
Digital transformation and the complexity it provokes are subverting conventional business
practices, while opening opportunities for aggressive start ups, upstarts, and veterans. But the
conversions arent occurring in equilibrium. A study out of the Fletcher School of international
affairs at Americas Tufts University found significant differences in how countries digitally
adapt. In lieu of a single grand pattern, researchers identified several key drivers the interplay
between supply and demand, institutional environments, and the capacity for innovation that
determine both the direction and momentum of advancement. The extent to which the drivers do
or do not correlate dictates whether their trajectories are consistent or nonlinear.
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Taking a slightly different tack, an investigationby the McKinsey Global Institute focused on just
one location the United States gauging the degree to which both corporate America and the
general population are moving into the digital age. Dividing the nation into digital haves and
have-mores, it defined the latter as the minority of companies using contemporary means and
tools to successfully update their core processes, and as elite workers whose highly marketable
skills garner wages well above the national average. After examining more than two dozen key
indicators across 30 industries, McKinsey concluded that in the U.S., as elsewhere, progress is
uneven, causing a critical imbalance between the most digitized members and the rest of the
economy.
Inequality like this brings a number of potential consequences including the rise of populist
politicians, the blocking of innovation and the onset of protectionism and nativism, cautions
Richard Edelman, president and CEO of the communications marketing firm bearing his name.
The companys annual trust and credibility survey uncovered an unprecedented gap between the
global elite and the rest of the worlds inhabitants with respect to their confidence in government,
non-governmental organizations, business, and the media. Adds Edelman: the trust of the mass
population can no longer be taken for granted.
Under these circumstances, every institution finds itself firmly wedged between the proverbial
rock and hard place. Complexity, after all, doesnt conform to most peoples desire for control,
nor to their need for direct lines between cause and effect. Likewise, managers want assurance
that once a strategy is put in place it can be used repeatedly, hence the appeal of playbooks and
best practices. When they dont get that, says Yves Morieux, senior partner and managing
director at the Boston Consulting Group, they respond with a proliferation of cumbersome
structures, interfaces, coordination bodies and committees, procedures, rules, metrics, key
performance indicators, and scorecards. This hodgepodge of initiatives, however, can
unwittingly aggravate the problem. In response to survey of 331 executives from companies with
revenues over $500 million, by the Economist Intelligence Unit, more than half confirmed that
organizational complexity actually lowered profits.

Thinking differently
Some enterprises, on the other hand, are pursuing a considerably different line of attack. While
not necessarily embracing complexity, they are learning to adapt to their environments and cope
with the uncertainty of constantly changing conditions. The scientific community, for instance,
has applied complexity thinking to a range of climate, food, and security matters.
Epidemiologists have developed tools to identify super-spreaders of diseases and prevent or limit
contagion. Most recently, a group of experts from fields as diverse as physics, sociology,
ecology, computer science, public health, economics, and banking co-authored an article urging
financial regulators and central bankers to incorporate complexity theory into new models that
could enable them to foresee and possibly mitigate future crises.
What these endeavors exemplify is the capacity to tackle the vicissitudes of 21st century life
through what are known as emergent strategies: patterns of action that evolve from the juncture
where an organizations best laid plans collide with the realities of the marketplace. Essentially
ongoing works in progress, they often develop in the absence of specific policies, or despite
them, and instead require a willingness to put aside assumptions and learn what works in
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practice. Just as important, emergent strategies arise through the convergence of ideas from
discrete sources.
This is especially important to communication professionals, for whom the rules of engagement
are changing. With the upsurge of social media platforms, communication is becoming more like
conversation. Yet conversations are sometimes uncontrollable, often unpredictable, and almost
always self-adjusting. In short, they are complex. And because people perceive their lives
through multiple lenses, it is critical to recognize how different groups access, process, interpret,
and use information. To that end, advances in cognitive and behavioral sciences bring together
distinct disciplines like psychology, sociology, anthropology, philosophy, linguistics, economics
and political science to explore how humans reason and respond in the context of their sundry
state of affairs. Incorporating these variables within powerful databases reveals previously
undisclosed patterns, peculiarities, and even sentiments around which to design and deliver more
meaningful messages. Yet communicators must understand that the task is no longer theirs alone,
but one they will increasingly share with machines.
All technologies are complex
There are algorithms, for example, that already gather, organize, and analyze data that they turn
into rudimentary documents such as press releases and quarterly reports. More advanced designs
are underway that can automatically edit hours of video footage for images with the ideal artistic
qualities. And a team of Chinese and American engineers is developing the means to anticipate
users needs and deliver only the most relevant content. Little wonder then, in a survey of more
than 3,000 technology officers in 30 countries, 97 percent of participating CIOs in broadcasting
and media acknowledge digital disruption as a significant threat; as do 90 percent of their
counterparts in public relations and advertising. These and innovations like them will add still
newer layers of complexity.
In fact, complexity is inherent in all technologies because they are basically combinations of
elements. Novel technologies call forth further novel technologies, notes W. Brian Arthur, an
American economist and a pioneer in complexity theory. They, in turn, make possible still newer
applications, and so on. Adds Arthur: It follows that a novel technology is not just a one-time
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disruption to equilibrium, it is a permanent ongoing generator and demander of further

technologies that themselves generate and demand still further technologies. Accordingly, what
it takes to be effectively digitized today wont be the same, one, two, or five years down the
road, rendering digital transformation a moving target.
In time, most businesses will likely learn to cope with the current crop of systems and
technologies. Nonetheless, their successes will be short-lived. A lot of the world has yet to come
online. The Internet is expected to connect four billion users, and as many as 25 billion devices,
before the close of the decade. By then, ultrafast 5G mobile broadband may deliver data and
content at speeds possibly up to 100 times faster than current 4G platforms. Add enhancements
to machine learning, virtual reality and, on the horizon, biotechnology to the mix, and these vast
swarms of elements will interact in trillions of different ways, increasing uncertainty but
unleashing a bounty of unpredictable opportunities as well.
Capitalizing on these will require that individuals and organizations do more than merely
manage technology. It will demand that they also master complexity. That means being able to
step back and consider all of the critical components of system. They will vary depending on the
circumstances. Not everything will be apparent; certainly not right away. And some are bound to
change throughout the process. But the goal will be to recognize how all of the different pieces
interact and influence each other; and with that knowledge, continually build appropriate
strategies.