Hoping for A to Z While Rewarding Only A: Complex Organizations and Multiple Goals

1 We thank seminar participants at the University of Michigan, the Complexity conference in Aix-en-Provence, and the Conference in honor of Sumantra Ghoshal at London Business School for helpful comments and suggestions. Errors and omissions remain our own. Abstract This paper explores the trade-offs inherent in the pursuit and fulfillment of multiple performance goals in complex organizations. We examine two related research questions: (1) What are the organizational implications of pursuing multiple performance goals? (2) Are local and myopic (as opposed to global) goal prioritization strategies effective in dealing with multiple goals? We employ a series of computational experiments to examine these questions. Our results from these experiments both formalize the intuition behind existing wisdom and provide new insights. We show that imposing a multitude of weakly correlated performance measures on even simple organizations (i.e., an organization comprised of independent employees) leads to a performance freeze in that actors are not able to identify choices that enhance organizational performance across the full array of goals. This problem increases as the degree of interdependence of organizational action increases. We also find that goal myopia, spatial differentiation of performance goals, and temporal differentiation of performance goals help rescue organizations from the status quo trap. Whereas spatial differentiation of performance goals is possible only in organizations that are loosely coupled or nearly decomposable, goal myopia and temporal differentiation works as effectively in tightly coupled as loosely coupled organizations.