The Next Next Common Sense - TEXT

NNTEEHXX ETT C OS EMNMS OE N Coherence & Context MICHAEL LISSACK

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CONTENTS Acknowledgements��v Foreword to the Updated Edition��vii Introduction�� xi Plan of the Book��xvii

Introduction to Part 1: Foundations of Complexity (Chapters 1-3)�� 1

Chapter 1 Chapter 2 Chapter 3

The New Complexity Landscape�� 5 Redefining Coherence for the Digital Age��18 Respect Mental Models: Yours and Others’��33

Transition from Part 1 to Part 2��65 Introduction to Part 2: Building Blocks and Roles (Chapters 4-6)��67

Chapter 4 Chapter 5 Chapter 6

Use Landscape Images��71 Combine and Recombine��93 Recognize Your Multiple Roles, Don’t Hide From Them��121

Transition from Part 2 to Part 3��146 Introduction to Part 3: Communication and Navigation (Chapters 7-12)��149

Chapter 7 Chapter 8

The Evolution of Role Complexity��153 Creating Canyons in Digital Spaces��170

Chapter 9 Narrative Intelligence��187 Chapter 10 Intelligence Gathering in the Digital Age��205 Chapter 11 Digital Signposts and Recognition��227 Chapter 12 Language and Coherence in the Digital Age��257 Transition from Part 3 to Part 4��281 Introduction to Part 4: Implementation and Measurement (Chapters 13-15)��283 Chapter 13 The Five Steps��287 Chapter 14 Measuring Complexity Mastery��321 Chapter 15 Leading for Coherence and Complexity��345

Transition from Part 4 to Part 5��390 Introduction to Part 5: Future Horizons (Chapters 16-17)��393

Chapter 16 Complexity Frontiers��397 Chapter 17 The Coherent Organization Of Tomorrow��419

Conclusion��447 Afterword: Navigating New Complexities: Reflections on Two Decades of Common Sense��455 Core Philosophical Underpinnings��463 Glossary of Key Terms��467 References by Chapter��473 Appendices�� 501

ACKNOWLEDGEMENTS The author is grateful to Johan Roos for his partnership writing the prior edition and to Brenden Meagher for commentary, criticism, and expres- sions of patience.. While preparing the text of this work, the author used Claude.ai, ChatGPT, Grok and Grammarly both to edit self-written text for clarity and brevity and to test the text for argumentation flow [by asking the LLM tool to review the text for argumentation, coherence, cogency, flow and self-consistency and to make suggestions]. After using these services, the author reviewed and edited the content as needed and takes full responsibility for the publication’s content.

FUOPRDEAWT OE DR DE DT IOT TI OHNE When Michael Lissack and Johan Roos published The Next Common Sense over twenty years ago, they were ahead of their time. They recognized that the world was transitioning from merely complicated to genuinely com- plex, and that this transition would fundamentally change how businesses operate. They understood that in a world of interwoven relationships and interdependencies, the command-and-control approach to management would become increasingly ineffective. Today, their insights seem prophetic. We now inhabit a digital land- scape where complexity has not only intensified but accelerated. The technological revolution has compressed time and space, creating con- nections that would have been unimaginable in the late 1990s. Artificial intelligence, remote work, platform economics, social media, and the blur- ring of industry boundaries have created a business environment that makes the complexity Lissack and Roos described seem almost quaint by comparison. Yet remarkably, the fundamental principles they articulated have proven extraordinarily resilient. Their core distinction between com- plicated systems (with many parts that can be “folded” together) and complex systems (with elements “woven” together in intricate patterns) has become even more essential as organizations struggle to navigate interconnected challenges. Their advocacy for coherence—alignment of context, viewpoint, purpose, and action—has been validated as more critical than technical expertise in navigating uncertainty.

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The original edition predicted that organizations would need to de- velop capabilities for pattern recognition rather than rigid planning, for adaptive response rather than predetermined action. We’ve seen these predictions play out dramatically across industries, with companies that maintained rigid control structures struggling against more adaptive com- petitors. The authors’ early emphasis on the power of mental models, nar- rative intelligence, and landscape metaphors has been reinforced by subse- quent research in cognitive science, demonstrating how these approaches leverage fundamental human capabilities for navigating complexity. This updated edition arrives at a critical juncture. After waves of tech- nological disruption, a global pandemic that transformed how we work, and increasing recognition of our interconnected global challenges, orga- nizations are desperately seeking ways to navigate complexity rather than being overwhelmed by it. We face unprecedented uncertainty, yet must still find paths to coherent action. The beauty of this book has always been its practical wisdom. Rather than providing superficial “five easy steps” to success, Lissack and Roos of- fer a profound framework for developing the capabilities needed to thrive in complexity. Their emphasis on coherence—the alignment that enables purposive action—speaks directly to our current struggles with fragmen- tation, polarization, and information overload. In this new edition, the authors have thoughtfully updated their frameworks for the digital age. They explore how artificial intelligence changes our mental models, how digital platforms transform our land- scapes, how remote and hybrid work affects our roles, and how social media shapes our storytelling. They demonstrate that while the technol- ogies have evolved dramatically, the human and organizational need for coherence remains constant. Perhaps most importantly, they remind us that mastering complexity isn’t primarily a technological challenge—it’s a human one. In an age ob- sessed with algorithms and automation, they argue persuasively that our uniquely human capacities for meaning-making, relationship-building, and pattern recognition are our greatest assets in complexity.

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I believe this book should be essential reading for leaders at every level in every sector. Whether you’re a CEO navigating industry disruption, a middle manager coordinating hybrid teams, an entrepreneur building a startup, or a professional trying to make sense of your career path, the principles in these pages offer invaluable guidance. Twenty years ago, the next common sense was a provocative idea. Today, it’s an urgent necessity. This book provides the wisdom we need to not just survive complexity, but to harness it as a source of creativity, innovation, and meaningful progress.

Hugo Letiche

MCa os ht eerr I i e n N n g T thalroAuggeh When Johan Roos and I published the first edition of The Next Common Sense more than two decades ago, we were witnessing what felt like a significant shift in the business landscape. The information age was as- cendant, globalization was accelerating, and managers were struggling to apply industrial-era principles to increasingly dynamic environments. We recognized then that the world was transitioning from being merely complicated to genuinely complex—from a world of discrete elements that could be folded and hidden to one of interdependencies woven to- gether in intricate patterns. c e C R o I O nm D Tp U l h e C e x T i D t I y i O g T i N Today, that transition has not only completed but has accelerated beyond what most of us could have imagined. The digital revolution has fundamentally transformed how we live, work, and create value. The smartphone in your pocket contains more computing power than the mainframes that once occupied entire rooms. The average employee jug- gles multiple digital workspaces while navigating hybrid work arrange- ments. Companies rise and fall at unprecedented speeds as network effects and exponential technologies reshape industry after industry.

Michael Lissack The Old Common Sense and Its Limitations Before exploring where we’re headed, it’s worth clarifying what we mean by “the old common sense” that has governed management thinking for decades. The old common sense viewed organizations as complicated machines with parts that could be optimized independently. It empha- sized prediction, control, and efficiency above all else. Decision-making was concentrated at the top, information flowed through formal channels, and success was measured by how closely reality matched the plan. This approach served well in relatively stable environments where problems could be broken down into component parts and addressed separately. But in today’s interconnected world, this old common sense increasingly fails us. When we try to optimize parts without understand- ing their relationships, we create unexpected consequences. When we insist on detailed plans in rapidly changing conditions, we waste resources on predictions that quickly become obsolete. When we concentrate decision-making at the top, we lose the distributed intelligence needed to respond to emerging patterns. The limitations of this old common sense have become increasingly apparent through both dramatic failures and missed opportunities. Companies that once dominated their industries have collapsed when unable to adapt to networked competition. Carefully crafted strategies have unraveled in the face of technological disruption. And organizations optimized for efficiency have proven surprisingly fragile when facing un- expected challenges like pandemic disruptions or supply chain failures. The Enduring Principles of the Next Common Sense Amid this technological whirlwind, a surprising truth emerges: the fundamental principles we articulated in the original edition have not become obsolete—they have become essential. The distinction between complicated and complex systems matters more than ever. The need for coherence—that alignment of context, viewpoint, purpose, and action

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that enables further purposive action—has only grown more acute in our fragmented digital landscape. Our original framework identified ten principles that have stood the test of time:

1. Using simple guiding principles 2. Respecting diverse mental models 3. Employing landscape metaphors 4. Combining and recombining building blocks 5. Embracing multiple roles 6. Creating canyons, not canals 7. Telling powerful stories 8. Sending out scouting parties 9. Posting and attending to road signs 10. Fueling coherence with aligned words

These principles have proven remarkably prescient. Organizations that have embraced simple guiding principles rather than rigid rules have demonstrated greater adaptability in changing conditions. Those that have respected diverse mental models have made better decisions in com- plex environments. Companies that have used landscape metaphors to navigate complexity have maintained direction amid uncertainty. The principles we identified weren’t just interesting ideas—they were founda- tional capabilities for thriving in complexity. What has changed is the context within which these principles must be applied. When we wrote about mental models, we couldn’t have antici- pated how artificial intelligence would extend and challenge our cognitive capacities. When we discussed landscape metaphors, we weren’t imagin- ing the digital territories and virtual worlds that now constitute significant portions of our economy. When we advocated for sending out scouting parties, we hadn’t experienced the overwhelming data deluge that now makes attention our scarcest resource.

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Michael Lissack The Updated Framework for Today’s World

In this updated edition, I maintain our original framework while thor- oughly reimagining its application for today’s world: First , I explore how digital transformation has fundamentally altered the complexity landscape. I examine how technologies like AI, block- chain, and social platforms have created new forms of complexity that didn’t exist when Roos and I wrote the original book. These technologies haven’t simplified our world—they’ve created new dimensions of inter- connection that require even more sophisticated navigation capabilities. Second , I dive deeper into how coherence manifests in digital and hybrid environments. The challenges of creating alignment across dis- tributed teams, virtual spaces, and multicultural contexts require new approaches to coherence-building. The mechanisms that once created shared understanding in physical offices must be reimagined for a world where work crosses boundaries of space, time, and technology. Third , I update our ten guiding principles with fresh examples and applications: • I show how simple guiding principles can scale across global dig- ital enterprises • I explore how mental models are shaped by algorithms and how diverse perspectives become even more crucial in digital spaces • I extend landscape metaphors to digital ecosystems and data territories • I examine how building blocks are reimagined as APIs, micros- ervices, and modular organizational capabilities • I discuss how multiple roles are navigated in an era of portfolio careers and digital identities • I translate the canyon metaphor to digital infrastructure and governance • I explore storytelling in a world of multimedia, social sharing, and generative AI

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• I update our approach to organizational sensing for a data-rich environment • I reimagine recognition systems for networked organizations • I address how language evolves and aligns in digital spaces Fourth , I provide a thoroughly revised implementation framework that addresses the practical challenges of today's organizations: hybrid work, algorithmic management, platform business models, and the blur- ring of industry boundaries. These aren't theoretical explorations but prac- tical approaches that organizations are using today to navigate complexity more effectively. Finally , I look ahead to emerging complexities that will define the next decade: climate change, demographic shifts, AI advancement, and new forms of social organization. Rather than pretending to predict spe- cific outcomes, I focus on developing the capabilities organizations will need to navigate whatever emerges from these interconnected challenges. Throughout, my message remains consistent: mastering complexity isn't about imposing control or pretending to predict the unpredictable. It's about creating conditions under which coherent action can emerge despite—or even because of—the swirling complexity around us. A New Journey Through Familiar Territory The structure of this book guides you through a journey of under- standing and application. We begin with the foundations of complexity, exploring the fundamental distinction between complicated and com- plex systems and introducing coherence as the cornerstone capability. We then examine the building blocks and roles that form the architectural elements of coherent organizations, followed by the communication and navigation systems that bring these elements to life. The second half of the book focuses on implementation—how to put these ideas into practice in your specific context. We explore steps for creating coherence, approaches for measuring complexity mastery, and

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leadership capabilities essential for navigating complexity. Finally, we look toward the horizon, examining emerging complexity frontiers and envisioning organizations specifically designed to thrive amid complexity. This journey isn't about reaching a destination where complexity is conquered—that's neither possible nor desirable. Instead, it's about devel- oping the capabilities to navigate complexity with wisdom, adaptability, and purpose. The organizations that master these capabilities won't elim- inate complexity but will harness it as a source of innovation, resilience, and meaning. The old common sense was about dealing with the discrete elements of a complicated world. The next common sense is about mastering the com- plex web of interactions that define our digital age. Our original edition helped readers cut their own Gordian knots—those seemingly impossible tangles that yield to simple, dramatic strokes of insight. This updated edi- tion equips you to navigate a world where such knots appear daily, where yesterday's solutions become today's problems, and where coherence must be continually recreated rather than permanently established. As you embark on this journey, I invite you to approach complexity not as a problem to be solved but as a reality to be embraced. The organi- zations and leaders who thrive in the coming decades will be those who can maintain coherence amid complexity, who can sense and respond to emerging patterns, and who can guide interactions rather than control entities. This is the next common sense for a digital age. Let's explore it together.

Michael Lissack May 2025

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PLAN OF THE BOOK Part 1: Foundations of Complexity (Chapters 1-3) In this opening section, we establish the fundamental distinction be- tween complicated and complex systems that forms the foundation of our journey. The digital transformation of our economy hasn't merely made our systems more complicated—it has fundamentally altered how they're woven together. Chapter 1 explores this new complexity landscape, distin- guishing between the intricate but predictable nature of complicated sys- tems and the emergent, interconnected reality of complex ones. Chapter 2 introduces coherence as the cornerstone capability for navigating com- plexity—that alignment of context, viewpoint, purpose, and action that enables further purposive action. Chapter 3 examines the critical role of mental models in shaping how we perceive and respond to complexity, revealing how these internal frameworks both enable and constrain our ability to navigate complex environments. These foundational chapters establish why traditional management approaches increasingly fall short in today's interconnected world and in- troduce the core principle that will guide our exploration: mastering com- plexity doesn't mean reducing it but developing the capability to maintain coherence within it.

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Michael Lissack Part 2: Building Blocks and Roles (Chapters 4-6) In Part 2, we explore how organizations can create coherence by thoughtfully combining elements and navigating the multiplicity of roles that each person occupies. Chapter 4 introduces landscape metaphors as powerful tools for understanding complex terrain, leveraging our in- nate spatial intelligence to perceive patterns and relationships that might otherwise remain invisible. Chapter 5 examines how organizations can combine and recombine building blocks—whether ideas, capabilities, or resources—to create coherent solutions in complex environments. Chapter 6 addresses the reality that we all occupy multiple roles simul- taneously and explores how recognizing and respecting this multiplicity creates more authentic and effective organizations. These chapters reveal how coherence emerges not from rigid struc- tures but from thoughtful combination of elements, clear landscape un- derstanding, and honest engagement with the multifaceted nature of hu- man roles. Part 3: Communication and Navigation (Chapters 7-12) Part 3 addresses the crucial systems that enable organizations to maintain direction and shared understanding amid complexity. Chapter 7 expands on role multiplicity, exploring how modern professionals navi- gate increasingly diverse role portfolios. Chapter 8 introduces the concept of "canyons not canals"—creating boundaries that channel energy while allowing freedom within them, unlike the rigid control of traditional management. Chapters 9 through 12 explore how organizations create shared meaning through narrative intelligence, gather critical informa- tion through scouting parties, acknowledge contributions through digital signposts, and maintain coherence through aligned language. Together, these chapters reveal how organizations create the infra- structure for coherent action without imposing rigid control—establishing

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The Next Next Common Sense systems that enable navigation, meaning-making, and recognition that work with the grain of complexity rather than against it. PMaerat s4u: rIemmpel ne mt ( eCnht aapt itoenr s a1n3 d- 1 5 ) Part 4 provides the roadmap and metrics for implementing coherence in complex environments. Chapter 13 outlines five essential steps for creating coherence: identifying yourself and your goals, using the right language, creating the right context, turning people loose while getting out of the way, and implementing communication that works. Chapter 14 addresses the challenge of measuring complexity mastery, offering ap- proaches that match the nature of complex systems rather than imposing inappropriate metrics. Chapter 15 explores the leadership capabilities required for creating coherence in complex environments, from evolved mindsets to specific practices that enable distributed yet aligned action. These chapters transform the principles and approaches from earlier sections into actionable implementation paths, providing both the steps for creating coherence and the means to assess progress toward complex- ity mastery. Part 5: Future Horizons (Chapters 16-17) Part 5 explores the emerging complexity frontiers that organizations must navigate and the characteristics of organizations designed to thrive amid these challenges. Chapter 16 examines specific frontiers from AI and climate adaptation to demographic transformation and ecosystem busi- ness models, revealing both challenges and opportunities on the horizon. Chapter 17 outlines the characteristics of the coherent organization of tomorrow—from distributed intelligence and permeable boundaries to dynamic stability and collaborative technology integration—providing a vision of what organizations might become when designed specifically for complexity.

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These concluding chapters don't simply summarize the journey but extend it forward, offering guidance for anticipating and preparing for complexities yet to emerge and a vision of organizations capable of thriv- ing within them rather than merely surviving.

introduction to Part 1 Foundations of Complexity (Chapters 1-3) T tems where analyzing component parts leads to understanding the whole. Instead, we face truly complex environments where interconnections, feedback loops, and emergent properties create realities that defy tradi- tional management approaches. Part 1 establishes this critical distinction and introduces the foundational concepts that will guide our exploration of complexity mastery. he digital transformation sweeping across our global econ- omy has fundamentally altered the nature of organizational challenges. We no longer operate in merely complicated sys-

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Chapter 1 invites us to examine the new complexity landscape that de- fines modern business. Here, we distinguish between the complicated— systems with many intricate parts that can be folded together (from the Latin "plic" meaning "fold")—and the complex—systems composed of elements woven together (from the Latin "plex" meaning "weave"). This distinction proves crucial for understanding why approaches that worked in complicated environments often fail in complex ones. Through exam- ples ranging from digital platforms to global supply chains, we see how the digital transformation hasn't simply made our systems more complicated but has fundamentally altered how they're woven together, creating expo- nential rather than linear growth in complexity. In Chapter 2, we introduce coherence as the cornerstone capability for navigating complexity. Coherence—that alignment of context, viewpoint, purpose, and action that enables further purposive action—provides the navigational framework that allows organizations to maintain direction amid unpredictability. Unlike traditional management approaches that attempt to eliminate complexity through control, coherence provides a way to maintain purposeful action within complexity. Through examples like Microsoft's transformation under Satya Nadella, we explore how co- herence manifests in organizational reality and why it proves so valuable during periods of rapid change and disruption. Chapter 3 delves into the critical role of mental models in shaping how we perceive and respond to complexity. These internal frameworks— simplified representations we form of how things work—both enable and constrain our ability to navigate complex environments. We examine how different mental models lead to different interpretations of the same information, how expert and novice mental models differ in their pattern recognition capabilities, and how organizations can develop more diverse and adaptive mental models. Through stories of both success and failure, we see how mental models can either illuminate new possibilities or blind us to emerging realities. Together, these foundational chapters establish why traditional management approaches increasingly fall short in today's interconnected

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world. They reveal how coherence provides a more effective navigational approach than either rigid control or chaotic abandonment of structure. And they introduce the core principle that will guide our exploration throughout this book: mastering complexity doesn't mean reducing it to simplicity but developing the capability to maintain coherence within it—finding patterns that enable purposeful action without denying the rich interconnections that define complex systems.

Chapter 1 The New Complexity Landscape FROM INTRICATE TO INTERWOVEN T ake a good look around the next time you open your smart- phone. With a single tap, you can summon a ride that arrives within minutes, initiate a video call with colleagues across the globe, or purchase an item that will arrive at your doorstep tomorrow. What makes these seemingly simple actions possible is not merely com- plicated—it is profoundly complex. When Johan Roos and I wrote the original edition of this book, we distinguished between the complicated and the complex. The complicated consists of many intricate parts that can be folded together ( plic in Latin means "fold"). The complex consists of elements woven together ( plex in Latin means "weave"). We used the example of a local dairy farm versus the airline transportation system. A flat tire on a dairy truck might incon- venience a few customers, but it doesn't affect the food markets of a major city. By contrast, weather delays at a hub airport like Chicago O'Hare can disrupt the entire national air transport system for days. Today, that distinction has become even more profound. The digital transformation of our economy hasn't just made our systems more compli- cated—more folded together—it has fundamentally altered how they're

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woven. Consider a simple example: streaming a movie on a digital plat- form. Behind this seemingly straightforward activity lies an astonishing web of interdependencies: • Content creation networks spanning multiple countries • Cloud computing infrastructure powering recommendation algorithms • Payment systems processing micropayments in real-time • Internet service providers managing bandwidth demands • User interfaces adapting to multiple device types • Licensing agreements responding to geographical locations • Analytics systems capturing viewing patterns All of these elements interact continuously, creating feedback loops that change the system in real time. The complexity doesn't just scale lin- early with the number of components—it grows exponentially with the number of potential interactions between them. THE EXPONENTIAL SHIFT In 1999, most businesses still operated on relatively linear times- cales. Strategic plans covered five years. Product development cycles lasted months or years. Customer relationships evolved gradually through face-to-face interactions and traditional marketing. Today's digital landscape operates at a fundamentally different tempo. Consider how quickly the following changes have transformed entire industries: • Social media platforms that reshape public discourse in hours • Financial technologies that move markets in milliseconds • Consumer trends that emerge and fade within weeks • Software updates that reconfigure capabilities overnight • Supply chains that reroute globally in response to real-time data

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This acceleration extends beyond mere speed—it reflects a shift from linear to exponential patterns of change. Linear systems change by add- ing; exponential systems change by multiplying. When Facebook (now Meta) operated on Zuckerberg's famous motto "Move fast and break things," they weren't just advocating speed—they were acknowledging the exponential nature of network effects, where value increases with the square of the number of participants. The implications for organizations are profound. Planning hori- zons have compressed. The half-life of skills has shortened dramatically. Competitive advantages that once lasted decades now evaporate in quar- ters. As Microsoft CEO Satya Nadella observed, "In the past, we were confident of our future for at least a decade. Today, we can't be confident for more than 3-5 years without continuous reinvention." CI NOTMHP LE IDCIAGTI TE DA LV AS .GCEO M P L E X

The distinction between complicated and complex has evolved in the digital age. Let me offer an updated framework:

Complicated Systems (Then and Now):

• Can be reduced to their component parts • Follow predictable rules of cause and effect

• Can be optimized through specialized expertise • Scale through standardization and replication • Example: A conventional manufacturing assembly line

Complex Systems (Then):

• Characterized by interdependence between parts • Demonstrate emergent behaviors not predictable from components • Self-organize in response to environmental changes

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• Example: A city's transportation network

Complex Adaptive Systems (Now):

• Massively interconnected across digital and physical domains • Generate continuous data that alters the system itself • Blend human and algorithmic decision-making • Operate across multiple timescales simultaneously • Example: A ride-sharing platform's dynamic pricing algorithm This evolution matters tremendously for leadership. Managing com- plicated systems requires analytical rigor and expertise. Leading in com- plex systems requires something quite different: the ability to create con- ditions under which coherent action can emerge despite—or even because of—unpredictability. TONHEE FCOORS TT HOFE MO TI SHTEARK I N G When organizations apply complicated-system approaches to com- plex challenges, the consequences can be severe and often unexpected. This misalignment is at the heart of many organizational failures in the digital age. Consider the case of Nokia, once the world's leading mobile phone manufacturer. Nokia's leadership treated smartphone development as a complicated challenge—breaking it down into discrete technical components managed by specialized teams with detailed specifications and timelines. This approach had served them well in feature phone development, where the system was primarily complicated rather than complex. Apple, meanwhile, recognized the complex nature of the smartphone ecosystem. Rather than just focusing on device specifications, they cre- ated conditions for emergent innovation through an integrated approach

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that considered hardware, software, user experience, and developer eco- systems as an interwoven whole. The result was the iPhone—not just a better phone but a fundamentally different approach that recognized the complex, adaptive nature of the mobile ecosystem. Nokia's failure wasn't due to lack of technology or talent; they actu- ally had developed touchscreen interfaces and many iPhone-like features before Apple. Their failure stemmed from treating a complex challenge as merely complicated—attempting to control and optimize components rather than nurturing the conditions for coherent innovation across an interconnected system. Similar patterns have played out across industries—from Kodak's failure to adapt to digital photography despite inventing it (treating mar- ket evolution as a complicated technical challenge rather than a complex adaptive system) to Blockbuster's collapse against Netflix (focusing on optimizing store operations rather than recognizing the complex ecosys- tem of home entertainment). These cases highlight a critical truth: the cost of mistaking complex systems for merely complicated ones isn't just suboptimal performance— it can be existential. Organizations that apply complicated-system ap- proaches to complex challenges face increasing misalignment with reality until they either transform their approach or become obsolete. THRIVING IN THE NEW COMPLEXITY Not all organizations have floundered in this new landscape. Some have embraced complexity as a source of advantage. Let me share three brief cases that illustrate different approaches to thriving in complexity:

Stripe: Simplifying Complexity for Others

When Patrick and John Collison founded Stripe in 2010, online payments were complicated, requiring merchants to navigate a laby- rinth of banking relationships, compliance requirements, and technical

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integrations. Stripe's insight wasn't to eliminate this complexity—it was to create an interface that shielded users from it. Their approach embodies what I call "complexity arbitrage"—taking on the burden of managing complexity so others don't have to. By build- ing a platform that handles the byzantine world of financial transactions through clean, developer-friendly APIs, Stripe became the infrastructure for thousands of digital businesses. They don't simplify the underlying system; they create a coherent way to interact with it.

Spotify: Learning Through Constant Experimentation

Spotify's journey from startup to streaming giant illustrates how or- ganizations can learn their way through complexity. Rather than attempt- ing to predict the perfect organizational structure, Spotify developed its now-famous model of squads, tribes, chapters, and guilds—a system designed not for stability but for continuous reconfiguration. Most importantly, Spotify treats its organization as an experiment, not a solution. As former Spotify executive Henrik Kniberg noted, "We're con- tinuously learning and adapting our model based on what works and what doesn't." This approach acknowledges that in complex systems, the map is never the territory—it must be continuously redrawn as the landscape shifts.

Haier: Dissolving Boundaries Between Organization and Ecosystem

Chinese appliance manufacturer Haier has reimagined what an or- ganization can be in a complex world. Under CEO Zhang Ruimin's lead- ership, Haier transformed from a traditional hierarchical manufacturer into a network of thousands of micro-enterprises that function as entre- preneurial units connected through digital platforms. Haier's approach dissolves the traditional boundary between organi- zation and environment. By creating internal markets where teams com- pete for resources based on their ability to satisfy customer needs, Haier has built what Zhang calls a "networked organization with no center." This

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radical decentralization doesn't eliminate complexity—it embraces it as a source of innovation and adaptability. These examples share a common thread: rather than trying to reduce complexity to simplicity, these organizations have developed ways to nav- igate complexity coherently. They don't fight against the interconnected- ness of the digital age—they harness it. KEY TENSIONS IN TODAY'S ENVIRONMENT This new complexity landscape creates tensions that organiza- tions must navigate. Five tensions in particular define today's business environment:

1. Efficiency vs. Adaptability

The digital economy simultaneously demands ruthless efficiency and radical adaptability. Companies must deliver quarterly results while con- tinuously reinventing themselves. This creates a fundamental tension: optimization requires standardization and predictability; adaptation re- quires experimentation and redundancy. Amazon exemplifies an organization that navigates this tension. Its fulfillment operations run with clock-like precision, while its culture embraces what Jeff Bezos calls "high-velocity decision-making" and experimentation. This balance doesn't resolve the tension—it holds it productively.

2. Scale vs. Responsiveness

Digital technology creates unprecedented opportunities to scale, but also demands hyper-responsiveness to local conditions. Global platforms must operate consistently across markets while adapting to cultural nu- ances and regulatory environments. Unilever has addressed this tension through its "Connected 4 Growth" model, which combines global brand strategies with empowered local

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marketing teams. The challenge isn't choosing between scale and respon- siveness—it's designing systems that can deliver both simultaneously.

3. Data Abundance vs. Attention Scarcity

We now generate more data in a day than was created in centuries past, yet human attention remains our scarcest resource. Organizations must navigate this tension between the exponential growth of information and the linear capacity of human cognition. Netflix's approach to content recommendation illustrates this tension. The company processes enormous datasets to personalize recommen- dations, but its interface remains remarkably simple. The complexity is absorbed by algorithms so that the user experience remains coherent.

4. Human Judgment vs. Algorithmic Decision-Making

As algorithms become more capable, organizations face difficult ques- tions about where to deploy automation and where to preserve human judgment. This isn't simply about efficiency—it's about preserving the uniquely human capabilities that create value. Mayo Clinic has navigated this tension by using AI to augment rather than replace clinical decision-making. Their approach recognizes that algorithms excel at pattern recognition across vast datasets, while human clinicians contribute contextual understanding and ethical judgment.

5. Autonomy vs. Alignment

Perhaps the most fundamental tension is between the autonomy needed for agility and the alignment needed for coherence. Organizations must empower individuals and teams to make decisions without waiting for approval, while ensuring these decisions serve a common purpose. This tension is particularly acute in digital-native organizations. Shopify addresses it by promoting what they call "aligned autonomy"— giving teams tremendous freedom within clear strategic guardrails.

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Leaders focus less on controlling decisions and more on creating a shared context that guides autonomous action. None of these tensions can be permanently resolved. They must be continuously navigated. The most successful organizations don't choose one pole over the other—they develop the capability to oscillate between them as circumstances require. HOW THESE TENSIONS PLAY OUT IN PRACTICE To understand how these tensions manifest in organizational life, let's examine a real-world scenario that many companies have faced during digital transformation initiatives. A global manufacturing company decided to implement a digital platform connecting its production facilities, supply chain, and customer interfaces. The initiative immediately surfaced the efficiency-adaptability tension. The operations team emphasized standardization across facili- ties to maximize cost savings and data consistency. Meanwhile, regional leaders argued for customization to accommodate local workflows and regulatory requirements. The initial approach treated this as a problem to be solved through compromise—creating a partially standardized system with limited local customization. This satisfied no one and created a fragmented solution that delivered neither full efficiency nor true adaptability. A more effective approach emerged when leadership reframed the challenge as a tension to be navigated rather than a problem to be solved. They established a modular platform architecture with standardized core components and flexible edge components that could adapt to local needs. They created governance mechanisms that distinguished between de- cisions requiring global standardization (security protocols, data struc- tures) and those benefiting from local customization (workflow configu- rations, user interfaces). This approach didn't eliminate the tension but created a framework for navigating it dynamically as conditions evolved. It required more

Michael Lissack

sophisticated design and governance than a simple standardization man- date would have, but it enabled the organization to achieve both efficiency and adaptability where each was most valuable. Similar dynamics played out across the other key tensions—they developed human-AI collaborative systems rather than choosing between human or algorithmic decision-making; they created attention-focused data visualization tools to navigate the data-attention tension; and they es- tablished purpose-driven decision frameworks to enable autonomy while maintaining alignment. The critical insight was that these tensions weren't problems to be eliminated but polarities to be navigated—ongoing balancing acts that required continuous attention rather than one-time solutions. COHERENCE AS A NAVIGATIONAL TOOL How, then, can organizations navigate this landscape of accelerating complexity and persistent tensions? In the original edition of this book, Johan Roos and I proposed coherence as the key capability. Coherence, we wrote, is "an alignment of context, viewpoint, purpose, and action that enables further purposive action." This definition remains valid, but its importance has grown exponentially in the digital age. When a system becomes more complex—more interwoven—the number of potential states it can occupy grows astronomically. Coherence doesn't eliminate this complexity; it creates patterns that make it naviga- ble. It's the difference between random noise and music—both contain complexity, but only one has a pattern we can follow. In organizations, coherence manifests in several ways: Narrative Coherence: A shared story about why the organization exists and where it's headed that makes sense of seemingly disparate ac- tivities. At Patagonia, the narrative of environmental stewardship creates coherence across product design, supply chain decisions, and political advocacy.

The Next Next Common Sense

Strategic Coherence: Alignment between the organization's capabil- ities, market position, and environmental trends. Apple's strategic coher- ence stems from the alignment between its design philosophy, ecosystem strategy, and customer experience focus. Operational Coherence: Consistency in how work gets done across the organization, even as the specific activities vary widely. Toyota's pro- duction system creates operational coherence through shared principles applied across diverse manufacturing contexts. Cultural Coherence: Alignment between espoused values and ac- tual behaviors. Netflix's culture of "freedom and responsibility" creates coherence by explicitly linking autonomy with accountability. In each case, coherence doesn't simplify the underlying complexity— it creates a navigable pattern within it. Like a jazz ensemble improvising around a melody, a coherent organization maintains alignment even as it responds to changing conditions. Creating and maintaining coherence in the digital age requires new approaches. The command-and-control mechanisms of the industrial era are too slow and rigid. The "move fast and break things" ethos of early digital companies is too chaotic for sustainable value creation. Instead, organizations need what I call "dynamic coherence"—the ability to maintain alignment of purpose and action even as the specific forms of that alignment evolve. This capability depends on the ten princi- ples that form the core of this book:

Michael Lissack

10. Fueling coherence with aligned words

In the chapters that follow, I’ll explore how each of these principles applies in today’s digital landscape. But the fundamental insight remains unchanged: mastering complexity doesn’t mean reducing it. It means developing the capability to maintain coherence within it. TOWARD A NEW NAVIGATIONAL CAPABILITY The complexity of our digital landscape will continue to grow. The number of connected devices will increase by billions. Artificial intel- ligence will become more capable and pervasive. Climate change will introduce new uncertainties. Demographic shifts will transform markets and workforces. Organizations cannot predict or control these developments. But they can develop the navigational capabilities needed to maintain coherence amid them. This navigation isn’t about finding a single optimal path—there is no such thing in truly complex environments. It’s about maintaining the capacity for coordinated, purposeful action even as conditions change unpredictably. The pages that follow offer a guide to developing this navigational capability. We’ll explore how simple guiding principles create coherence without rigidity, how mental models shape our perception of complexity, and how storytelling creates shared context for autonomous action. The journey begins with a fundamental shift in mindset—from seeing complexity as a problem to be solved to recognizing it as a reality to be navigated. In the words of complexity scientist Dave Snowden, “We can- not control complex systems, but we can dance with them.” As we proceed through this book, you’ll see how each principle builds upon the others to create a comprehensive approach to complexity navi- gation. In Chapter 2, we’ll explore how coherence functions as the corner- stone capability for this navigation, providing direction without limiting

The Next Next Common Sense

adaptability. Chapter 3 will examine how mental models shape our per- ception of complexity and how diverse perspectives create more robust understanding than any single viewpoint could provide. From there, we’ll move to more concrete approaches—using land- scape metaphors to make complexity intelligible, combining and recom- bining building blocks to create adaptive solutions, and embracing mul- tiple roles to navigate diverse contexts. We’ll explore how canyons create productive boundaries, how stories make meaning of complexity, and how intelligence gathering provides the awareness needed for effective navigation. Throughout, we’ll maintain focus on the central challenge: creating and maintaining coherence amid complexity—not by eliminating com- plexity but by developing the capabilities to navigate it effectively. Let’s learn the steps of that dance.

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