Investing with Cynefin: Complicated

The complicated domain is the realm of strategic superiority. Organisations know with certainty how customers will behave, however it is not common knowledge. This is where organisations should focus their strategic investment.

The complicated domain is where organisations should be making larger investments as this is where they have competitive advantage. The only place where organisations should be making larger investments is where they are forced to due to regulatory dictate (Obvious) or to resist the vertiginous draw of the cliff (The Cliff). The complicated domain is where constrained resources should normally be deployed.

The complex and complicated domains are not binary in nature but rather “linear” with 0% certainty at one extreme and 100% at the other. As such, the investments are best managed using the Kelly criterion. The nature of the experiments change. Whereas in the complex domain, the experiments relate to understanding needs, in the complicated domain, the eperiments relate to the scope of the needs.

For organisations, the danger with the complicated domain is that too many investments are made in it. Either because they are classified incorrectly due to perverse cultural incentives or because the organisation is utterly risk averse. One is reminded of the risk averse anthem “No one ever got sacked for investing in the complicated domain. buying IBM.”. The real message being that perhaps some people should have been sacked for failing to think for themselves.

In summary, investing in the complicated domain is the easy option. Therefore the investment decision process should make it difficult to do so.