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Application of Complexity Theory in Change at a Small Consulting Firm

Hannah Elise Jones

Pepperdine University

January 10, 2018

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A consulting firm made the decision to move from a functional structure to a cross-

functional grouping of regional teams. The intention with the change was to bring employees in

all parts of the business, closer to the clients and allow for deeper team relationships to emerge,

driving revenue growth as a result. This change consisted of a major restructuring that broke up

four teams, and brought them together regionally rather than functionally. This paper will review

that process, how the change evolved and the challenges presented by complexity.

The regional teams, known as pods, had originally been conceived by the Consulting

Team in a brainstorming session about a year before implementation. When the transition was

finally implemented the Consulting Team was supportive, and other teams involved were curious

about what the change would hold. Two leaders were brought up be responsible for the growth

and management of the client-facing business. While the whole Consulting Team had envisioned

the pods, these two leaders implemented and designed them. Across all the cross-functional

pods, the client-facing business became known as the Consulting Services Team (CS). The top

two leaders of Consulting Services chose leaders for each pod who were were responsible for

running them like business entities. Each leader had profit and loss responsibility, sales goals,

and up-sell targets. They were also responsible for managing the utilization of team members on

their pod. While they managed the pods, these leaders still reported to the top two leaders of CS,

and only had figurative responsibility when it came to the whole group. They seemed to have

little influence in the broader organization.

To enhance the revenue growth capacity of the new structure, account management

became a priority. In the transition, Consultants were tasked with account management

responsibility for all clients who were not deemed top-tier. Those top-tier clients were managed

by the pod leaders, known externally as Partners, or the top two CS leaders. Extensive rules were
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put in place as to how accounts should be managed and who was responsible for what actions.

As these expectations were rolled out tension began to emerge between individuals on the pods

because the account management structure, put in place by organizational leadership, gave

consultants primary responsibility for clients. This led members in other roles to feel under-

appreciated and misunderstood.

Due partly to some of this early tension, it took the pods a while to establish themselves

and find a good rhythm. Many employees were frustrated with the rules and structure that

were controlling the pods. Less than six months into this transition, organizational leadership

called a meeting and announced that the pods would be disbanded and that everyone would

move into one large Consulting Services team, without small teams or their pod leaders. All

employees would begin reporting to one of the top leaders of the CS team. While some

employees were relieved to be free of the pressures of the struggling pods, very few agreed with

this decision and the abruptness of the announcement. There was a great deal of discussion about

what went wrong with a design that initially many people had believed in.

This process, which all told spanned about nine months of the year, failed in many ways.

Employees became unhappy and intensely frustrated. Revenue targets for the

year became increasingly unattainable as sales declined. The intensity of the work picked up and

employees began to experience burn out. Clients complained about the level of transition on their

teams. Based on the objectives outlined for the restructure originally, it failed to meet all of its

goals. Had organizational leaders been better able to embrace complexity in the process, the

outcomes could have been quite different. In this process, two key concepts of complexity

theory, that could have had transformational effects, were ignored; the value of chaos, and the

role of leadership in complexity.

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Traditionally, the instinctive reaction to chaos is control. There is an innate desire to

minimize uncertainty in order to preserve a sense of safety (Keene, 2000). However, in

organizations it is the edge of chaos, the space between stability and destructive turbulence,

where true transformation takes place (Burnes, 2005). It is this level of disturbance that forces

creativity, ingenuity and vision to emerge, not just from leaders, but from all parts of the

organization. When viewing organizations through a complexity lens, embracing the edge of

chaos is a key component of the organization’s ability to thrive in a competitive or

turbulent environment.

In the case of the consulting firm restructure, no space was permitted for chaos. When the

transition was made, rules and structure were already in place. Not only was a new design

created, so were rules for operating within that design. Consultants had a list of their required

tasks and responsibilities for the new approach to account management. Team meetings

consisted of similar agendas, focused on utilization, client updates and project management.

There was little space for the newly formed teams to grapple with the questions of how

they worked together or wanted to serve their clients, as all of that was laid out for them.

By ignoring the value of chaos, leaders set the teams up to lack creativity and inspiration.

There was little challenge or motivation for individuals in the process because everything had

been predefined. This resulted in individuals having lower levels of buy-in to the whole

structure. Even though many members of the team had participated in the original envisioning of

the pod structure, the lack of autonomy they had when it was implemented significantly

decreased their commitment to the new way of working. As Angelique Keene says in her work

on complexity and leadership, the very act of control might prevent the creativity and innovation

we seek (2000). This dynamic undoubtedly played out at the consulting firm.
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The leadership of the Consulting Services team was performed essentially by the top two

leaders all of the pod leaders reported to, and both of them relied heavily on traditional top-down

approach to leading. They exhibited behaviors that expressed a need to be in control and predict

and direct the change the organization was going through. This control was exhibited most

specifically through the process that was put in place after the dismantling of the pods.

As has been mentioned, the original intention of the pod structure was to create client-

focused teams that could build relationships that would sustain and drive more revenue. The

structure was being dismantled but the revenue growth goals remained the same, and the team

was behind for the year. As a result, more intense forms of control came in what was called the

Seven Touch Point Process. This process involved each individual consultant being required to

meet with the leader of the CS team at seven stages of each standard client engagement. The

process was time intensive and demanding. Requiring more than 14 people to meet with one

individual seven times per client, quickly became a scheduling impossibility, and caused a great

deal of stress. This form of intense control, over not only the final deliverable, but over the way

in which individuals worked, had a negative impact on the moral of the team.

To manage complexity effectively, the Consulting Services leaders could have taken an

almost entirely opposite approach. It was widely agreed that change needed to happen on the

team. In order for this new way or working to come to life, an emergent process was more likely

to generate successful results, as new knowledge is generated when “there is a sufficient

responsiveness, connection and diversity in the membership of the group” (Griffin, Shaw,

Stacey, 1999). Accepting this, it is clear that the consulting leaders could have seen more success

by allowing for process to emerge within the team rather than controlling them so rigidly. The

role of leadership in this situation should not be to control, but to provide a clear vision for the
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organization, from which principles emerge to guide behavior, thus allowing the system to

navigate the complexity (Keene, 2000). The role of leaders in a complex world is not to control,

but to allow the system to be. In her writings Keene says, “We erroneously see greatness in

leadership with what those leaders do rather than what they are and allow others to be” (2000). In

the case of the consulting firm, the two key leaders had been rewarded by the organization for

what they did, and as a result, were incentivized to do more, particularly when things became

more challenging. This act of doing, of controlling, ultimately caused the system to revolt.

The Consulting Services team failed to meet its growth and revenue goals that year. Plans

changed again, developing a strategy that leaders hoped would result in greater success than the

previous attempts described here. Regardless of the strategy the firm identifies, if the traditional

patterns of top down control are used when the first signs of chaos emerge, success, let alone

transformation, is unlikely. The lessons of complexity theory challenges old paradigms of

organizational leadership, but it is experiences like those of the consulting firm, that provide

compelling examples for organizations to change their ways to better adapt to a changing world.

References

Burnes, B. (2005). Complexity Theories and Organizational Change. Journal of Management

Reviews, 7, 2, 73-90.

Griffin, D., Shaw, P., & Stacey, R. (1999). Knowing and Acting in Conditions of Uncertainty: A
Complexity Perspective. Systemic Practice and Action Research, 12, 3, 295-309.
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Keene, A. (2000). Complexity Theory: The Changing Role of Leadership. Industrial and
Commercial Training, 32, 1, 15-19.