Governments Must Thrive in Complex World

Black Swan is a hard to predict event with a large impact

SARS (Severe Acute Respiratory Syndrome) was an unexpected event, a black swan. The virus entered Singapore on 25 February 2003, carried by three women who had returned from Hong Kong. It quickly spread. By the time the crisis was declared over in Singapore, 33 people had died out of the 238 people infected.

A black swan, says Nicholas Nassim Taleb who popularised the term, is a hard-to-predict event with a large impact. SARS severely disrupted Singapore’s economy. Visitor arrivals plunged and tourism here came to a halt.

The lesson from the SARS crisis that I want to highlight is that other black swans will surprise us, time and again. In recent years, the world seems to have been beset by a succession of strategic shocks including 911, the financial and economic turbulence of 2008/2009, the 2011 Japanese tsunami and nuclear meltdowns, and the Eurozone crisis.

Such shocks seem to be increasing in frequency and amplitude. The question is why?

The Great Acceleration

The period from mid-20th century, sometimes called the "Great Acceleration", has seen change accelerating at a pace and on a global scale that is unprecedented in history. Population growth has surged, generating enormous consumer demand. Meeting this demand through industrialization and mass production has had a huge but unpredictable impact on the earth’s eco-system. Globalisation resulting from and combined with technological innovation has in turn accelerated change – politically, economically and socially.


Much of this change has been unpredictable. The reason for this is "complexity". But "complex" is very different from "complicated". The natural world is complex. An engineering system is merely complicated. An aeroplane’s inner workings may be hard for us to understand. Still, it performs certain pre-determined functions that are repeatable.

But a complex system will not necessarily act in a repeatable and pre-determined way. Cities and human societies are complex systems. The world as a whole is complex and unordered.

The Great Acceleration has seen huge technology leaps, in telecommunications, the internet, and transportation. All these connections – vastly increased trade and movements of people – and feedback loops have greatly increased global complexity.

But connections and interactions within a complex system are extremely difficult to detect, inexplicable, and emergent. Its components interact in ways that defy a deterministic, linear analysis. Hence, the constant surprises and shocks from black swans and other unknown unknowns.

Wicked Problems

Complexity also gives rise to what the political scientist Horst Rittel called "wicked problems" – which have no immediate or obvious solutions. Large and intractable, these issues have causes and influencing factors that are not easily determined ex ante. They contain many agents mutually interacting in often mystifying ways. Their many stakeholders not only have different perspectives but also do not necessarily share the same goals. A key challenge for governments is to move the many stakeholders towards a broad alignment of perspectives and goals. But this requires patience and a lot of skill.

Climate change, pandemics and ageing populations are such problems.

Sustainable economic development – not unconnected to the triangular problem of food, water and energy security – is an enormous wicked problem.

In our increasingly inter-connected and globalised world, the impact of wicked problems can and will be felt worldwide, in many forms, and in many fields.

Retrospective Coherence

Complexity theory includes the idea of "retrospective coherence". Looking backwards, a current situation always makes sense.

But just because we can explain the current state of affairs does not mean we are operating in a complicated and knowable world.

Retrospective coherence says that in a complex system, even if we were to start again and make the same decisions, we cannot be sure that we will end up in the same situation. Put another way, the lessons of history are not enough to guide us into the future.

Governments that do not grasp retrospective coherence will often dangerously assume that the operating environment is merely complicated – and not complex.

Governments & Complexity

Governments that ignore their operating environment’s complexity risk assuming that policies that succeeded before will still work in the future. To them, wicked problems are amenable to simple and deterministic policy prescriptions.

The temptation to take this approach is understandable. It is easier, requires less resource, and may actually lead to positive outcomes – but only in the short term.

But government policies that do not account for complexity can, and often do, lead to unintended consequences, with a real risk of long-run national failure.

Sadly, many governments will take this path, either out of political expediency, or because of cognitive failures, or simply because they lack an understanding and the tools to deal with complexity.

Governments that have learnt to manage complexity, and to govern in a complex operating environment, will gain a competitive advantage over those that do not.

Professor Yaneer Bar Yam, a complex systems scientist, says "the most basic issue for organisational success is correctly matching the system’s complexity to its environment". That is, the complexity of the government developing the policy should match the complexity of the system being affected by the policy.

Network to fight Network

On Dec 7, 2001, the detention of several Singaporean members of a previously unknown network of extremists, the pan-Southeast Asian Jemaah Islamiyah (or JI), was announced. The JI had been plotting acts of mass terror. Singaporeans were preparing to kill fellow Singaporeans in pursuit of demented ideological goals.

This was a black swan that overnight produced a wicked problem for the Singapore Government – how to deal with the threat posed by extremists who were part of a larger Southeast Asian network, and who lived and worked within the community, like ordinary Singaporeans.

Someone made the profound observation then that a network was needed to fight a network, implicitly acknowledging that the sprawling, multi-layered JI network was a complex organisation.

Our response had to match the JI’s complexity; it was not possible to destroy the network by just hunting down and decapitating the leadership. That would be to deny the JI’s complex nature.

Singapore took a whole-of-government, perhaps even a whole-of-nation, approach to the threat posed by the JI.

Delineating the boundaries between agencies, with each responsible for a particular area, would not work. No government agency had the full range of competencies or capabilities to deal completely with this complex threat.

Rather than create a US-style Department of Homeland Security, we strengthened coordination and integration among government agencies and leveraged on their strengths. This meant coordinating the counterterrorism efforts of line agencies and ministries at the operational level, and integrating strategy and policy at the whole-of-government level.

Hence, a small but active centre – the National Security Coordination Secretariat – was set up, geared to drive the strategic national agenda in counter-terrorism, but without interfering with each agency’s accountability.

Many agencies were roped in, and at different levels, from the security, economic and social sectors. Community groups and leaders were activated to manage potential frictions and manage communal sensitivities. In the beginning, it was a real challenge.


But looking back now, this whole-of-government approach had a compelling logic. A complex and multi-layered network of government agencies and non-governmental organisations had taken shape. The policies that were implemented were complex – both defensive and offensive, employing both hard and soft power.

The Singapore Government has since applied this approach to other wicked problems like population and climate change.

Developing policies and plans to deal with wicked problems requires the integration of diverse insights, experience and expertise. People from different organisations, both inside and outside government, have to come together and pool their knowledge so as to find potential solutions. Cooperative mechanisms need to be set up to enable information sharing and to beef up collective action.

While this whole-of-government approach is an imperative, it is not easily achieved. Government hierarchies optimise at the departmental level rather than at the whole-of-government level.

Complexity puts stress on hierarchies. Today’s world is too complex and too fast changing for the leaders at the top to have the full expertise and all the answers.

Hence, vertical silos need to be broken down, so that information can flow horizontally to reach other departments. This improves the chances that connections hidden by complexity, as well as emergent challenges and opportunities, are discovered early.


The German military employed with great success (at least at the operational level) a concept called auftragstaktik. It was a philosophy of command that acknowledged the complexity and the chaos of war – even the most junior officers were empowered to make decisions on the spot because they had a more direct feel for the situation on the ground.

Whole-of-government implicitly contains auftragstaktik’s central idea: that in complexity, it is not possible for everything to be centrally directed. Not unlike auftragstaktik, whole-of-government depends critically on people at all levels understanding how their roles fit in with the larger national aims and objectives.

Agencies must have a strong sense and a shared understanding of the challenges faced by the nation and the underlying principles to guide responses. Then it depends on the agencies’ good sense to align their plans and policies with the national imperatives.

Cognitive Biases

In April 2010, the Icelandic volcano Eyjafjallajökull erupted. When a huge cloud of volcanic dust began to spread over Europe, thousands of aircraft were grounded as a precaution and Europe was almost paralysed.

Volcanoes do erupt from time to time, and it is risky to fly through volcanic ash clouds. Despite this knowledge, why was the world so surprised and unprepared for this eruption’s impact?

First, while the risk of eruption is known, it is very difficult to assess its probability of occurrence. We underrate the probability of an event when it has not happened recently and overrate the probability of an event when it has. Due to this cognitive bias, the risk of an eruption was underrated in this case, as that volcano had not erupted for a long time.

Second, the effect of the eruption on aircraft flights was the result of complex interconnectivities and thus highly unpredictable. When the volcano erupted, aviation bodies depended on the predictions of analytical models and reacted cautiously by shutting down all flights.

The airline industry began to question the reliability of these models and proposed experimental flights to probe whether it was safe to fly.

In the event, the experimental flights proved to be a better indicator for action than the models. This is a clear demonstration of the value of exploration and experimentation when we are confronted with complex phenomenon.

Cognitive bias and the extreme difficulty of estimating the cumulative effects of complex events make preparing for unforeseen situations fraught with difficulty. They add to the challenges of governments facing complex situations.

Managing Complexity

Governments often have often to make big decisions and develop plans and policies under conditions of incomplete information and uncertain outcomes.

Not every contingency can be exhaustively prepared for. Instead, a "search and discover" approach should be adopted. The use of experimental flights to check out the real risk of flying into a cloud of volcanic ash exemplifies this approach.

The military calls this approach the OODA loop (observe, orientate, decide, act) – a recurring cycle of decision-making that acknowledges and exploits the uncertainty and complexity of the battlefield.

Scenario planning, a linear method, projects futures based on our understanding of today’s operating environment. Used wisely, it is a vital tool for planning and can help overcome cognitive biases by challenging our mental models. But it is insufficient in a complex unordered environment. In this regard, non-linear methods should be part of the government’s complexity toolbox. They include back-casting, policy-gaming (akin to military war-gaming, but applied to the civilian policy context to condition policy-makers to complex and uncertain situations, and to help overcome cognitive biases), and horizon scanning (detecting emerging trends, threats and opportunities).

Governments must also be able to manage the risk that is a natural result of operating in complexity. There will always be threats to national outcomes, policies and plans, because no amount of analysis and forward planning will eliminate the complex world’s volatility and uncertainty. These threats constitute strategic risk.

There is little by way of best practice to systematically address or ameliorate threats to national goals posed by these risks. The Singapore government is developing a unique Whole-of-Government Integrated Risk Management (WOG-IRM) framework – a governance chain that begins with risk identification and assessment at the strategic level, to monitoring of risk indicators, and finally to resource mobilisation and behavioural changes to prepare for each anticipated risk.

WOG-IRM also plays an imperfect but important role in discovering the inter-connections among risk factors. This in turn helps to reduce some of the complexity. The WOG-IRM framework is work-in-progress, and we have started using it for strategic conversations on risks that occur at the whole-of-government level.

Organising in Complexity

The WOG-IRM framework is also critical to building resilience, that is, the ability to cope with strategic shock by adapting to, and even transforming with, rapid and turbulent change. Resilience ought to be a key characteristic of governments that operate effectively in a complex environment.

Resilient governments must go beyond an emphasis on efficiency. Lean systems that focus only on efficiency are unlikely to have enough resources to deal with unexpected shocks and volatility, while also having the bandwidth to make plans for an uncertain future filled with wicked problems.

This is not to argue for having bloated and sluggish bureaucracies; but one important idea is for resilient governments to have a small but dedicated group of people to think about the future. The skill sets needed are different from those required to deal with short-term volatility and crisis. Both are important. But those charged with thinking about the future systematically should have the bandwidth to focus on the long-term without getting bogged down in day-to-day routine.

To this end, the Singapore Government set up the Centre for Strategic Futures (CSF) a couple of years ago. This think tank promotes a whole-of-government approach to strategic planning and decision-making. It works on leading-edge concepts like WOG-IRM and resilience. It promotes fresh approaches like policy-gaming to deal with complexity. It encourages experiments with new computer-based tools and sense-making methods to improve horizon scanning. It is a small outfit but it is a catalyst for strategic change in the government and its agencies.


There will be more complexity ahead, with more black swans and unknown unknowns. Governments have to operate and even thrive in this complexity, and deal confidently with strategic shocks. A start is to accept complexity’s existence, adopt a whole-of-government approach and deploy new non-linear tools for managing complexity and strategic risk. Governments that can better anticipate shocks may reduce their frequency and impact. In turn, governments and nations become more resilient as their leaders govern for the future.

Peter Ho was head, civil service and is now senior adviser at the Centre for Strategic Futures. This article is edited from a speech at the Australia New Zealand School of Government 2012 conference in New Zealand and orginally appeared in the Straits Times. Photo Credit: Strait Times Illustration/Manny Francisco

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