Management practice based on complexity science
by Birute Regine and Roger Lewin

Revenues and products have for a long time been a byproduct for me, albeit an important one. People look for absolutes, and say, ‘Oh, yeah, touchy/feely....so you won’t deliver the numbers.’ At VeriFone, the numbers speak for themselves. Tough business decision have to be made, of course, but along side a deep level of compassion and care. Businesses ask for too little, they aim too low, they can have it all....Care is what makes the organization tick.
Hatim Tyabji
CEO of VeriFone
September 1997

Q: What does complexity look like in your company?
A: It looks like chaos, and you can live with that....You have to. But don’t think I don’t wake up in the middle of the night and say to myself, ‘Geez, this feels very uncontrolled.’ I spend most nights feeling that way, which is what makes this job very demanding, more than any other....If you work within boxes, it’s easy; because then it’s not about people.
Tony Morgan
CEO of The Industrial Society
October 1997

Summary

We describe a new model of organizational dynamics, based on our study of eleven companies in four countries. The study was guided by the principles of complexity science, which is a new scientific paradigm aimed at understanding the dynamics of complex systems in biology, physics, and human affairs–including business organizations. [1] Our study led to the formulation of what we call a relational model of organizational dynamics, and includes the identification of five domains of relationship within and between organizations. These domains exist as a rich interactive web of connections, out of which emerges what we observed as a culture of "care and connection" (as opposed to the more traditional command and control), which is not only human-oriented and congenial, but is also effective in the traditional terms of economic success.

Although grounded in science, management practice guided by principles of complexity science does not lead to scientific management (in the Tayloresque sense), which could not have been predicted from the outset of our study. Nor does it fall into traditional human-relations management (in the Parker Follett paradigm), because it is also concerned with organizational design; it is, however, much closer to human-relations as compared with scientific management practice. Similarly, the structural analysis paradigm (in the Drucker tradition) does not fully encompass complexity management, because of the latter’s focus on relationships as the source of organizational structure. [2]

Complexity management might be seen as closest to the ideas of Tom Peters, whose books Thriving on Chaos (1987) and The Tom Peters Seminar: crazy times call for crazy organizations (1994) promote the notion that the business world is much less controllable and predictable than has traditionally been assumed, just as complexity science argues. But, as John Micklethwaite and Adrian Wooldridge recently commented, "Peters fatally underestimates the need in even the craziest organizations for some stability if they are to survive." [3] By contrast with Peters’ view, complexity science explores the balance between chaos and stability in complex systems, and seeks the most creative place between them. For managers, this means establishing sufficient structure to give direction, while allowing innovative activity to thrive within it. Complexity management includes much paradox, to be sure, but it does not promote chaos.

Introduction

Since the 1950s, managers and management consultants have striven to find ever more effective ways to organize businesses so as to keep pace with the demands of competition and innovation. The sequential list of "solutions" is long, and includes such techniques as Decision Trees, Systems Theory, Cybernetics, Total Quality Management, and Reengineering. Each has had success in its turn, and the present dominance of US companies in many high tech industries (such as computing, aerospace, and, belatedly, automobiles) is the result in large part of the Total Quality Management and Reengineering techniques, which rescued the industries from economic doldrums of the early 1980s. Giants, such as IBM, Boeing, and General Motors, are the children of this approach. However, many of these interventions bring short-term success but do not guarantee long-term solutions, perhaps because they do not fully address the fundamental nature of business organizations.

The current theory of the firm is based on a machine model of business (a reflection of scientific management), so that industrial language speaks of "restructuring" industries, "fine-tuning" economies, and "engineering" organizations, so that they run like clockwork. The machine concept involves directed planning and centralized control, and is predicated on linear thinking and expected predictability. Managers pursue stability and equilibrium, and effectively bring a static perspective to business organization. Management theorists now recognize that this perspective is at odds with the real world, which, as biologists and physicists have come to realize, is much more dynamic, nonlinear, far-from-equilibrium, and unpredictable than had long been supposed. [4] Many managers are therefore imposing an out-dated static paradigm onto the business milieu that is in fact dynamic; but they are frustrated with being unable to find ways of developing a more appropriate dynamic paradigm.

As we approach the twenty-first century, a new business environment is emerging, one that will dramatically widen the gap between the current static perspective and the dynamic reality. The new environment has been called the Connected Economy, which is the successor to the Information Economy, and will usher in a very different world of business. The Connected Economy is the product of the second half of the Information Revolution, and it can be seen as a synergistic network in which the pace of innovation may escalate.

Four developments are creating the emergence of the new environment. They are:

  • Markets are becoming more global, engendering greater global competition.
  • Change has always been part of the business environment, but the rate of change is increasing.
  • The workforce is becoming more educated and affluent, capable of contributing more to the work experience and of demanding more from it.
  • New technologies, particularly in means of communication and information processing, are driving advances in the above three areas.

As a result, the business environment will be even more dynamic than in today’s world, and it requires that corporations must be able to adapt much more rapidly and in a much more unpredictable ways, if they are to survive and thrive. Some corporations are already recognizing the need for a new outlook, and are breaking themselves up into smaller, semi-autonomous units that are capable of responding to change, a process known as organizational flattening. Techniques such as out-sourcing, networking, idea management and a focus on core competence are also responses to the demands of rapid adaptation to changing business environments. But, like organizational flattening, they often fail, not because the techniques are innately flawed, but because organizational thinking has remained the same. A corporation that breaks itself up into smaller units that are supposed to be freed to be more creative, yet still imposes hierarchical lines of decision making, stifles that creativity before it takes root. The failure is therefore the result of the coexistence of two incompatible models: a new way of doing and an old way of thinking.

Complexity science offers a path for discovering and embracing that "new way of thinking," because it recognizes that business organizations are complex systems, with nonlinear, far-from-equilibrium, unpredictable dynamics, and brings a methodology to understanding these dynamics.

What are complex adaptive systems?

Until recently, the world was viewed through a Newtonian lens. That is, the emergence of order was expected to be the result of linear, deterministic systems that could be analyzed by standard mathematics. Some of the world is like that, otherwise the orbits of the planets could not be predicted; nor could a spacecraft be launched with the expectation that it would land on Mars, for example. But most of the world dances to a nonlinear tune, and is not easily understood with standard mathematics. The unpredictability of the weather is the classic example; so too are population fluctuations in ecosystems. In other words, the world is full of complex dynamical systems that defy analysis by standard mathematics. A new way of analysis was required, and that is embodied in complexity science (which includes chaos theory).

The midwife of complexity science was the development of computer models of complex algorithms that were entirely abstract. Very soon, however, the world of biology became fertile ground for extending the science. Increasingly, complexity science has taken on the language of biology, so that one now reads of, for instance, solutions evolving, computer models being like ecosystems, and algorithms improving through adaptation on fitness landscapes, and so on. The core idea of the science is that in a complex system--whether a computer simulation, an ecosystem, or a company--the "agents" interact in often simple ways, mutually affecting each other, to create elaborate and unexpected patterns of behaviors, a phenomenon known as emergence. [5] A graphic example will illustrate the point.

No one who has watched flocks of birds swirl through the sky can fail to be impressed by the precise coordination of the flock as a whole, as hundreds of birds swoop and turn in unison. The feat of coordinating the motion of hundreds of individuals in so precarious an environment seems complex and daunting. In fact, in one of the earliest models developed by complexity theorists, Craig Reynolds discovered that the complex behavior of the flock emerges from a few simple rules of individual behavior. Wryly, he called his computer simulation "boids." [6]

In Reynold’s model, each boid obeys just three rules: 1) fly in the direction of other boids; 2) try to match the velocity of neighboring boids; 3) avoid bumping into things. The simulation begins with the boids placed randomly in space, but very quickly the individuals form themselves into a flock that behaves just like real birds, wheeling and turning together, and avoiding obstacles in their path. The point is that the complex behavior of the system--the coordinated motion of the flock--emerges from a few simple rules of interaction between individuals. Similarly, in computer simulations of battlefield situations, complex, coordinated behavior emerges from groups of "soldiers" when their behavior is guided by a set of six simple rules, in the absence of a leader. [7]

Much of complexity science therefore focuses on the nature of interactions between individual "agents" in a complex dynamical system, and monitors their effects. As important is the system’s response to external change: interesting patterns emerge. For instance, systems in which interactions are numerous become turbulent when prodded by external change, whereas those in which interactions are few hardly respond at all. In the first case, the system is described as chaotic, and in the second, static. Neither state is particularly well adapted to respond to change.

One of the key discoveries of complexity science, however, is that computer models of complex systems often tune themselves to a critical point poised between being chaotic and static, where their emergent response is measured, unpredictable, and richly creative. This has been blessed with the term, the edge of chaos. Order emerges at the edge of chaos--the phenomenon of self-organization--when systems adapt to some kind of external perturbation. This leads to the expression, complex adaptive systems. It describes very well the dynamics of populations of organisms and ecosystems in the world of nature–and to companies, because they, too, are complex systems. The same dynamics applies to all such systems. [1] We recognize that, to a manager, the edge of chaos might not sound a very desirable place to be, even thought it is in the context of complex adaptive systems. A more congenial term might be zone of creativity.

The most important lesson of complexity science, therefore, is that complex dynamical systems generate creative order and adapt to changes in their environment, through simple interactions among their agents, and that small changes can often lead to large effects. The order is not imposed by top-down design; it derives from bottom-up emergence. This, if you like, is the difference between the pre-Darwinian view of the world, in which divine design was imposed on the world, and the post-Darwinian view, in which order emerges as a result of natural selection between individuals in their struggle for existence.

Complexity science in the context of business

Business organizations are complex adaptive systems, and so complexity science is just as applicable to the economy as it is to ecosystems. The economy is like an ecosystem, in which individual companies may be thought of as species competing for limited resources (customers); and those companies that are better at adapting to changing environments are more likely to prosper than those that don’t (when innovation changes the market, for instance). [8] Complexity science therefore applies a biological model to business, which exploits the creativity of complex systems, by contrast with the mechanical model, which struggles to suppress the apparent chaos of such systems. The nonlinear, unpredictable business world with limited control of the complexity perspective therefore replaces the linear, predictable business world endowed with much control of current management theory. And in the business context, the "agents" of complexity-based computer models are people and the "interactions" among them are various kinds of relationships.

The application of complexity science to business is not only revolutionary; it is also threatening to established structures and management egos, because current business philosophy is based on top-down planning, which endows top managers with power, not bottom-up emergence, which distributes power to many. A paradigm shift to complexity science in business is therefore not an easy goal to embrace.

Much of the work of management—its organizational design, restructuring, and human resources efforts—is aimed at getting people to shift priorities or improve performance. In doing this work, managers have learned that change doesn’t happen simply because they plan or mandate it. Managers are now aware of informal communication networks, trust, and an array of lessons from psychology confirming that the ways people change are more complicated than traditional management practice supposed. [9] At the same time, ostensibly human-oriented management intervention has become popular, including organizational-change programs with themes such as "empowerment" and "culture." However, many such programs pay only lip service to empowering people and nurturing culture, while in fact are hewing ever closer to Tayloresque control-oriented management, as Jeffrey Pfeffer, of the Stanford Graduate School of Business has recently noted. This is ironic, says Pfeffer, because studies of human-oriented management consistently show a strong correlation with enhanced economic performance, although the causal link is not well understood. [10]

Although it was not part of the research agenda, our work at least illuminates, if not explains, this link, as a consequence of the emergent culture of care and connection.

The Study

The study was predicated on complexity science principles, which means that we attended to the kinds of relationships that exist in the workplace, and looked at the nature of the workplace culture that emerged from them. We kept in mind the three key principles of the science:

  • relationships are governed by simple rules
  • order will emerge, even though it is unpredictable
  • small changes can lead to large affects

Among those organizations whose management practice follows the principles of complexity science, some do so explicitly, but many more have come to that point in (initial) ignorance of the science. We therefore sought companies whose management practice reflected complexity science principles: such as being a "flat" organization, limited bureaucracy, rich and open communication, and an enthusiasm for self-organization. We conducted longitudinal in-depth interviews with a selection of people in each organization [11], from CEOs to secretaries and listened for where people placed value in the workplace.

Although some questions we asked were common to CEOs and other workers, many were specific to each group. This was partly because of different interests of the two groups, and partly as a test of veracity of responses. For instance, few CEOs/senior management will answer "No" to the question, "Do you care about your people?" But workers are quick to answer "No" to the question, "Do you feel cared for?"

Examples of questions asked of CEO/senior managers are as follows:

  • Tell us a story about a high point/low point for you in your time here.*
  • How would you describe the culture of your organization?*
  • What qualities do you look for in the people you hire?
  • Complexity science says that much of what will happen in organizations is unpredictable/uncontrollable. How do you manage that?
  • Who in the organization has access to you?
  • What is your highest organizing principle?
  • Is there sometimes a difference between what you think and what you say?*
  • Is there a question you don’t feel you can ask?*
  • Is there something you want to change, but feel you can’t?
  • What are you doing differently this year from last year?
  • How would you describe your role as the leader of this organization?

(* Questions common to CEOs and other workers)

Examples of questions asked of other workers are:

  • Do you feel valued at work?
  • Can you go to senior management and expect to be heard?
  • Do you feel you have an influence on how you do your work and on the decisions made here?
  • How are project teams formed in your work environment?
  • What happens when you fail at some project?
  • Do managers listen and respond to you?
  • How would you describe your relationship with your peers, your boss, the CEO?
  • Do you have access to all the information and other resources you need to do your work?
  • Are you learning/growing in your work?
  • Why do you do the work you do?

The questions were open ended, so that interviewees could bring their own construction of thinking to the answers. The questions were aimed at gaining an understanding of an individual’s perception of their place in the organization, and their relationship to others. Ours was a qualitative, naturalistic study. The analysis of data was linguistic; that is, we identified patterns in words, phrases, and expressions that people use, and the way people talk about their interactions within and between organizations. From preliminary analysis, we identified five domains of relationship:

  1. to oneself,
  2. to others,
  3. to the organization (or CEO),
  4. to other organizations, customers, and the community,
  5. to the global ecosystem.

This is not a static framework of relational domains, but rather a nested set of interactions, so that relationship to oneself will influence one’s relationship to others; the relationship among small groups of people shapes the collective relationship to the CEO/organization, and so on; and with each domain influencing every other, in a multiple feedback.

For each of the domains we identified a principle parameter (in italics), which emerged from the way people talked about themselves, others, and the organization:

  1. to oneself......presence
  2. to others......mutuality
  3. to the organization (or CEO)......purpose
  4. to other organizations and the community......interdependence
  5. to the global ecosystem.......responsibility

In other words, presence is a scale on which relationship to oneself may be measured. At one end of the scale is connection, which is authentic presence, and may be heard in the language of connection to oneself, such as "I strive to keep my word." At the other end of the scale is disconnection, which is calculating presence, and may be heard in the language of disconnection from self, such as "I just do what I’m told." For each domain and associated parameter, we illustrate the scale of connection/disconnection with the language of connection and disconnection: see table 1.

With this richer picture, we can address again the dynamic, rather than static, nature of this relational web. For instance, we observed that you are much more likely to have a genuine, positive connection to others and a co-learning relationship if you have authentic presence. Likewise, relationship to other organizations (as part of an economic web) will be most fruitful when there is a strong, collective sense of purpose within the organization.

We observed that in the companies we studied, language patterns were strongly toward the connection end of parameter scales, and that the emergent culture could be most accurately described as that of "care and connection." CEO’s and managers in these companies paid attention to and valued relationships, typically guided by a few simple rules: these included acknowledging workers’ efforts, demonstrating respect, creating opportunities, and valuing time spent talking with and listening to coworkers. We heard that such a culture generates a sense of community, one in which people claimed to have a greater willingness to change, and less resistance to adapting to changes, and to experience little disruptive politicking. Culture as an emergent property, therefore, influences the level of creativity, efficiency and productivity that is possible in a company; and it is the source of an organization’s capacity to adapt, to change, and be flexible.

Moreover, the culture of care and connection enhances these behaviors, which may help explain the observation that human-oriented management practice leads to better-than-average economic performance. [10] This accords with our observations of economic performance in our sample. Many of our interviewees had worked at companies other than their present one, and in the great majority of cases the previous workplace cultures were described as those of command and control. Work experience in these prior jobs was typically described as less rewarding (psychologically, although not always materially), and as engendering less loyalty and willingness to push beyond reasonable expectations of work effort. These observations provide an internal control in our study, guarding against the possibility that our interviewees were unrelieved Pollyannas, and that their behavior was indeed influenced by the emergent environment.

Others have described a people-oriented approach to management, [12] including within the complexity context. [9, 13] But our work extends this, because it identifies the domains of relationships in the workplace, and discusses organizational dynamics that emerge from them.

A common response to the suggestion that managers should focus on relationships, and that through doing so a more connected, caring workplace can emerge is the following: "This will be expensive, and anyway it’s not necessary for good business." We do not suggest that businesses that do not value relationships will not be financially successful; many are. But, as mentioned, many studies, including our own, show that companies that follow human-oriented management practices enjoy enhanced economic performance over those that are control-oriented. [10] Furthermore, lack of value on relationships might be a factor as to why many businesses tend to be short-lived. [14]

We believe our study has two strengths in terms of encouraging managers to adopt this more human-oriented management practice, based, nevertheless, on a scientific foundation. First, management guided by principles of complexity science will lead to an emergent culture that is human oriented (and therefore congenial for workers), and economically robust. This is likely to be more persistent than a caring culture that is imposed through well-meaning human relations programs. Second, the diversity of corporations we studied is great: they range in size from large (Dupont in the USA) to small (a family-owned chain of paint/decorator stores in the USA), and in business activity, from hightech (VeriFone in the USA) to traditional industrial (BHP, in Australia). The fact that similar emergent patterns of culture are seen across this diversity of business indicates that something fundamental to the dynamics of all business organizations is being tapped into.

A complexity science approach to management practice is therefore powerful for the following reasons:

  • It is based in a recognition of the fundamental dynamics of business organizations
  • It leads to a human-oriented management practice that is deeply rewarding for all
  • It enhances economic performance over the traditional command and control workplace

Complexity science in practice

Complexity management is easy to imitate, but hard to do. Imitation fails because true connection cannot be faked, and in its absence a creative, adaptable culture of care and connection will not fully emerge. A few examples of CEOs’ view on how they apply complexity science in their daily practice illustrates this point. For instance, we asked two CEOS what response would they give if another CEO said to them, "Tell me how to do it." The answers are as follows, first, from VeriFone’s CEO, Hatim Tyabji:

"There is no simple ‘how to.’ People don’t like to hear that, because they are looking for a panacea. The first and most important element in terms of creating the culture of caring is that you've got to care. That's got to come from within you. That is not something you are going to learn reading a textbook."

Tony Morgan, CEO of the Industrial Society, UK, gave a different perspective, but one that was equally non-textbook:

"My personal lesson--and it’s one that’s deeply uncomfortable for the average chief executive–is that the most creative thing he or she can do is to shut up and listen....Listen to the constructive, controversial and maverick thinkers who bring new ideas, even if–actually, especially if–they make you nervous....When you go back to your company, ask yourself, how much trust exists? Ask yourself how well do you–and your organization–keep your word? Ask yourself how open and honest your organization is. In other words, ask yourself about the quality of relationships in your company."

In the spirit of exploring some of the practical aspects of complexity management, we list seven questions below that we’ve often heard asked (or at least are in the sense of what is often asked), and then we respond to them:

1. If you were to walk into a company that was operating in the creative zone between stasis and chaos, what would you see/hear?

First and foremost there would be a sense of openness, of physical environment and psychological environment, though the latter is by far the more important.

Openness of physical environment includes:

  • Geographical distribution of plant/branches
  • Physical structure of the workplace

We should note that while openness of the workplace–free-flowing office spaces, glass walls, and so on–can help nurture connection and creativity, it is not a necessary condition. We have seen organizations thriving in the spirit of complexity science management, yet are cramped into ancient, rabbit-warren offices. Equally, we have seen offices that are the epitome of physical openness, and yet the prevailing culture is one of command and control.

Openness of psychological environment includes:

  • Sense of connection (humor, playfulness, constructive conflict)
  • Accessibility to people/information
  • A willingness to experiment
  • Sense of inclusiveness (participation)
  • A flexible, can-do attitude
  • Fluctuating authority

This constellation of characteristics encompasses what Rob Goffee and Gareth Jones call "sociability," an important asset, because it engenders employees to "work harder than is technically necessary, to help their colleagues–that is, their community–look good and succeed." [15] But this constellation is richer, because it includes issues of accessibility, experimentation, and authority.

The second signal of an organization operating in the creative zone is the existence of a rich flow of information, which maintains connections between:

  • People
  • Ideas
  • Resources

2. How do you create such an environment?

For the CEO:

Creating the psychologically open environment that is the foundation of complexity management begins with the CEO, and requires a different way of being. As the quote by Tony Morgan at the beginning of the article indicates, this is not easy. It leads to a different style of leadership, which we call paradoxical leadership, and involves:

  • Knowing, while not knowing
  • Giving direction, without being directive
  • Being authoritative, without controlling
  • Being strong, while being vulnerable to influence
  • Uncertainty, without doubt
  • Structure/no structure

The complexity-guided CEO gives up control and the illusion of control, which is both liberating and terrifying. It is liberating, because many CEOs feel burdened by the expectation that they will provide all the answers when in fact they know that much in their world of work is beyond their–or anyone’s–control. It is terrifying, for two reasons. First, control is often viewed as power, and many traditionally-oriented managers find it hard, if not impossible, to give up this veil of power. Second, it requires a confidence that what emerges from the efforts of his/herspeople will be beneficial to the company, even though he/she cannot be sure precisely what it will be: this is uncertainty without doubt, and knowing, while not knowing.

Hearing this line of argument, managers sometimes say, "What, you mean just let everything go, complete chaos, hoping something good will happen!" This is not what we are saying; we do not advocate chaos; we advocate finding the creative space between chaos and stasis. The CEO’s role is to give vision, create the structure (physical and psychological) that will take the company in the direction he/she feels is right, and then get out of the way: this is giving direction without being directive; being authoritative without controlling.

Perhaps the hardest part for many CEOs is to be open enough to learn from others, to be visibly affected by others: being strong while being vulnerable to influence. As Tony Morgan is quoted above: "The most creative thing [a CEO] can do is to shut up and listen."

A laundry list of behaviors for complexity-guided CEOs is as follows:

  • Build relationships
  • Create connections
  • Allow experimentation at small scales
  • Allow mistakes
  • Be accessible
  • Walk the talk
  • Speak from your heart
  • Follow your gut
  • Give immediate feedback

And the core values are: trust and care.

For Senior Management:

Much of what has been said about CEOs also applies to senior management, of course, because the values and behaviors cascade through each layer of the organization. Also, much of what is said sounds like simple common sense, but lamentably, "common sense isn’t all that common" in the world of business. [16] Where it is present, however, it can be very powerful.

We advocate five behaviors, each simple by itself, but cogent in combination. It begins with ask: Ask the people close to the problem what they know about it, what they think should be done, what resources are required, ask what they know that you do not know. And then listen. If there is one thing that we heard many, many times from people whose organizations had been transformed by the introduction of complexity-oriented management it was something like, "He listened to me....that had never happened before." Front line workers are the ones who are closest to the problems, so it makes sense to listen to them. But listening by itself is not enough. Managers must then focus on what needs to be done, and then act–act immediately. Lastly, we cannot overestimate the impact on organizational dynamics of managers who acknowledge workers’ efforts–again, acknowledge immediately, not next time a performance review comes around.

Also, speak straight, because when you include people in the process, no matter how difficult the situation is–cuts in staff, a wage freeze, for instance--people will stick by you.

For Front Line Workers:

Expect to contribute. Be prepared to use your knowledge on your own initiative. Don’t expect to be told what to do. You can have an impact on what happens in your work. Work together.

3. How do you move from this state to the next? What levers need to be pulled?

The first step is to acknowledge that your organization is a complex adaptive system, and that, as a senior manager, what you do can have far reaching effects on the culture of the organization, its creativity and adaptability. The next step is to find out what "this state" is, in other words, which of the three zones your organization is in: stasis, chaos, or the intermediate zone of creativity. (Your organization will fluctuate in its state, moving between these zones, because it is constantly responding to internal and external influences.) You find out which state the organization is in by attending to the domains of relationship, and finding out where it is on the scales of: presence, mutuality, purpose. You listen to the language people use, which reveals the extent of connection and disconnection that prevails. You look for the presence/absence of the characteristics listed in question 1. When you know where you are, you will know what to do, guided by the answer to question 2.

If you ask "What levers need to be pulled," you are still in a mechanistic mindset and have not yet come to terms with the biological model of business organizations that complexity science leads to. You don’t pull levers to move an organization; you attend to relationships.

4. How do you know if a branch office/plant is adapting appropriately and quickly enough? Should you even try to understand what is happening?

Ask the front line workers. You might not get all the answers you want, but you will find that the workers are extremely tuned to the state of their organization. A story will illustrate the point. A very large Canadian corporation, concerned about whether it was sufficiently adaptable, engaged consultants to find out. A team of twenty consultants spent six months and $12 million to produce an 600-page report full of quantitative, statistical analysis, to produce the answer: No. As an exercise, the corporation allowed a single individual to conduct a qualitative study, which involved simply talking to a cross section of people (a dozen in all) over a period of a week. The short report covered 80 percent of the substantive issues in the large report, and came to the same conclusion. The lesson is that the workplace is rich in information, and that by talking to workers and listening carefully, you can tap into it.

Should you try to understand what is happening? Probably not, because complex adaptive systems are, by their nature, impossible to understand in a reductionist way. Just trust it.

5. Should knowledge networks (IT and non-IT) be established so that branches/plants can adapt based on each others experience?

Yes. A key property of an organization run on complexity science principles is the existence of rich channels of communication–see question 1. This includes IT resources, such as an efficient, fully open intranet, and non-IT modes, such as providing opportunities for people to talk with each other informally as well as formally. Communication via e-mail is greatly more effective if the correspondents have already met face to face. Where an internal e-mail system is accessible to everyone (not yet very common), the CEO sometimes has to have a thick skin about what is being posted. Yes, there will be some abuse of the system, but abuse is a good indicator of the relational health of the organization.

When people in different geographical locations can be in rich communication with each other, it enhances a collective adaptation.

6. What constitutes an emergent property in the organization; and how do you "manage" it?

The emergent property is the organization’s culture, which is generated by the way relationships are attended to at all levels. The culture is the collective consequence of how people relate with each other, and it also affects that behavior. It affects the way workers feel about their organization–their loyalty to it, for instance–and it influences the way the organization is perceived by others outside–the organization’s public image.

You cannot manage an emergent property, because it is not an entity in the usual sense. You can only attend to the behaviors from which the property emerges, and this offers managers a powerful opportunity, not for controlling but for nurturing a feedback loop.

7. How do convey the concept of complex adaptive systems to front line workers?

Management practice guided by the principles of complexity science is powerful, for three reasons. First, because it can greatly enrich the work experience. As the CEO of a hospital in New Jersey put it to us, "If we can't come here every day being happy there's no reason to come here." Second, because this leads to enhanced financial performance. Third, and pertinent to this question, the practice is based largely on simple behaviors, not on complicated technology or arcane concepts.

For this last reason, front line workers do not need to understand or even know of the concepts of complex adaptive systems for them to operate effectively in one. Several organization we studied came to complexity-like management practice before anyone in the organization had even heard of complexity science. Much of the practice is very intuitive, given the appropriate mindset. When these organizations learned of complexity science and its application to the business environment, their people felt validated in what they had been doing, and often were able to enhance their efficacy by further developing their management practice. Similarly, front line workers operating in a complexity-oriented environment may be helped to gain a greater insight into their work by learning about the science; but that knowledge is not a precondition for getting to complexity-oriented work habits.

Conclusions:

  • The business environment is becoming ever more fast changing and unpredictable, forcing managers to seek new theory and practice to enhance their organization’s creativity and adaptability.
  • Complexity science is a new scientific paradigm for understanding the dynamics of nonlinear systems ( which encompasses much of the natural world, such as weather systems and ecosystems), and includes questions of creativity and adaptability. The core characteristic of such systems is that order will emerge from the interaction of their component parts, or agents.
  • Business organizations are nonlinear systems, which means that a complexity-science perspective can be brought to a deeper understanding of organizational dynamics. In the business context, "agents" translates to people, and "interaction" translates to relationships.
  • Complexity science in the business context focuses on three principle:
    • P relationships are governed by simple rules;
    • P order will emerge, even though it is unpredictable;
    • P small changes can lead to large affects.
  • A qualitative, naturalistic study of eleven companies whose management practice reflected complexity science principles led to the following:
    • the identification of a nested set of five interacting domains of relationships;
      • a culture of care and connection emerges from a complexity-oriented management practice, which is a highly convivial work environment;
      • a culture of care and connection enhances the economic performance of businesses, partly through improving creativity and adaptability, but also through human-oriented factors, such as loyalty to the organization and a desire to support fellow workers.
  • A set of seven questions and answers addresses practical issues raised by managers about applying complexity science to business problems.

References:

1. S. Kauffman, At Home in the Universe, Oxford University Press, 1995.

2. M.F. Guillen, Models of Management, University of Chicago Press, 1994.

3. J. Micklethwaite and A. Wooldridge, The Witch Doctors, Times Books, 1996, page 91.

4. R. Lewin, Complexity: life at the edge of chaos, Macmillan, 1992.

5. G.A. Cowan et al. eds, Complexity: metaphors, models, and reality, Addison Wesley, 1994.

6. C.W. Reynolds, "Flocks, herds, and schools: a distributed behavioral model, Computer Graphics: Proceedings of SIGGRAPG ‘87, 21(4) 25-34, July 1987.

7. A. Ilachinsky, "Irreducible semi-autonomous adaptive combat (ISAAC): an artificial life approach to land warfare," presentation of work developed at the Center for Naval Analyses at Ernst & Young "Embracing Complexity" conference, Cambridge, MA, August 1997.

8. J.F. Moore, The Death of Competition, Harper Business, 1996.

9. R.D. Stacey, Complexity and Creativity in Organizations, Berrett-Koehler, 1996.

10. J. Pfeffer, The Human Equation, Harvard Business School Press, 1998.

11. The companies include, in the United States: Babel Paint Stores, Massachusetts; a business ecosystem of restaurants in Greenwich Village, New York; Dupont, West Virginia; Muhlenberg Regional Medical Center, New Jersey; VeriFone, California; In the United Kingdom: The Industrial Society, London; Barclays Bank, Leeds; St Lukes Advertising Agency, London; In Germany: BMW.

12. D.A. Wren, The Evolution of Management Thought, John Wiley & Sons, 1994.

13. Stacey and M.J. Wheatley and M. Kellner-Rogers, A Simpler Way, Berrett-Koehler, 1996.

14. A. de Geus, The Living Company, Harvard Business School Press, 1997.

15. Rob Goffee and Gareth Jones, "What holds the modern company together?" Harvard Business Review, November-December 1996, pp 133-148.

16. J. Pfeffer, ibid. page xviii.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1

Relational Model of Business Organizations

Culture of Domain of Culture of

Command and Control Connection Care and Connection

language of disconnection (parameter of connection) language of connection

 

Complacent ECOSYSTEM Accountable

(responsibility)

"It’s not my problem" "It’s not business or the environment"

 

Competitive OTHER ORGS/COMMUNITY Adapt

(interdependence)

"We don’t need anyone" "How can we be better together?"

 

Controlling ORG/CEO Allow

(purpose)

"It’s my way or no way" "Go ahead, just try it"

 

Complaining OTHER Acknowledge

(mutuality)

"Who authorized that?" "You did a great job. Thanks!

Calculating SELF Authentic

(presence)

"I just do what I’m told" "I strive to keep my word"