Complex CatchUp: PART 3: Into Y2K
Sooooo…. Did you read my last two blog posts? If so, big round of applause and let me buy you a drink the next time we bump into each other :-)) If not, I have no idea if this third in a row post will make sense to you, so please go back two moves and read the others just to make sure you didn’t miss anything.
Read them? Right, good. You’re all up to speed and you know what I’m doing here. It’s a chronological tour de history of the world according to complexity science. Abridged. I started with aeons of sameness preceding the Cambrian Explosion, fast forwarded via Aristotle, Emile Durkheim, Taylorism, Einstein, mentioned modernism, slipped in Stuart Kauffman going to university, and my own birth, ahem, ended the last century with postmodernism and Stuart Kauffman phoning someone up to organise a conference… So this third and final epic post starts with, yes, you guessed it, that conference… there’s a lot more practical advice for management here by the way… enjoy…
1991 – Conference: “Organization and Evolution of Southwestern Prehistoric Societies.”
So in 1991 there with this conference held in Santa Fe, organized by Santa Fe Institute (see previous entries on Chaco Canyon and associated projects for relevance). A general introductory paper [to the above conference] was written by George Gumerman, conference co-organizer. Gumerman said, “The increase in variety of social conventions [in the social change in the history of the South West] is in many ways analogous to the ‘Cambrian Explosion’. The sudden increase and richness of life forms in the Cambrian has been attributed to the occupation of a ‘vacant ecology’, an environment which was available for and receptive to evolutionary experimentation.”
The vacant ecology idea is interesting, ‘an environment available and receptive’ to some stuff happening, trial and error style. Lots of interactions producing a lot of diverse and novel outcomes, and suddenly a whole new level of emergent order was created. Real history and real biology, as well as amazingly sound metaphors transferable to other complex systems.
1991, August 19 – J. Baden, The Wall Street Journal – Newspaper article
Another such complex system is the economy. In an article in the Wall Street Journal, John Baden, of the Foundation for Research on Economics and the Environment, wrote: “When we understand that the economy is an ecosystem – not a machine isolated and insulated from the environment – we grasp fundamental truths about what makes the economy work.” You need to go back to my first post and see the entry for Adam Smith on this one, especially the idea of the ‘invisible hand’. When you look at the macro patterns in the economy, that are not being controlled by any singular organisation, person or paycheque, and you see the movement over time, you can’t help but be impressed by the underlying beauty of it all, that no-one, absolutely no-one, is controlling. Control is totally decentralised. Decentralised control is another big theme in complexity science.
1992 – Book by Lewin, R. “Complexity: Life at the edge of chaos.” 1st edition. University of Chicago Press: Chicago.
There are many key texts I would recommend you read to get to grips with complexity science, but the one I found great as an introduction / starter book to the topic, was this one by Lewin. I’ve quoted a lot from it in these past three blog posts. One of the most significant quotes I loved the most in there was where Lewin said, “Complexity Science offers a way of going beyond the limits of reductionism, because it understands that much of the world is not machine-like and comprehensible through a cataloging of its parts; but consists instead of organic and holistic systems that are difficult to comprehend by traditional scientific analysis.” I think this has to be one of the biggest learning points of all: you can’t be mechanical, you need to go for holism over time, and try to make sense of the dynamic, emergent patterns rippling between the network nodes in the decentralised system. And that applies to any system because everything is interconnected.
1992 – The Harvard Business Review. ‘Is Management Still a Science?’ David Freedman, November-December 1992, 27.
To take this topic into the realms of management practice, and for managers to think about what it all means to them (including SLT teams in education), you need to think about what paradigm is shaping your manager mindset. Is it a mechanistic one? In 1992, the Harvard Business Review carried an article title ‘Is Management Still a Science?’ The author, David Freedman, answered the question thus: “Management may indeed be a science – but not the science most managers think”. In other words, the way scientists perceive the world has changed dramatically in recent decades, but many managers still follow an outdated scientific mind set, one that is now heading toward the intellectual scrap heap – namely, the mechanistic, reductionist perspective.What was considered needed was a paradigm for managers that cohered with the non-mechanical perspective of the world that complexity science was beginning to offer. Out of such a paradigm managers might then adopt the right approaches, tools and methods for interacting as part of complex systems on a daily basis.
1992 – The Business Network, a corporate affiliates program, is established by the Santa Fe Institute. (International alliance).
These insights were recognised as having large value very quickly in the business world, and as such the SFI were able to set up a network at warp speed. Back in 1992 they reported, “We have approximately 50 member companies from around the world. Membership in the program provides early access to innovative research, learning/educational opportunities, and networking opportunities.”Managers were starting to make the paradigm shift.
1995 – P F Drucker, ‘Managing in a Time of Great Change (New York: Truman Talley Books/Dutton, 1995).
However, key challenges were seen immediately. First and foremost was the historical path dependency created by the previous century of scientific management driven through by Taylor, Ford and Fayol. Lewin summarised the pertinent issues thus, “Although management theory has undergone many revisions since the early decades of the century, particularly with the impact of Peter Drucker’s thinking, Taylorism still remains the dominant influence today, with the machine model of business as its core, and embodied in a command-control style of management.”Indeed, throughout many industries and sectors, this is still the case now, even 20 years after THAT was written. Many managers are just responding to what has gone before, and what has gone before are very deeply entrenched ways of doing things. What would it take to really change things? Really???
Lewin went on to highlight the main implications for managers:
“Complexity scientists have identified a few simple rules by which complex adaptive systems operate. Those rules are presented here, with a translation of what they mean in the business context:
- The source of emergence is the interaction among agents who mutually affect each other: Managers should attend to relationships characterized by mutuality among people, among teams, and among companies, in order for novelty to emerge.
- Small changes can lead to large effects: Seek to lead change through many small experiments, which search the landscape of possibilities.
- Emergence is certain, but there is no certainty as to what it will be: Create conditions for constructive emergence rather than trying to plan a strategic goal in detail. Evolve solutions, don’t design them.
- Greater diversity of agents in a system leads to richer emergent patterns: Seek a diversity of people, their cultures, their expertise, their ages, their personalities, and their gender, so that when people interact in teams, for example, creativity has the potential of being enhanced.
“Some of these practices are already present in some current management paradigms, particularly in Peter Drucker’s model of business, for instance with its emphasis on businesses as communities. But complexity science brings these practices together under an umbrella of a scientific understanding of the deep nature of business organizations. Specifically, whatever enriches the interactions (that is, relationships) among agents (that is, people) in the system will lead to greater creativity and adaptability. Management guided by the principles of complexity science therefore constitutes a style that is very human-oriented in that it recognizes that relationships are the bottom line of business, and that creativity, culture and productivity emerge from these interactions.”
If you look at that 4 point list again you will no doubt think to yourself that this makes sense. But really, are we evolving current management practices in line with these in a decentralised way? Or are we still driving them from the top-down? Is there a veneer of doing things so as to engage people, while all along you are just manipulating things to go your own way? Is the system you are managing within really decentralised enough for there to be a richly enabling environment? All good food for thought, and still salmon swimming upstream for the most part, sadly due to the very hardwired nature left by the legacy of scientific management in so many subtle ways that we don’t even know when we are adopting them.
1995 – Stuart Kauffman became associated with Ernst & Young’s Centre for Business Innovation.
In the fray of this emergent field being applied to the business world, the scientists started to work with the consultants to see how companies were not only complex systems, but nodes in the network of much larger complex systems that they were only a tiny part of. Director Christopher Meyer set the trend with E&Y teams to try to understand workings of companies in the highly-connected global economy. McKinsey & Company, and Coopers and Lybrand soon followed. But not everyone was convinced.
1995, June, Scientific American, “From Complexity to Perplexity”, J Hogan (Journal article).
In 1995 a sceptical criticism of complexity theory was published in the Scientific American. Quite rightly too – nothing wrong with healthy debate and critique on *any* idea, especially stuff as big as this that would require a whole rethink of the way we do *everything*!
1995, September. Unilever Research, Merseyside, UK, join SFIBusiness Network. (Alliance).
In spite of the reticence from some corners of the world, however, it didn’t stop others from joining in to see the benefits of adopting the complexity science perspective. Unilever was one giant that stepped into the mix as well. The company notes about themselves, “Unilever was formed in 1930 when the Dutch margarine company Margarine Unie merged with British soapmaker Lever Brothers. Both companies were competing for the same raw materials, both were involved in large-scale marketing of household products and both used similar distribution channels. Between them, they had operations in over 40 countries. Unilever NV and Unilever PLCare the parent companies of what is today one of the largest consumer goods businesses in the world.”They were no small player, and their involvement in the SFI network added significant gravitas to the endeavours of the SFI.
1996 – The Mckinsey Quarterly, 1996, Number 1, 6 & 15. “Spider Versus Spider”. J Hagel. (Journal article)
Further developments in the field of complexity science applied to business and management came by way of the realisation that competing was out and that cooperating together was in. Lewin writes: “The death of competition: In the new economy, strategy based on conventional competition and cooperation will give way to strategy based on co-evolution, as companies adapt in concert. “Web strategies turn traditional strategic thinking on its head,” says John Hagel, a consultant with McKinsey and Company. “The conventional approach dictates that firms first define their own strategy and advance its aims. Web strategy asserts that the two basic choices confronting senior management are which webs [or ecosystems] to participate in [or to form], and what role… to play in them. In other words, firm strategy follows web strategy.” In traditional business thinking based on head-to-head competition, the bottom line is win-lose: “I win, my competitor loses.” But in the more complex, co-evolutionary business environment, the bottom line is win-win, because most businesses succeed if others also succeed. Competition is part of the picture, of course, but only a part. Cooperation and building mutually beneficial networks is important, too.
This resonated with the metaphor offered in ‘The Red Queen Effect’, the idea that if you are just seeing yourself in competition with others all the time, it will take all you can do to keep up and you will end up just running on the spot. In other words, not really growing along your own path, but just surviving by keeping up with the lead determined by others. Not very innovative or original, eh?
Lewin went on, “Companies can change and advance in the Darwinian, self-centered sense, but this is of limited value in the longer term. The more important challenge is to seek opportunities in a complex network of other companies, each of which might sometimes be collaborators, sometimes competitors, and sometimes both at once. In other words, the notion of competition as we know it should be allowed to die and replaced by thinking more in terms of whole systems. John Hagel also believes that the simple Darwinian metaphor is of limited value in an increasingly high-tech world. “Webs emerge from the turmoil wrought by uncertainty and change” he says. “They spread risk, increase flexibility, enhance an industry’s innovation capability, and reduce complexity for individual participants.” And, in a phrase that contains interesting biological overtones, Hagel states that “the more companies – and customers – that join, the stronger the web becomes.” Similarly, many ecologists believe that the more species there are in a community, the more productive and stable the community can be.”
So, resilience and strength depends on collaborative and co-evolutionary relationships with all, rather than the so-called success of the individual.
1996 – A Brandenburger and B Nalebuff, ‘Co-opetition’, New York: Doubleday Currency, 1996. (Book)
A new word was spawned to talk about a way of doing things in line with the above. Lewin writes:
“Adam Brandenburger and Barry Nalebuff use the term ‘co-opetition’ to describe joint strategy [see Lewin on ‘the death of competition’], a word coined by Ray Noorda, founder of the networking software company Novell. For many traditionalists in business and economics, this death of old-style, head-to-head competition as the number-one route to success will prove hard to accept, because the idea goes all the way back to the 18thcentury and the ideas of Scottish economist Adam Smith. He argued that if individuals were left free to pursue their own selfish interests, patterns of economic activity would emerge that would serve the greater good, guided, he said, ‘as if by an invisible hand.’ Almost a century later, Darwinincorporated Smith’s thinking into biology, in his theory of natural selection. The core of the theory is that individuals act in their own interests, from which the evolutionary patterns we see in the world arise. Competition in this context includes whether one species or another of, for instance, a see-eating bird will dominate in a particular ecosystem: The invisible hand at work again, this time in the biological realm. It is therefore ironic that modern economists embraced Darwinian metaphors earlier this century, raising the notion of the survival of the fittest through bitter competition to the level of a business law, and apparently believing that their business theory was being inspired by laws of nature. In effect modern economists were embracing Adam Smith’s economic theory, but in a modern, biological guise. The irony doubled, however, because just as prevailing economic wisdom elevated the power of competition to new heights in the late 1970s and 1980s in the United States and Europe, ecologists were engaged in a fierce debate over whether competition really was the dominant force traditional Darwinism held it to be. The outcome was that ecologists realized that, though important, competition was just one of the many factors that shape ecological communities. The emergent effects of ecological webs were at least as important, if not more so. The rest of the world has, however, been slow to catch up with this new perspective, because the most common popular conception of evolutionary theory is still dominated by the ideas of competition and survival of the fittest. This is the case among most business theorists and practitioners.
Sad, but true, and dog-eat-dog is unfortunately the way many individuals behave as well. But the science says, “Don’t!”
1996 – Harvard Business Review. Article written by Brian Arthur of Santa Fe Institute. (Journal article).
But by the second half of the 1990s some key messages were starting to be reinforced, especially the message that businesses were part of a rich interconnected eco-system, or complex adaptive system. Lewin noted that in an article on the fast-paced world of high-technology companies, the Santa Fe Institute economist Brain Arthur used the term ecosystem (or its derivatives) seven times.
“Every company is embedded in a larger complex adaptive system; that is, the economic sector in which it operates. Every company, irrespective of its economic sector, is a player in an economic web of connections that can be thought of in terms of business ecosystems. The notion of using ecosystems as a metaphor for business systems, while once considered bizarre by most managers, is now becoming more common, as the network character of the new economy is becoming ever more apparent. “Pimm’s statement [see 1998 interview] about the requirements of a successful would-be invader in ecosystems is echoed with uncanny similarity in Brian Arthur’s 1996 article, when he comments on the commercial failure of Steve Job’s NeXT workstation: “A new product has to be two or three times better in some dimension – price, speed, convenience – to dislodge a locked-in rival.” No one questioned that Steve Job’s NeXT workstation was technologically excellent. Powered by chips from Motorola, the machine was easy to use, had multimedia capabilities, and was far more advanced in many ways than its competition. And yet, when it was introduced in the late 1980s it failed to achieve the kind of market share that its technical muscle might have implied. A network of connections in the form of often informal alliances among key companies, such as Microsoft, Hewlett-Packard, and Intel, repelled the would-be invader, just as occurs in nature.
So what would have made a difference? Perhaps if Steve Jobs had sought to co-evolve his new idea within the network that repelled him it would have had lift off. Then again, it might not have been the same end product; you just never can tell. We can’t go back in our time machine to find out the answer to that question, and history didn’t happen that way. Things emerged as they did at the time and that was that.
1996, March. American Programmer. “Strategic Planning in the Contemporary World”. C. Crook. (Journal article).
Therefore, further implications for managers have to do with strategy in general. Out with the linear, and in with the flexible, adaptive and networked strategy. Lewin cited Colin Crook, a former senior executive with CitiCorp, who stated: ‘We must abandon the formal, static, linear planning process… In the nonlinear world, no predictions remain valid for too long’.Because business are complex adaptive systems, nested in a larger complex adaptive system (the economy), managers should always expect surprises, no matter how carefully they plan, or how simple the goal. Indeed, they should not even attempt to plan too precisely, because inevitably a linear approach will fail in some respect or other as the business environment constantly changes.
In other words, change needed to recognised as a fundamental constant, in order to keep adapting in an ever shifting landscape, together with others on the landscape.
1996, July 17-19 – CBIConference: Embracing Complexity 1. San Francisco, CA. (Conference).
A huge insight was the need for people in business to also become more interdisciplinary. The first Embracing Complexity conference brought together visionaries from across disciplines – from the laboratory to the assembly line, in the sciences, industry, academe, and the cultural sphere – to share ideas and innovations in an environment of experimentation and fun.
This interdisciplinary approach allows people to work together on common problems from different angles, and for cross-fertilisation of ideas to occur in innovative ways. But you have to be prepared to explore and discover. Another question for you there: how often do you expose yourself to different disciplines that your line of work seemingly has nothing to do with? More food for thought maybe.
1996-8 – Stuartdy of companies using complexity ideas.
Over two years towards the end of the 1990s, Birute Regine & Roger Lewin conducted a study of a dozen companies in the US & UK whose management practice was guided by principles of complexity science. This resulted in a book, called ‘The Soul at Work’. See 2000 entry. Some interesting outcomes emerged from that study, importantly in terms of the foundation of trust and respect between people to take risks while in a caring environment that tolerated failure in a healthy way.
1997, May 1 – Roger Lewin interviews Stuart Kauffman, in Cambridge, MA. (Interview).
Struggling to understand the vast interconnectedness of everything? Stuart Kauffman said: “The way to think about economic webs is in terms of niches around some kind of activity. In the days before the automobile, transport centred on the horse-drawn carriage, which required wheelwrights, blacksmiths, saddleries, way-side inns, and so on. This was the horse-drawn carriage ecosystem. Then, when automobiles arrived, a whole new ecosystem coevolved, requiring paved roads, gas stations, motels, and so on, which replaced the previous ecosystem.The equivalent of food webs in the business world are economic webs, which describe patterns by which companies do business with other companies, and how. Economic webs have always existed in society, of course, But in today’s fast-moving, high-technology economy, their patterns are much more complex than they once were, and the patterns change more rapidly, too, as companies break old alliances and form new ones in the quest to survive and thrive.If, as a wheelwright, for instance, you were unable to transform yourself in the face of this change [as above], perhaps to make wine barrels or rustic furniture instead, then you would go extinct, as your niche – making wooden wheels for carriages – shrinks to virtually nothing. The process of co-evolution is producing even more complex economic webs in the world of high technology, with software, hardware, and Internet companies interacting to produce a complex economic web. The co-evolutionary process can also be thought of in terms of what complexity scientists call adaptive, or fitness, landscapes. The wheelwright we spoke of can also be thought of as living on an adaptive landscape, one that describes his potential economic status, depending on whether he uses his skills to make carriage wheels, barrels, or rustic furniture. In the pre-automobile era, making wheels would represent a high peak on his landscape, whereas making barrels or furniture would be far less attractive. When the demand for wheels falls with the arrival of the car, the height of the wheel-making peak sinks dramatically, and making barrels or rustic furniture becomes strong, through a change in fashion, that peak might eventually become higher than the previously occupied wheel-making peak; that is, the wheelwright can now make more money making furniture than he ever could making wheels.”
In other words, if you’re a teacher of English as a foreign language abroad, for example, but then you have to leave the country you are in due to a military coup, you can still make a living teaching English as a foreign language in another country, or even back home teaching to foreigners who have immigrated. You could also diversify and do TESOL, adapt and upskill, help English kids with private tutoring, and even work in mainstream education teaching them GCSE English in schools and colleges. I’m sure you can think of other examples of this kind of transferability necessitated by change that occurs at the macro level beyond your control.
Another new domain that sprang out of the 1980s-cum-1990s was knowledge management, which was really taken up due to international competition with new competitors in countries, where manufacturing was cheaper, suddenly entering the market and putting the jitters up long established industries. Intellectual property was suddenly a big issue, and the need to manage knowledge within an organisation. A poor man’s version of knowledge management would be crippling, however, but a co-evolutionary take on knowledge management would be liberating and enabling knowledge sharing through networks with high collaborative gains.
Ruggles explained this for managers in the abstract to a paper, “Processes are supposed to take inputs, act on them, and produce output which is more valuable than the inputs. However, because of the speed of change, many processes need to adjust often if they are to maximize the value they add. This paper describes how organizations can enable complex, knowledge intensive processes to adapt to changes in their environment. We analyze processes through the lens of complexity science, a field which has focused on how groups of highly connected, intelligent agents behave. We have established a taxonomy by which organizations can identify the types of processes upon which knowledge management efforts will have the highest payoff and how knowledge can be managed in the context of these processes in input, execution, and output terms. When linked to processes that create value for the organization, knowledge management is key to ensuring that complex adaptive processes are as effective as possible, providing the foundation for a true knowledge-based business.”
This almost seems old-hat to me now, as social networking and creative commons licensing have really unleashed the power of collaboration and flattened hierarchies in many respects. But do you think we have gone far enough? I certainly feel like when you blog you are giving away your knowledge and sharing it with the great and the good. Similarly, some people definitely collaborate to produce excellent and much enhanced co-evolved work together, even in the day to day of Twitter’s edu tweeping community.
1997, August 3-5 – CBIConference: Embracing Complexity 2, Cambridge, Massachusetts. (Conference).
The need to continue networking and drip-feeding complexity science into a multi-disciplinary field that included managers kept being recognised and delivered on. In 1997 “Scientists, practitioners, translators, educators and business managers were” again “brought together to participate in a conversation around the application of complexity science to business.”
And large firms kept getting involved.
1997, September – BTexact Technologies, Ipswich UK, join SFI Business Network. (Alliance).
One of those large firms was the UKs British Telecom. They said about themselves, “BTexact Technologies is BT‘s advanced communication technologies business, helping businesses and organisations gain maximum advantage from communications technology, creating value and competitive advantage by combining a deep knowledge of networks and networked applications with proven skills in business consulting, change management and innovation. Collaboration with leading academic departments has always been part of our research capability. They are now extending this collaborative ethic through research projects with partners in business and government. They say they have seen that the best ideas often emerge through bringing together people from diverse backgrounds, with commercial and technical insight contributing specialist expertise in return for a share of the reward”.Key employees were engaged to investigate how to best apply complexity science learning into the organisation and its practice. Many outcomes were gained. I’ll blog about these separately another time.
1998, January – Roger Lewin, Teresa Parker, Birute Regine: “Complexity Theory and the Organisation: Beyond the Metaphor.” (Article).
Many people worked hard to apply complexity science learning to organisational life and practice. Lewin and Regine were interested in the interactions between people within organisations in working life. Find the article online at: http://www.cbi.cgey.com/pub/docs/Complexity_Theory_and_Organization.doc. They summed up their key findings in the abstract:
“To look at business organizations as complex adaptive systems is to see their properties as emerging from the interactions among people in the workplace. The metaphor accords with experience because it suggests that the essence of business organization is what individuals do, not what executives plan. The paper examines two investigations, both based on this CASview, but very different in approach. The first uses an agent-based computer model of social behavior known as Sugarscape, developed by Robert Axtell and Joshua Epstein of the Brookings Institution.[i]The second is a framework developed by Roger Lewin and Birute Regine that categorizes the interpersonal relationships among the members of an organization.”
The interpersonal relationships side of things went on to focus mainly on the pre-mentioned topic of trust, care and supported risk-taking and failure. This as a message is mentioned time and again in terms of the growth mindset now. I’m sure you all now what I’m talking about.
1998, May 1 – Roger Lewin interviews Stuart Pimm, A University of Tennesseeecologist (Interview).
The relevance of biology to other systems was still being refined and Lewin kept on reporting on this topic. Following an interview with ecologist, Stuart Pimm, he writes: “In ecology, the traditional view was encapsulated in the phrase, “The Balance of Nature,” in which ecosystems were seen to rest at equilibrium until they were disturbed, then found a new equilibrium. However, just as in economics, the shape of the ‘eco-bowl’ is constantly changing, causing constant fluctuations in species’ populations in ecosystems, the result not just of external changes but of internal dynamics, too. “Ecologists didn’t deny that complex dynamics exist in nature,” says Stuart Pimm, “But they explained them as the result of genuinely unpredictable factors in the external world, such as fluctuations in climate. More and more of us are beginning to realize that these behaviours are emergent properties of the internal dynamics of the system itself.”
“One such emergent property is the ability of an established ecosystem to exclude a would-be invading species, even when the latter is competitively superior to its potential rival within the community. The network of species’ interconnections in a mature ecosystem, of which the would-be invader’s rival is an established part, protects the incumbent species from outside competition. Pimm says that “the potential invader has to be very much more competitively superior, if it is to surmount this system level effect,” which he has seen in ecosystems simulated in the computer, and in real habitats in Hawaii. Pimm’s statement about the requirements of a successful would-be invader in ecosystems is echoed with uncanny similarity in Brian Arthur’s 1996 Harvard Business Review article, when he comments on the commercial failure of Steve Job’s NeXT workstation…”
This has already been referred to above, as has the need to respond to this learning point by collaborating with others in a co-evolutionary manner. The right qualities would be needed to do this of course. I.e. top-down, command-control management styles wouldn’t really work, would they? Not with other members of a network characterised by decentralised control and therefore a flattened hierarchy.
1998, August 2-4 – CBIConference: Embracing Complexity 3: Exploring the Application of Complex Adaptive Systems to Business. Cambridge, Massachusetts. (Conference).
By the end of the 90s the interdisciplinary complexity conference crowd were starting to deliver some tangible lessons. The CBI reported, “Embracing Complexity 3 demonstrated the power of partnership between science and business. Attendees learned from innovators who were implementing complexity-based approaches to facilitate investment decision-making, organize and inspire teams and re-evaluate corporate strategies. The conference allowed those in attendance to consider with leading journalists and academics the challenges of translating these concepts to their own organizations.”
Clearly, scientific management legacies were being weighed in the balance, and not just found wanting, but being replaced with better things.
1998, winter. Sloan Management Review. ‘Strategy Innovation and Quest for Value’. G Hamel (Journal article).
In terms of realising the potential of complexity science for innovation, Gary Hamel made it clear that a key lesson was not to have senior management taking the lead, but to enable preconditions within an organisation so that innovation could flourish from the bottom-up. Gary Hamel (strategy consultant) wrote: “Once we start thinking of strategy as an emergent phenomenon, you realize that we have often attacked the wrong end of the problem. Strategists and senior executives have too often worked on ‘the strategy’, rather than on the preconditions that could give rise to strategy innovation… Order without careful crafting – I’d like to suggest that is the goal of strategizing.”
As implications for practice, Lewin writes: “Rather than setting goals and setting the route to reach them, the manager should create the conditions that will nurture creativity, rather than try too assiduously to direct that creativity; otherwise creativity is more likely to be stifled rather than enhanced.”
1998 – J H Holland, ‘Emergence: From Chaos to Order’. Reading, Mass.: Addison-Wesley, 1998. (Book).
Meanwhile, John Holland published in more depth on the topic of emergence as applicable to organisations in business. Lewin explained:
“Emergence can be described as a holistic phenomenon, because the whole is more than the sum of the parts. But John (Holland) balks at loose use of the word, because it is often enveloped in a veil of impenetrability. “I hear people talk about holism in a way that avoids investigation,” John observes. “I hear people say that because the business environment is a complex system, is holistic, you can’t plan. It’s a bit like saying I can’t plan in playing chess, because there are so many ramifications, and I don’t know what my opponent will do, and so on. All of that is true, but I’m not going to do well at chess if I don’t plan, am I?” We had a lively discussion about the issue of ‘control’ in such systems, because one of the tenets of complexity science is that you have little control of emergent patterns, and yet here John was talking about planning in chess. We eventually agreed that, yes, you can have control over moving the individual pieces, but you can only influence the unfolding pattern. “The same is true in business,” John observed.
Hollandelaborated further: “The Greeks argued that all machines can be constructed by combining six elementary mechanisms, namely the lever, the screw, the inclined plane, the wedge, the wheel and the pulley. In an intuitive way, this leads me to look at emergence in terms of elementary mechanisms and procedures for combining them. It’s the interaction among these mechanisms, or building blocks, that generates emergence.” John goes on to argue that a complex system that is produced by the combination of one set of building blocks can itself become a building block for a ‘higher’ system, and so on, in an inclusive layering, or hierarchy. For example, a business is a complex adaptive system in itself, generated by the interaction of the building blocks (people’s behavior) within it; the business is then a building block in the larger complex adaptive system, which is the business sector in which it operates; and the business sector is a building block of a still larger complex adaptive system, the national economy; finally, national economies are building blocks in the global economy. “It’s building blocks all the way down,” John quips, “and I’d like to get to the notion of what that means.”
Lewin asked John what the implications were for managers when they recognized that a business was a complex adaptive system. “It lets you see that it is not a fixed, monolithic structure,” he responded. “At the end of a fifteen year period, hardly anyone who was in a company at the beginning will still be there, and yet the company will still be there. You can thing of complex adaptive systems as emergent patterns that persist even when you have a turnover of their constituent parts, like a standing wave in front of rock in a fast-running river. The wave remains constant, even though the water molecules change all the time. It’s the same with the human body. The molecules in our tissues are being replaced all the time, so that after two years almost all will be new ones, and yet you remain the same person… Managers have a tendency to focus too closely on the bottom line, the quarterly results. But there are many things that go on in a business whose value will be realized only years or decades in the future, particularly n innovation. This is what I call paying attention to the long horizon.”
I’ll let you draw out your own implications for practice from that – it’s not hard, is it? Surely, at the simplest level, a major thing would be to stop obsessing about short term targets, or numerical goals. It must surely start to become about the qualitative patterns emerging from between many people playing in the longer game.
1999 – Lewin, R. “Complexity: Life at the edge of chaos.” 2nd edition. University of Chicago Press: Chicago (Book – With after-word examining business thinking in framework of complexity science).
Lewin’s second edition made clear more tangible implications for managers in practice. He said, “Complexity science implies that CEOs and managers must give up control – or, rather, the illusion of control – when they are trying to lead their organization to some goal. But they do need to create the environment in which creativity can emerge. The message of complexity science is not simply to stand back and wait for the right solutions to emerge. Too little control is just as misguided a business strategy as too much. Some structure is necessary. The degree and nature of control that CEOs establish in their companies strongly influences what emerges, in terms of culture, creativity, and adaptability.”
“Parallels between business communities and ecosystems are intriguing, and they flow from the fact that both are complex adaptive systems. This being the case, there are some disconcerting implications for business executives. The first rule of complex adaptive systems is that it is almost impossible to predict who is a friend and who is an enemy. Ecological field experiments, in which a predator is removed from a community, illustrate this point. The predator’s prey, species A, might be expected to thrive, because it is no longer being prayed upon. But about half the time species A suffers when the predator has gone, because the predator has another prey species, B, which is A’s competitor. With its population no longer kept in check by the predator, species B may then push species A to local extinction through being competitively superior. These effects are only one or two steps into the network, and yet we are already in the midst of uncertainty. Venture a few more steps, and it becomes almost impossible to work out combinations of harm and good: This is complete uncertainty.
“In the business ecosystem, CEOs face the same problem of working out who is a friend and who is an enemy, and how this might change as the environment changes. Not merely competitive interactions are important in the business ecosystem, but rather the entire complex of interactions. In addition, being part of an interconnected network of companies – the business ecosystem – has dangers as well as benefits. The benefits include the opportunity to reap great rewards through forming alliances, and thriving within the network, protected from potential invaders. But this same interconnectedness that protects ecosystem members also poses the threat of disaster. When everything is connected directly to everything else, changes in one part of the system may be propagated throughout the system, and sometimes organizations may go extinct through no fault of their own. This is an example of small changes provoking large effects, with innocent victims suffering as a result.
“These aspects of complex systems – unpredictability and the possibility of extinction because of changes in other parts of the system – are distinctly unnerving to those who cherish predictability and control. Embracing complexity in the business context is not particularly comforting. The strength of complexity science lies in giving business a perspective that is grounded in reality.
We could compare this to the uncertainty and unpredictability that comes in the education sector, largely due to the whim of the government minister in role at the time, and the outcomes on the day of a weird Ofsted visit.
1999, April 11 – Warsh, D. “Untangling Economic Complexity” in BostonGlobe, Sec. F, P1.
Complexity science was hitting the headlines – perhaps it had hit a peak of faddism? The Boston Globe ran an article, which asked the question, “What to make of the current vogue of ‘complexity Studies’ in finance and economics’? It said a good start had been made but there was a long way to go. There still is.
1999, July 25-27 – CBIConference: Embracing Complexity 4: The Adaptive Enterprise. The CambridgeMarriott, Cambridge, MA. (Conference)
The CBI interdisciplinary conferences continued and more lessons for management practice were shared: You “must be more agile, responsive, and connected to adapt to marketplace changes. Complex natural systems must also evolve, and constantly reinvent themselves as the environment shifts. During our 4th annual Embracing Complexityconference we explored adaptation in the connected economy through the lens of complexity science.”
Agility, responsivity, connectivity and adaptivity became big themes.
2000 – Lewin, R., & Regine, B. “The Soul at Work: embracing the power of complexity science for business success.” (Book).
Regine and Lewin published the result of their research carried out in organisations between 1996-8. It was all about trust, care, support in the workplace, and tolerated risk taking and failure. Growth mindset? Oh yes.
2000, April 25-27. CBIConference: Embracing Complexity 5: Growing the Adaptive Organization. Paris, France. (Conference).
The CBI interdisciplinary conference team started to use the conference space to experiment in co-evolutionary ways in real time. The CBI reported, “Recent breakthroughs in our understanding of nonlinear dynamics point to a new way of looking at the world. The science of complex adaptive systems, or complexity, suggest that eco-systems, economies, and even social systems may evolve according to unifying principles. EC5 brings together visionaries from across disciplines to share ideas and innovation in an environment of experimentation.”
That was all in the States of course. Meanwhile, back in Europe…
2000, June. Menno Marien, Jeroen Kemp and Frank Wagner submit Kompass proposal (idea).
This ultimately took shape as RODEO project (the one I worked on while employed as a researcher at Cranfield University, UK), but the initial goal was to bring together in an EC context researchers and practitioners to investigate and improve strategic business development, knowledge-based and networked. When Kompass was rejected, it was then put forward as LISS.
2000 – 2001 – Chacosynthesis project (Research).
Although this was by now in the background, work on the Chaco Canyonwas still ongoing, “The Chaco Synthesis Project , now in progress (dated May 2000), will summarize archaeological work completed by the Chaco Project (1971- 1982). A series of five conferences and a final “capstone” conference will consolidate information concerning different aspects of Chaco archaeology. Subject-matter experts will produce two publications, and a popular publication will also be produced.”
2001, April. LISS submitted (idea).
The Kompass project proposal was rejected by the European Commision, so LISS was put together instead. LISS was also rejected, and new project put forward as RODEO.
2001, August. Baillie Gifford, Edinburgh, Scotland, join SFIBusiness Network (Alliance).
The interest in the SFI business network was still going strong. Investment company Baillie Gifford were keen to jump in. They said about themselves, “Baillie Gifford has been one of the success stories of the investment management industry in the last 20 years. In a period where expansion through acquisition has been an industry trend Baillie Gifford has managed to expand organically at a rapid rate, growing funds under management and advice by more than 40 times in the last 20 years. In a period when the ownership of financial firms and their management have become more distanced Baillie Gifford has prospered through its partnership structure and independent status. These have enabled the firm to adapt quickly to changing circumstances and to be at the leading edge of modern financial management systems and thinking.”
Adaptive responses to change were obviously a key interest, and one that complexity science has much to offer on.
2001, October/November. RODEO proposal submitted and accepted (idea and success).
A complexity science project to integrate learning from the domain with knowledge intensive businesses in the EU was finally accepted in 2001. People involved up to that stage included: Menno Marien, Jeroen Kemp, Frank Wagner, Gianni Sabastiano, Steve Evans, Agnes Bradier, Michael Wunram, Frithjof Weber, Marc Pudlatz and Fiona Lettice. I was just finishing my undergraduate degree at the time, but got involved as a researcher the following year.
2002, March 13. CBINetwork Global Web Cast: The Adaptive Enterprisein Action(Duration: 60 minutes Web cast)
To take their learning global, the CBI network delivered a global web cast, setting their stake in the ground thus: “There is no doubt that highly connected systems are more volatile. If the past two years were about connections—among business units, companies, and even industries—the next will be about adapting to the highly volatile environment in which business is conducted. Those organizations that see volatility as a permanent condition, and not a bump along the path of strategy execution, will be the ones that survive and thrive. Tom Manning, Global Managing Director of CGEY’s Strategy & Transformation Practice described how companies can become more flexible by applying the Adaptive Enterprise framework and principles. Tom specifically discussed CGEY’s approach to working with clients and cited recent examples of work in this area. Cap Gemini Ernst & Young, largely through the Center for Business Innovation’s pioneering research into the science of complex adaptive systems, is emerging as a leader in this important field.”
The big themes emerging for management to contend with were consolidating around maintaining strong networks to be resilient and adaptable in turbulent conditions.
Finally, the EC project RODEO got started – the kick off was in Bremen, Germany. The full project title was, ‘Robust Development of Organisations – Adaptation through Complex Business Development within Turbulent Environments’ (EC Project: IST-2001-35329, April 2002 – September 2004). The vision of the RODEO project was to build up a coherent perception of the modern business organisation, grounded in complexity theory. Based on that construct, an integrated approach and respective instruments for business development would be built, where the key focus was on achieving adaptability and robustness in turbulent environments. “Business development” was understood as the holistic and continuous process of developing and aligning products/services and different markets with the organisation’s employees and competency sets. Partners included: The Bremen Institute of Industrial Technology and Applied Work Science, University of Bremen – Germany; University of Stuttgart, Institute for Technology Management and Human Factors – Stuttgart, Germany; Competitive Design Network (CDN) – Rubi, Spain; Cezanne Software – Italy; Innovation Ecology – Israel; Innovation Network Austria GmbH (INNA) – Austria; Skandia Group – Stockholm, Sweden; INDRA – Spain; Hoffmann GmbH – Pforzheim, Germany; CCSO – The Network of CIM Centres of Western Switzerland, and, last but not least Cranfield University, at the International Ecotechnology Research Centre (which is where I ended up working).
Conclusions in brief…
The history I’ve presented is relative to the context and discipline I am writing from. There is no definitive history of complexity science, just many histories. The telling of history then is understood in both an individualised frame of reference (my own) and socially constructed in a field of already present defined ideas and knowledge. Take this as you will and extract the relevant bits for yourself. There are obvious implications for practice you can make on your own, but if you would like to chat about any of this, comment here or tweet me at @cazzwebbo … there’s more to come by the way… just in case you thought that part 3 was the end (there’s probably another trilogy up my sleeve ;-))