This is the third blog in this series. It should be read in conjunction with the first two before and ideally should be read in order, as they build a story. Go to www.tonyleng.com to review.
The ability to understand complexity can be roughly approximated with IQ, and we know that not all people have the same IQ. The difference, however, is that people mature in their ability to understand complexity (or use their cognitive capability) over time, and at differing rates. The yardstick that Elliott Jacques used to measure complexity is “time,” so using this construct, the complexity (time horizon) that a CEO deals with as she manages an organization is far higher than the complexity (time horizon) required of the person managing AR in the finance department.
Here is a useful diagram to understand Cognitive Complexity Levels (CCL) - set out below:
This diagram shows that at CCL 1 - the individual is focused on a task that should take between one and 90 days to complete. We all start our careers here. We then move to CCL 2 where we typically supervise several people doing CCL 1 work and manage a process that requires coordination as we move toward a longer-term goal (3 months to a year).
From there, we then get promoted to CCL 3 where we manage the entire system. For example, this may be the Controller of your organization who is optimizing the system that comprises revenue, cost, and profit. The controller works within this “box” to optimize and institute best practices to achieve the goal. She is not thinking about innovation or going outside the box; the task is focused on optimizing the box. The time horizon complexity here is typically 1 to 2 years.
Some folks happily spend their careers here. In fact, some folks are at CCL 1 their entire career – think of a master carpenter – and there is nothing wrong with that. But for our purposes, I am discussing a framework that helps us understand complexity within an organizational setting so that we can better understand our own career trajectory and determine the complexity of the organization where we work.
Innovation starts to occur at CCL 4, where the leader starts challenging existing frameworks and product/market fit to create differentiation. This mostly happens because the leader is scanning outside her paradigm to discover technologies/trends/sentiment (and anything else) that will cause market disruption or product differentiation. To extend the example above, the CCL 4 leader redefines/differentiates/changes the “box”. This kind of thinking requires that the CCL 4 leader have a time horizon of approximately 2 to 5 years so that the market will be receptive to the new product/service when it is introduced. We see many Silicon Valley startups that have totally disrupted industries in this manner.
At CCL 5, we typically find the CEO of an organization. This leader needs to understand how the whole system works, what innovation needs to be put in place to keep the organization competitive, and is focused on the wider stakeholder community, reputation, purpose, and ambition of the organization. I will give you the classic example. Uber (CCL 4) used new technologies to disrupt a stable industry (Taxi) that was optimizing at CCL 3. The senior executives were extremely smart but were not yet thinking at CCL 5, which got them into trouble, so a new CEO came in and made it clear that he was focusing on reputation and purpose. Here is an example of a typical CCL 5 purpose/ambition from Airbnb - “to help create a world where you can belong anywhere, and where people can live in a place, instead of just traveling to it.” With technology, this is made possible without investing billions in real estate. They were not necessarily trying to disrupt so much as trying to create a new world/paradigm of their own. The timeframe at CCL 5 is typically 5 to 10 years.
At CCL 6, we find the “Captain of Industry.” This individual has multiple CCL 5 organizations/divisions that she oversees. This leader needs to understand which organizations will meet the evolving needs of the markets in which they operate and make trade-offs as to which businesses to invest in, which to use as cash cows or sell, etc. The added dimension that a CCL6 leader brings is that her organization must act in a way (or develop products) that are meaningful to people and contribute to the betterment of society. This is where Corporate Social Responsibility/Purpose starts to fit in. (Example – a food company at CCL 5 moving toward nutrition and healthy living in CCL 6). The time horizon here is 10 to 20 years.
At CCL 7, the leader is concerned with societal progress. This is what I call the “Davos crowd” where leaders should be thinking about how to make society better through institutions, organization, or businesses that help citizens from every culture flourish for the global good. The time horizon for CCL 7 is 20+ years as they are addressing how the value systems of different societies, ecosystems, countries, and cultures can be harmonized for a better world.
The President of a country should be thinking at this level. Here is what one great CCL 7 leader said; “For to be free is not merely to cast off one’s chains, but to live in a way that respects and enhances the freedom of others.” – Nelson Mandela.
We don’t all grow at the same pace.
The other significant point that Elliot Jacques made, is that not everyone’s cognitive capacity matures at the same rate. Certain individuals might get to CCL 4 at age 55 and stay there; others may get there at age 35 and continue up to CCL 7.
Jacques spent time assessing people, identifying high potential candidates, and then nurturing them upward. Some of this will be addressed when I write about Leadership Maturity, but there is definitely an element of IQ in the mix. It is not surprising that really smart, mature people get ahead if their personality/values are requisite. There is, however, a dark side to all this, and I have seen executives derailed by a lack of maturity, humility, or authenticity who could have gone on to great things if they had matured suitably. So, the question is – how do you mature suitably? I will cover this in a future blog.
Why is all this relevant/important?
It is important to understand where you are, where your organization is, and where you can get to. As a leader, your task may be to push your organization forward and embrace new technologies and business models (move up in complexity). Or, if you are joining a company, make sure you are a fit; not only from a values perspective, but also from a complexity and maturity perspective.
The next few blogs will unpack Maturity. The whole person will then come into focus.