Business complexity is on the increase in South Africa, according to KPMG's Confronting Complexity South Africa report. To gain competitive advantage, companies should be investing in leaders who thrive in this new environment.
The KPMG report, published towards the end of 2011, shows that 84% of the companies surveyed say that complexity has increased in the country over the past two years, most believe it to have risen significantly, and 68% foresee more complexity over the next two years.
Increased costs and increased risk are identified as the major causes of this complexity, similar to the rest of the world, but South African companies also view delays in sealing deals and transactions as major issues perpetuating complexity.
Rather than fearing this complexity, an overwhelming 82% of CEOs see the potential for exploiting this, 88% believe the possibility exists to gain a competitive advantage, and 80% argue that it could help focus existing strategies.
Over the past two years, South African companies have sought to adapt to the rising complexity with 82% of them reorganising parts of their business, and 88% improving information management.
Research shows that South African companies have a healthy attitude towards complexity and that they're doing all the right things to manage it and capitalise from it, but a major issue stands out.
SA companies do not view changing approaches to human resources as effective for managing complexity. According to the KPMG survey, 85% of Chinese companies, 80% of Indian companies, and 76% of Brazilian companies do, but only 36% of SA firms believe changes in HR strategies help.
"But changes to HR approaches are critical in a time like this. Specifically, companies should be doing everything they can to develop the future leaders of the company; leaders that will be facing greater degrees of complexity and will need to draw from deep resources in order to manage this," says Chris Breen ...
"Instead, complexity calls for experimentation, the rejection of single, simple explanations of reality and the ability to maintain entirely contradictory views of reality," he said.
"There is very little success in trying to predict the outcomes of decisions, internally and externally, using traditional business thinking and forecasting," says Breen. "Only leaders who are well-anchored in themselves, fearless, unassuming and open to change, can manage teams in this uncertain environment. And these leaders in the workplace today need to be developed in such a way that prepares them for increasing complexity."
Via WorldsView Academy