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Incentives and Disincentives - Organizational Dynamics

by Chris Lucas

"When the axe entered the forest, one of the trees was overheard saying,
'
The handle was one of us'..."

Ancient Proverb

"The child has hardly left the mother's womb, it has hardly begun to move and stretch its limbs, when it is given new bonds. It is wrapped in swaddling bands, laid down with its head fixed, its legs stretched out, and its arms by its sides; it is wound round with linen and bandages of all sorts so that it cannot move."

Jean Jacques Rousseau, Émile ; ou, De l'Éducation, 1762, Book 1, 44

Introduction - two types of systems-based design

Many of us today can sympathise with such a child. We live in a world of constraints, of frequent disincentives to grow or even to live as human beings. This relates to the tendency of our world to adopt 'top-down' design methodologies, forms of control that specify externally how people should behave, indeed how they must behave if they are to avoid 'punishment' in any of its many forms. Here we contrast this methodology with the alternative 'bottom-up' pattern being proposed by many people today. In this method of working we allow the final result to 'emerge' dynamically from the adaptive interactions of the human agents, rather than being a 'design' imposed, by others, upon them.

"Adopting a systems approach means putting the emphasis on "the big picture" or the whole and considering the functions of a system's parts based on their relations with one another and within the system's larger context. This approach has gone by different names at different times and places: systems thinking, general systems research, cybernetics, management science, operational research, decision science, and praxiology, to name a few. All share the concept of a multi-disciplinary approach to defining and solving complex, high-variety, dynamic, continuous, and interactive problems."

Allenna Leonard with Stafford Beer, The Systems Perspective: Methods and Models for the Future , 1994, Introduction

"However, what is lacking in this approach in order to make it a full-fledged theory of complexity is a model of how a system, and complexity in general, may emerge out of something which is not yet a system. Such a phenomenon might be understood with the help of some recent concepts developed around the phenomenon of self-organization. A third strand we need for our general science of complexity concerns the way in which complex, autonomous beings, such as we ourselves are, may solve the problems posed by a complex environment."

Francis Heylighen, Building a Science of Complexity , 1988, Introduction

We will look at two styles of systems thinking, in the first (characterised by the movements in General Systems Theory, System Dynamics and Cybernetics, as per the first quotation), we see the move from disjoint groups doing their own reductionist thing (specialist tasks) to a focus upon the whole, to a perspective that brings all the separate functions together and then analyses the overall result, before proposing changes to make the system function better and more predictably. In the second style (characterised by Complexity Theory and Complex Adaptive Systems, as per the second quotation), we see a focus upon the self-organization of the parts, upon allowing the values of the agents to drive the dynamics of the system without any explicit 'leadership'. We shall, a little later, investigate the sorts of incentives and disincentives associated with each style.

Systems Thinking - which level do we analyse ?

"If the rational metaphor has been dominant in organization theory, an organic metaphor has been the principal opposing view... The problem with both of the approaches... is that they adopt fixed, static stances. The rational metaphor assumes a pre-defined goal. The organic metaphor assumes a predefined community. Both tend to define an organization in a way that does not allow for redefinition of its mission or boundaries. Both also seem to assume that the individuals participating in the organization have static motives and identities, making them theories of dead, lifeless organizations... The resolution of the conflict between rational-bureaucratic and organic-communal concerns is found in working together to identify and solve emergent collective problems arising out of interdependent activities. The good organization is one that is continually getting better."

Eric Bredo, Organization Theory and Ethics , 1999

Both viewpoints that we have characterised are systems viewpoints, in other words they both take the view that we must evaluate systems as wholes, and not as reductionist collections of independent specialisms or values. As a result both forms of thought use similar language, emphasising relations, interdisciplinary applicability, emergence and circular causality processes, which has led many people to wrongly assume that they are identical viewpoints. The practitioners of each style do vary widely, and there is much overlap, so we should not make too much of the differences. Nethertheless we can categorise practitioners as to the extent to which their models and focuses adopt a 'top-down' versus a 'bottom-up' approach - the 'rational' versus the 'organic', and to what extent they allow for 'novelty', adaptability and unpredictability. Thus we can identify four extreme styles, the top two related to dynamic 'learning systems' modes (Type 3 & Type 4), the bottom two to static 'equilibrium' modes (Type 1 & Type 2):

Type 3: Designed Top-Down InnovationType 4: Self-Organizing Bottom-Up Adaptation
Type 2: Hierarchical Top-Down ControlType 1: Traditional Bottom-Up Community

"Resolution can be started, once the Discovery work has produced sufficient understanding to make possible the Design (or redesign) that is required in order to resolve the complexity associated with the problematic situation. Resolution incorporates recognition of the need for resources for the purpose of implementing the design, and that such resources normally are found only in organizations, because of the size and scope of complexity."

John N. Warfield, Understanding Complexity, 2002, Ch. 5

In 'top-down' systems thinking the goals of the whole, the higher level system (which may be a company or a public body), are paramount. In this style the techniques of a 'consultant' are employed to analyse the current system and how it relates to the organizational goals. This frequently involves inviting various 'stakeholders' (interested parties) to participate. The resultant analysis is then used to redesign the organization (over time, in a detached 'objective' way) to better meet the desired ends, and then this redesign is implemented (as per the above quotation).

"The properties and modes of action of higher levels are not explicable by the summation of the properties and modes of action of their components taken in isolation, if, however, we know the ensemble of the components and the relations existing between them, then the higher levels are derivable from the components."

Ludwig von Bertalanffy, Problems of Life, 1952, Pg. 148

In 'bottom-up' systems thinking the interests of the individuals are paramount, and attention is given to how these mesh together, and to how the overall organizational behaviour emerges. This recognises that 'new' features come into being due to interactions, these features are not explicit within any design brief, yet do make considerable contributions to the success or failure of the organization.

"The Systems Engineer must also be capable of predicting the emergent properties of the system, those properties, that is, which are possessed by the system but not its parts."

Peter Checkland, Systems Thinking, Systems Practice, 1981, Pg. 129

Whilst we do agree that there are many such emergent properties, the complexity viewpoint denies that these 'higher levels' are (quantitatively) predictable from even total knowledge of components and relations (as proved by analyses of totally deterministic cellular automata). Analysis concentrates instead on the 'subjective' beliefs of the agents, on their assumptions, needs and interactions, and on the changes that could advantageously be made to them (checked using simulations) in order to allow and to drive (qualitative) dynamical improvements - in other words to put 'life' and 'values' back into the organization.

"The order of a complex system is not predictable from the characteristics of the interconnected components nor from any design blueprint, but can be discovered only by operating the iterative cycle, despite the fact that the emergent whole is in some sense contained within the dynamic relationships of the generating parts. In a science of qualities, the interactive process, given rich interconnections and deep engagement, will lead to emergent order. A science of qualities, as a form of bounded instability, is radically unpredictable."

Peter Reason & Brian Goodwin, Toward a Science of Qualities in Organizations , 1999

Explicit versus Implicit Design - static or dynamic goals ?

"Given that the key finding claimed for complexity theory is the effective unknowability of the future, the common assumption among managers that part of their job is to decide where the organisation is going, and to take decisions designed to get it there is seen as a dangerous delusion. Management, afflicted by increasing complexity and information overload, can react by becoming quite intolerant of ambiguity. Factors, targets, organisational structures all need to be nailed down. Uncertainty is ignored or denied... All of these managerial reflexes, many of them seeming unassailably commonsensical, are (we shall see) quite counter-productive when viewed from a complexity theory perspective.

Let us summarise some of the received wisdom about how well-managed businesses (and the public sector agencies which emulate them) should proceed. There should be a Chief Executive Officer presiding over a cohesive management team with a vision or strategic intent supported by a common culture. The organisation should stick to its core business and competencies, build on its strengths, adapt to the market environment, and keep its eyes focused on the bottom line. Despite the critical hammering taken by 1970’s-style long-term planning, strategic management will nevertheless incorporate the tasks of goal formation; environmental analysis; strategy formulation, evaluation and implementation; and strategic control. All completely wrong from the perspective of management writers influenced by complexity theory."

Jonathan Rosenhead, Complexity Theory and Management Practice , 1998

What we have then are two interacting forms of systems behaviour. The first, based upon the explicit goals of the organization, i.e. its purposes, axioms or assumptions, relates to the 'principles' (e.g. mission statement or scope) and 'rules' (laid down procedures) of the organization. The second, based upon the implicit goals of the individuals, relates to the models (worldviews) and behaviours (values) of the various agents. These two pairs may be in line, but they frequently clash. The 'organizational' elements tend to be static, and bureaucratically enforced, they amount to a number of constraints which attempt to control the personnel, to ensure that they follow 'orders' and achieve the desired ends as efficiently as possible. For this purpose originality and deviation are opposed, in fact what happens is that since the 'requisite variety' of the control chain is very low, then to maintain any control the other personnel must be prevented from having any variety - this bullying of course stresses them, and is unlikely to make them 'cooperative' to organizational goals !

"When (if) a single component controls the collective behavior (not the individual behaviors of all the components) of a system, then the collective behavior cannot be more complex than the individual behavior. i.e. there is no emergent complexity. Examples... corporate hierarchies/dictatorships/etc. (to the extent that central control is exercised complexity of collective behavior is bounded by the complexity of the controlling individual)."

Yaneer Bar-Yam, Significant Points in the Study of Complex Systems , 2000

In other words, of all the billions of behaviours that the staff could adopt, the 'managers' forcibly restrict them to only the few that they (arrogantly, in their ignorance) can currently imagine ! We can relate such (structurally) 'closed' systems to mechanisms, where each 'part' has a well defined and restricted function, and the system achieves an homeostatic balance - an equilibrium, which acts to resist perturbation. But we must note that if the design is wrong, or the environment changes, then the mechanism just won't work as expected ! One of the roles of complexity theory is to investigate just how sub-optimal such organizations are and to propose better and more adaptive forms of organization.

"I find it striking that in the entire spectrum of complex adaptive systems only when we come to human organizations do we typically find a powerful agent in charge of the whole operation. And these are precisely the complex adaptive systems that break all the time and that we are always trying to fix."

Mike Simmons, review of The Complexity Advantage, Emergence Vol. 1, No. 2, 1999, Pg.68

The focus upon 'individualist' elements, by contrast, emphasises the feedback and adaptive responses that are essential within working organizations. Much of the knowledge that allows any organization to perform is contained within the minds and experience of the staff, it is not in any sense laid down in the 'rules' (which is why 'working to rule' cripples most organizations). The ability to innovate is essential if an organization is to be able to cope with new problems and 'open' far-from-equilibrium situations, and this ability resides within the 'staff' (information) alone - 'things' (infrastructure) cannot innovate... Thus adaptive organizations need to allow the staff to 'escape the box' of laid down procedures and of rigid quantifications as (static, system freezing) 'measures' of results. To the extent that their organizational ethos permits (and even encourages this) then they will prove successful in today's rapidly changing world; to the extent that a culture of 'bureaucracy' and being 'subservient' to the boss' 'rules' prevails then they will not. In effect, traditional 'management' takes an organization's future (in the ideas and insights of their new staff) and destroys it in order to glorify a dead past (e.g. this is how we do things here) !

Enabling Adaptation - who drives the necessary changes ?

"While we remain mentally and psychologically dominated and oriented by the traditional simple deterministic lineal causal models, we always look for so-called "solutions". This is intended to be the timely punctual and supposedly definitive replacement of some unsatisfactory state of affairs by a new and satisfactory one.

In fact, this is merely a jump from one adaptation to another one, with the frequent but illusory belief that "now, the matter is settled". Bela Banathy Sr., who was a leader in systemic thinking once said: "you cannot solve any problem: you only can manage it". It should be added: "and you are able to manage it only if you understand its deeper nature and, behind the visible symptoms, its really significant structures and dynamics. And of course, there is always a price to pay.

In short, we need permanent adaptability, and not merely more or less ill connected jerks from one state of affairs to another one."

Charles François, The Need for an Integrated Systemic-cybernetic Language , 2004

Both styles of systems thinking do recognise the need for adaptation in today's world, but they differ in as to how they approach this problem. The 'top-down' style, makes explicit which changes are necessary, it targets the 'organizational' elements, assuming that the staff will change to accommodate the changes in their company structures and procedures. The 'bottom-up' approach makes explicit what changes in 'individual' elements are necessary, it assumes that the new organizational structure will self-organize dynamically (emerge) to reflect the new behaviours of the staff. In the first, sometimes called 'Distributed Problem Solving' (DPS), 'Type 3' in our table, the staff are forced into line with the manager's 'plan', in the second, called 'Multi-Agent Systems' (MAS), 'Type 4' in our table, the 'rules' are forced into line with staff innovations.

"There are many points of departure between complexity as defined from a more modern perspective and complexity from the perspective of traditional systems thinkers... For example, there is an underlying assumption that symbolic formalism is necessary to deal with complex systems design, because of the inadequacies of natural language... According to the law of requisite variety... I would argue that language itself is in fact our most complex design formalism... Likewise, Warfield's science of generic design may work well on various mechanistic elements of a complex system, but, by ignoring emergence and self-organization it is incomplete."

Kevin Dooley, review of A Science of Generic Design, Emergence, Vol. 1, No. 2, 1999, Pg. 191

Now, of course, in practice we do not exclusively employ either of these styles, sometimes it is obvious that problems already exist within one or more of these elements, yet their rather different priorities will remain, in that the first style puts 'management' first (the 'adaptability' is restricted to the few), the second puts 'workers' first (where 'adaptability' becomes a general behaviour). This does however raise several interesting points regarding benefits and responsibilities amongst the stakeholders, and these issues are crucial to our focus later - on the incentives and disincentives which encourage and allow people (or do not) to behave as expected or as required by various 'organizers' (internal or external).

The Mindset - what we think determines our behaviour

"Who is at the table representing which beliefs ? Who has a right to speak and put forward their perspective ? Who has discursive legitimacy ? Who chooses the concepts and language ? Who is viewed as authoritative and deferred to ? What are the standards of evidence for knowledge claims ? Who is credible and why ? Whose interests are served by the acceptance of particular knowledge claims ? How are issues framed and what does this imply for potential outcomes ? Control over symbolic resources matters here... Not everyone is equal when it comes to the construction - or, when appreciations conflict, the negotiation - of reality."

Steve Maguire & Bill McKelvey, Complexity and Management, Emergence, Vol. 1, No. 2, 1999, Pg. 19

How we answer these questions matters greatly, it structures our whole behavioural rationale. Do we think "it's nothing to do with me", or perhaps "I just do what the boss says" or even" I'm all that matters", or "these bastards don't care less about me". Each of these views bias our behaviour in different ways, in the first we are unconcerned, the second is submissive, the third arrogant, the fourth resentful. Each of these would answer the above questions in ways that would illegitimise valid values, valid worldviews, valid experience - largely by suppressing 'feedback' information that could challenge a faulty status-quo. None of these views therefore gets the best from people, none engages the 'communal spirit', none even considers 'synergy' - that talent for building off each other's abilities which takes humanity as a whole forward. We thus see that our own personal viewpoint, ignored in most top-down views, is quite crucial in determining just how we choose to behave, and thus what effect our behaviour has on those about us, including our 'organization' as a whole.

"The shift that has occurred in complexity thinking moves us outside the subject-and-object domain. The frame of reference is not the relationship of the presumed facts, but the formulation itself. Now the assumption is that we are not so much communicating facts as informing. We are communicating interpretations. Our formulation is our way of putting it together.

When we eliminate the distinction between subject and object, we return to something akin to the dialectical model mentioned earlier, which joins, for example, thesis and antithesis, in which being and non-being shift from a linear way of thinking to a nonlinear one."

Howard Sherman & Ron Schultz, Open Boundaries, 1998, Principles, Models, Rules and Behaviours, Pg. 53

In today's thinking a new sort of worldview (or paradigm) is proposed, one which goes somewhat beyond that of the (either/or) 'organization' or 'individual' views common to earlier eras. Modernist views took the perspective that if "I" am right then "you" are wrong, and that if you could not 'prove' your belief scientifically then it was quite meaningless (logical positivism) and thus should be just ignored. Post-modernist views, unsurprisingly, took the diametrically opposite view, i.e. that no view was 'right', that all were culturally relative, but they then also went on to ignore any contrary views and to deny the validity of any criticism ! Neither of these viewpoints is valid however. What we believe is very dependent upon what we want to achieve, and here it seems quite clear that not only are there many valid ways to approach any end, and many valid ends to approach, but that some of them prove to be successful and some of them prove to be quite useless. What we believe matters greatly in coping successfully with our world and its 'opportunities'.

"Like people, organizations can get sick and die. They also need to be cured and healed. Yet, like physicians who focus only on their speciality, most consultants fragment complex situations into symptoms, treat the symptoms, and rarely inquire into the deeper causes. Consequently, management experts have very little ability to influence organizational health. All too often, their solutions contribute to a vicious pattern of "programs of the month" that fail and get replaced by the next program of the month...

The walls that exist in the physical world are reflections of our mental walls. The separation between the different functions is not just geographic, it lives in the way we think. Redesigns that "throw down the walls" between different functions may have little enduring effect unless they also change the mental models that created the walls in the first place."

Peter Senge, Personal Transformation , 1998

One System or More - what are we adapting to ?

"Unfortunately, few bosses or employees understand the relationship of subsystem to larger system, and frequently act in ways that disrupt the healthy systemic functioning of their organizations. CEO's may assume that because they are 'on top', their own needs and perspectives matter more than anyone else's; they may make decisions based more on personal preference than on organizational needs. Disgruntled employees may blame their bosses for low morale and fail to notice how their own complaining and diminishing productivity contributes to the overall problem. And even organizations utilizing systems principles within their management philosophy may fail to consider the larger wholes of which they are but subsystems - larger wholes like the socio-economic communities and ecosystems upon which they utterly depend. Most of us fall into the mind-trap from time to time of thinking of ourselves as separate from everything else, forgetting we are completely interconnected and nested within the human family and the biosphere of the earth."

Molly Young Brown, Patterns, Flows, and Interrelationship , 2002

Just saying that we must become 'adaptive' however tells us little. Just what do we need to adapt to ? Many companies seem to imagine that this is just the activities of their 'competitors', but this one-track-mind focus is very inadequate. The whole environment under which any organization operates contains many levels. The society in which they are situated has its own dynamic, as do all the groupings within the organization. Individuals within any organization also have their own lives, their families, their friends, peer groups and wider interests. They are concerned over their health, their values, their lifestyle and quality of life, as are many external groups such as environmentalists. All these other 'systems' will interact, so we have an 'hypersystem' within which all the various sub-systems will coevolve. But we must note that these other systems are not 'contained' within our target organization but spread (typically) all over our now global world. Thus we must ultimately adapt to everything.

"The systems approach that was the foundation on which most operational urban development models were predicated, was strident in its advocation of three key principles of model-building. The first involves defining the system in its wider environment in such a way that the system has a crisp boundary with the outside world; in short, interactions of interest must be much denser within the system than outside. The second has become more controversial and this revolves around the idea that the system must manifest some equilibrium, that processes of change within it must imply some equilibrium and, if such processes are well behaved, that the equilibrium itself might be the focus of prediction. The third principle involves the elements of the system that must be uniform or homogeneous in some sense, with the focus on explaining the order and regularity that such homogeneity implies. These principles did once appear to be implementable for urban systems but it is now easy to argue that none of these apply to even the simplest system of interest to policy-makers. Systems of any interest are impossible to close, their usual state is far-from-equilibrium; often no such equilibrium ever exists. They are composed of heterogeneous agents and objects, indeed their very richness comes from such heterogeneity. The quest of science, it is now argued, should be to grapple with explanation and frameworks that attempt to contain, if not explain, such diversity. None of this bodes well for models in which traditional prediction is the goal."

Michael Batty & Paul M. Torrens, Modeling Complexity: The Limits to Prediction , 2001, Introduction

Since this vast web of interactions is impossible to analyse, we must embrace uncertainty. We are no longer able to discount all other systems as independent of our behaviours, and we cannot, except with some risk, make assumptions about their behaviours. Thus if we try to 'plan' for every contingency, if we try to predict and determine the future, then we will fail. So how do we proceed ? The two styles take different approaches to this. In the earlier form of systems thinking we prioritise, we target those aspects of our organization that we think are the most important and concentrate our efforts on optimizing them. Unfortunately, when systems are nonlinear it is not at all clear which influences are critical - sudden collapses can unexpectedly occur (as in the U.S.S.R.).

"Organization science for fifty years has focused on "controlling uncertainty." Complexity science for the past ten years has focused on how to understand it so as to better "go with the flow" and perhaps to channel that flow."

Michael R. Lissack, Complexity - the Science, its Vocabulary, and its Relation to Organizations, 1999

And by neglecting 'unimportant' aspects, which nethertheless are of value to other stakeholders or levels, this again stresses the system, almost guaranteeing long-term failure - since the stressed 'agents' will work to oppose the 'plan' in all the ways that they have available. The later style of systems thinking accepts this inevitable ambiguity, the impossibility of 'solving' any problem (once-and-for-all), and instead moves away from 'control' towards 'freedom'.

Control or Freedom - letting go of power

"It is very hard for business to let go of its mechanistic and very linear cause-and-effect models and adopt an evolutionary model in which we sit back to see what can happen from any direction without knowing what will come of it. To do so is to relinquish control, direction, role and intentionality. Businesses get very nervous just at the idea of this process."

Howard Sherman & Ron Schultz, Open Boundaries, 1998, Principles, Models, Rules and Behaviours, Pg. 65

This movement away from a centrally controlled or hierarchical organization to a flatter more distributed decision making process is quite common today. Yet we find that in most cases the 'bosses' are extremely reluctant to let go of the strings, the essential nature of 'control' still remains with the few - these bosses just 'prune-out' all those intermediate 'experts' that would honestly dare to tell them that they are wrong, leaving them more in absolute control than ever before ! These organizations are still locked into the standard worldview, the Newtonian (and we must say religious) paradigm which thinks that organization is something that can be imposed from outside, and if problems arise the 'boss' needs to tell people what to do. The newer viewpoint suggests that this is not the case and that organization must be grown, it must spontaneously emerge if it is to be viable, if it is to be truly 'adaptive'. For this to happen the agents within the organization must individually have the freedom to act as they will, they must not be constrained by 'rules', by inflexible forms of behavioural restrictions, by imposed ideas of what should (and always did) take place.

"The idea of a social system implies sources of behavior beyond that of the individual people within the system. Something about the structure of a system determines what happens beyond just the sum of the individual objectives and actions. In other words the concept of a system implies that people are not entirely free agents but are substantially responsive to their surroundings"

Jay Forrester, System Dynamics and the Lessons of 35 Years , 1991, Pg. 7

These constraints are what we call 'downward causation' or 'canalization' and are crucial to how the agents choose to behave, yet for adaptive behaviours we should strive to minimise their effects - hence the neccessity to remove the control by 'rules'. But note that (despite the earlier quotation) we have not abandoned 'control' itself, what we have done to simply to move it to where it is most effective - the grassroots. The staff are all in control of themselves, and they are all in control of their interactions and what resources they need to use. It makes no more sense for a boss to try to control all this than it would for them to try to tell the staff how to walk ! Bosses simply do not have the 'requisite variety'. But how do we get anything done ? We simply say what it is we want to collectively achieve, the desired 'end result'.

"The organism restricts the individual creativity of its component unities, as these unities exist for that organism. The human social system applies the individual creativity of its components, as that system exists for these components."

Humberto Maturana & Francisco Varela, Autopoiesis and Cognition, 1980, Pg. 199

This is where Complex Adaptive System (CAS) based organizations differ from the undirected (at group level) CAS's in the natural world, and why we should not treat human organizations as 'superior' to people, in the way that 'organisms' are thought to be superior to 'cells'. Each person within the organization is able then to teleologically adjust their behaviour slightly to better approach that 'end result' (based upon their many life experiences), and as they adapt to each other (coevolutionarily) the whole collectively converges upon a result, that desired 'attractor' - quite automatically ! And if something changes (either internally or externally) then the self-organizational process will continue until the attractor is regained - again automatically, i.e. the system is self-regulatory. It may be feared that by letting the people do their own thing that the situation would rapidly degenerate into total chaos and the business simply would not then function at all, so now let us now look at 'chaos', as understood in complexity theory.

Information Overload - a world in chaos

When we look at the effect of interactions we find that the more that occur the closer the system gets to chaos, the more pressure builds up, we are overwhelmed. Chaos is the nonlinear mathematical idea that a small deviation in initial state rapidly escalates to a totally unpredictable final state, in other words there is a sort of positive feedback effect. Now additional information effectively is such a deviation of state, so in today's world (deluged with the stuff !) we would expect to already be well into the throes of chaos. Why are we not ? The reason is simply that we don't act on it all, we are very selective. We pay attention only to information that is relevant to us, and this means information that makes a difference.

"In fact, wherever information - or comparison - is of the essence of our explanation, there, for me, is mental process. Information can be defined as a difference that makes a difference. A sensory end organ is a comparator, a device which responds to difference. Of course, the sensory end organ is material, but it is this responsiveness to difference that we shall use to distinguish its functioning as "mental." Similarly, the ink on this page is material, but the ink is not my thought. Even at the most elementary level, the ink is not signal or message. The difference between paper and ink is the signal."

Gregory Bateson, Mind and Nature, 1979, Ch. 2

What differences then does information make to us ? There are two sorts of difference. The first relates to enhancements to our values. If we can see a positive way forward, by using some information to improve our lives, then of course we will do so. We benefit from that information. The second sort of information relates to constraints on our freedom to act. Here we actively look for ways around the constraint, we look to reject the obstruction, to bypass or ignore it. Dynamically the first attracts us to the information, the second drives us away from it. To put it another way: personal benefits stabilise the system, obstructions destabilise it. Or yet again, if people feel 'closed down' by the information they are getting then they will fight it - and war is the most effective way to chaos that there is ! Thus if we wish to avoid chaos then we simply need to check what sort of information people are getting and whether it is having the desired beneficial effect, i.e. in generating innovations that are useful to them. This is even more relevant when we are the ones supplying that information, since then we are fully in control of (and responsible for) all the resultant effects !

"It is no secret that the world is glutted with information. The volume of junk mail, advertising, newsprint, cable channels, Ph.D. theses, and scientific papers is growing exponentially. No matter how quickly they are constructed, the lanes of the information highway soon slow to their customary speed-of-light crawl. In such a world, the capacity to ignore selectively becomes ever more valuable. A system that is to control its environment successfully, be it a consumer, a scientist, or a robot, must adapt by constructing models that allow it to decide what information to get, and how to act on it."

Seth Lloyd, Learning How to Control Complex Systems , 1995

Nonlinearity - and the myth of the eternal yesterday

"Among the most active areas of current research in systems science is the investigation of relatively new categories of systems, whose practical utility is closely connected with advances in computer technology. Examples of these new categories of systems are cellular automata, neural networks, systems based on fractal geometry, fuzzy systems, chaotic systems, developmental systems, autopoietic systems, anticipatory systems, and self-reproducing systems. Each of these categories of systems opens a new avenue for representing knowledge.

Another active area is the ongoing research on systems complexity and simplification strategies. This inevitably involves research on nondeterministic systems and this, in turn, requires to study the various facets of uncertainty (predictive, retrodictive, prescriptive, diagnostic, etc.), a subject that became tremendously enlarged by the emergence of fuzzy sets nonadditive measures."

George J. Klir, Systems Science , 1999

In Newtonian linear thinking, what happened yesterday tells us about what will happen tomorrow. Period. This is the myth of 'induction' so central to scientific 'prediction'. However, when new interactions come onto the scene, as in today's more dynamic world (driven by our new innovations), then this determinism simply does not work. New influences, incorporating these (often chaotic) interactions, invalidate such naïve predictions. Their validity goes from the assumed 100% to close to 0% ! This problem invalidates 'plans', since their basic assumptions are then falsified. What really happens, when following any 'plan', need not have any connection with the predicted result - and frequently it does not !

"Below are the questions that we are usually asked by most of the leaders and the teams with whom we work. Notice how each of these questions springs from a desire for certainty:

1. How long will this process take?
2. What results will be produced?
3. What will actually happen to create those results?
4. What guarantee is there that this process will work?
5. How much will this cost?
6. What is the return on investment?

Most leaders and teams want the answers to these questions to provide certainty. For example, an answer to “How long will this process take?” can be given as a set number of days. It is important to remember that, when you seek certainty in situations that are complex and in flux, you get only the illusion of certainty."

Marilyn Herasymowych & Henry Senko, Corporate Culture and Complexity, 2002, Part 2B

But if we cannot 'plan' as traditional systems thinking hopes, then how can we possibly achieve our ends ? An example may help. Think of a jazz 'jam session'. This is an actual example of a working CAS, where the players monitor each other's output and adapt accordingly. And of course what arises is often far more creative than the output of, say, a traditional (organized) classical quintet ! Nonlinear effects then simply mean that we must continuosly monitor the situation. We can no longer assume that we can freeze the system, analyse it, and then re-design it. This means that the idea of 'detached objectivity' is another myth. The system (any system) must be treated subjectively, by those people involved in it, by those people who care about it. No 'outsiders' have enough experience to do this, or are likely to wish to spend the time to do so !

"In linear problem states, in which similar causes have similar effects, the effect of the context on the knowledge can be determined, and the knowledge can be applied to any context... This simple relation between regularity and context is no longer given in complex problems. Slight fluctuations in context may have large effects on the solution to a problem. The knowledge that describes a content adequately in one context may prove to be false in a slightly changed context. A general solution to complex problems for all contexts does not exist. In complex problems, solutions are extremely context-dependent because of non-linearity... Innovations belong to this category of "complex problems"... Innovation networks have emerged and prove to be successful in coping with innovation uncertainty."

Günter Kueppers, Coping with Uncertainty: The Self-Organisation of Social Systems, 1997

This does not, however, mean that no outside expertise is useful, simply that this must be 'information' which helps the 'locals' (those innovation networks) to do the job, and not an attempt to impose an 'organizational' solution upon them, as traditional 'management' (and 'consultants') far too often insist upon ! What we do, effectively, is to enable the formation of a 'strange attractor', this is a complexity construct that can wander at will around various options (its trajectory) yet still manages to stay within certain bounds - defined by our wanted 'end result'. What emerges is in fact an 'autopoietic' system, a system that is self-maintaining and self-sustaining (and cannot in fact be 'instructed' from outside at all, it must adapt internally) . We enable this adaptation by paying close attention to incentives and disincentives.

Targeting Benefits - incentives matter

"Purpose, process, interaction, integration, and emergence are salient markers of understanding systems. Furthermore, we should think about and define human activity systems always at three levels. (1) A system serves the purpose of its collective entity. (2) It serves the purpose of its members. (3) It serves its environment of the larger system in which it is embedded."

Bela Banathy, Characteristics of A Human Activity System , 1996

The idea that many levels are important in the dynamic evolution of complex systems is still not properly understood. In almost every case, 'organizational experts' concentrate on a single level only of the complex system. They divorce social and personal views totally from the corporate or organizational focus. Yet what can we say about how this affects the individuals that are, in fact, the only relevant value of the supposed organization ? The rest of the supposed hierarchical 'structure' is quite abstract and irrelevant, a mere linguistic fantasy used, usually, simply to bully (top-down) the 'subordinates'. And bullying people, of course, does not make them creative - just the opposite in fact ! Yet our benefits from co-operating can be large, we do not need to fixate on one level, it proves (in fact) pretty destructive if we do !

"Why, the Sheep asked time and time again, are organizations, whether governmental, commercial, educational or social, increasingly unable to manage their affairs ? Why are individuals increasingly alienated from the organizations of which they are part ? Why are commerce and society increasingly in disarray ?"

Dee W. Hock, The Chaordic Organization , 1996

Benefits can take many forms, the most valuable are behaviours that are ends-in-themselves, these need no incentives since the behaviour is in itself self-rewarding. Of lesser value are behaviours that are means to desired ends, e.g. constructing a 'nice' garden or embarking upon a personal 'fitness' regime. Again the incentive for all the hard work is contained within the expected result. Within most organizations however we see very little of any of this, most organizational goals are of little intrinsic value to the staff, they gain no direct benefit from any of them, so incentives must take more instrumental forms, e.g. payment, promises of 'promotion', and the like. To address this issue we can perform an 'Incentive/Equilibrium Analysis':

"Problems which last a while, despite varied good efforts to solve them - especially problems in the firm or in society involving large numbers of people - are usually situations in equilibrium. By definition, these are in self-defending homeostasis or sociostasis. Self-balancing, they reflexively maintain themselves, often in complex or sophisticated ways... Where large numbers of people are involved, and especially in hierarchical and complex situations, there tends to develop a very great difference between what benefits the common good and what will benefit one's own narrowly selfish interests... To the extent such a difference is allowed to exist... such situations necessarily punish humanitarian and "higher" motivations... To reduce such punishment - and to reduce the attrition of the higher-minded - reduce the difference between what benefits the individual and what benefits the whole... Find a solution which constitutes a win/win for all concerned, if possible even in the short run - and definitely a win/win for all in the long run. The extent to which the eventual solution falls short of that objective is the measure of the cost in power, force or extraordinary persuasion which would be required to implement that solution or policy."

Win Wenger, Win-Win Finder , 1999

How people behave depends extensively on what they think they gain from so behaving, if there is no incentive to behave as the company 'requires' then they simply will not do so ! Period. In fact, if they can behave in the opposite way, and still gain some benefits then of course they will do just that ! This does however work bothways. If the 'management' can lie to the staff and 'con' them into working for the company instead of for themselves (when it is not in their interests) then they are simply being 'used' - but pretty often they know that is the case, they are very rarely 'fooled', in the way that naïve and blinkered management thinks - and will retaliate ! Thus it is quite obvious that avoiding a win-win approach is fundamentally ignoring the whole point of a systems viewpoint - the interaction of all the parts, which leads to a very poor enterprise.

"In enterprises of this type, when a worker is asked what he is doing, his pathetic and ironical reply is usually: "Nothing, I just work here." It is natural for him not to be interested in the progress of the business, for he only works for his pay which is by the hour, although more accurately by the second, and he will try to do the least work for the most pay. He is alienated both from himself and from the economy, and he rebels against this alienation... In this system there is no room for morality and therefore, according to our formal hypothesis, it should be a relatively poor system... More advanced.. is the moral stage: the application of intrinsic value to labor, out of which grows a new science, moral economics and its man, homo moralis. The application of intrinsic value to labor means that the laborer is considered not as a Taylorian construction nor as a function within a class of laborers, but as a moral person of infinite value. This means that the worker gives his complete self to his work, with a sense of responsibility not only for himself but also for his colleagues, the company, and the total economy.

When the establishment of a ten minute rest period each morning and afternoon was proposed in a factory in Baltimore several years ago, the management engineers got to work with their slide rules... in order to determine exactly the loss of productions as a result of these twenty minutes of rest... On the basis of these calculations they reported that the production loss would ruin the company. However, the rest periods were established anyway, and instead of loss of production, production increased. With twenty minutes less "work" each day, more was produced than formerly.

Robert S. Hartman, Applications of the Science of Axiology , 1970

Getting involved in any organization takes time and effort - so why do it ? Obviously the more benefits we get out of it the better, this means targeting all our values at once, and those of the other people, both inside the organization or outside (in the wider society). In systems thinking, we often find that when we do this that we can find new solutions to old problems, new ways of working (as above) that benefit all the participants (some perhaps more than others - but in ways that nobody ends up worst-off - the cause of all our current troubles !). To do this requires flexibility, we must get out of our many ruts, e.g. that old fixation that there is only one way to do things, control from the top, and that if it doesn't work then we must simply do more of it - escalate the bullying as it were...

"The results hint at something deep and simple about why flatter, decentralized organizations may function well: contrary to intuition, breaking an organization into "patches" where each patch attempts to optimize for its own selfish benefit, even if that is harmful to the whole, can lead, as if by an invisible hand, to the welfare of the whole organization."

Stuart Kauffman, At Home in the Universe, 1995, Pg. 247

Instead we should try multiple strategies - not all or nothing. This means that diverse groups (or 'patches') are allowed to try to approach the problem in their own way in order to generate solutions that work for them. This succeeds because if everyone finds a solution that works for them, then they all should be happy - they have all found an acceptable niche. Of course there is an obvious drawback, in that we are considering nonlinear hypersystems, so the various groups may well interfere with each other - creating mutually incompatible solutions. This relates however to another commodity that the control-freak mentality currently distorts, the idea of tolerance. If we try to impose our idea on others - wiping out their values, and vice-versa, then all is again lost. But if instead we accept their values, then we can self-organize (coevolve) with their 'patches' in order to gain another synergic solution, which proves to be better (for all of us) than either of our separate ones were even for ourselves! The skill is in choosing the sizes of the patches, if too big then we approach the (one-patch) Stalinist style of one-size-fits-all, if too small then we have the (everyman's-a-patch) Free-Market approach where everyone fights everyone else. The right size distribution will (perhaps not too surprisingly) take us once again to our 'edge-of-chaos' !

Targeting Misbehaviours - disincentives stress

"If it is accepted that we are all of equal worth as human beings (albeit with many individual differences) then it becomes apparent that processes and systems differentiating on the basis of power, status, special privilege etc - i.e. nothing to do with some real need concerning the work or individual - are likely to be viewed negatively on the core values continuum. Highly differentiated organisation not only disrupts self-organisation, as stakeholders perceive they are being treated unfairly, or dishonestly etc. but also, the capability of the process to achieve its technical outcomes is impaired."

Michael Church, Organising Simply for Complexity , 1999, Values

If we have identified some poor behaviours, which operate on a lose-lose or win-lose basis, thus hurting the whole (i.e. negative-sum), then we must try to ensure that they are not beneficial to the perpetrators in practice (which is like rewarding criminal behaviour !). Misbehaviours of this sort, by any party, need to be contained. If they are not, then the whole structure of our society and of our organizations disintegrates. In no sense can we operate as a group, if nobody can trust anyone else. The laws of any country are supposed to address this problem, penalising those who 'breach their social contacts' in whatever way these are described. Yet these 'laws' and political behaviours are often biased, they have perverse results, because they do not operate in the public interest, but in the interests of limited small-minded 'pressure groups'.

"Perhaps the most important way of all to overcome obstacles to reform is to build support constituencies, especially among the public. The more citizens know that their tax dollars and consumer payments are going down a rathole of perverse subsidies, the more there will be political support for reform. These constituencies - with an interest in the public good rather than sectoral benefit - can engage in information campaigns about the perversity of certain subsidies.

Norman Myers & Jennifer Kent, Perverse Subsidies, 1998

For another example, we can ask why companies so hate their employees ? They do you know, otherwise why would they spend so much time trying to 'get rid' of them all (in contrast to their 'people matter' hypocrisy) ? A more insidious disincentive to staff 'participation' could hardly be imagined. But it is 'suicidal' for any 'intelligent' organization to do this, when you realise that all the innovative and adaptive ability within the company lies precisely in those elements being disposed of, and even if any creative people remain they will not act to improve a company that shows them such abject disloyalty ! Again we should not reward bosses that behave in such damaging ways (to company, individuals, to society and environment, i.e. all levels !). But how can we control these negative behaviours ? Four mechanisms have been suggested, 'internal restraint', 'mutual monitoring', 'legal control' and 'market equilibria'.

"A complex society like ours, characterized by a full division of labor, seems to require the presence of at least the four social control mechanisms outlined above. Each of these mechanisms functions at a different level of interaction. Internal restraint functions at the level of the single individual. Mutual monitoring functions between pairs (one to one) or small groups. Legal control is directed from an individual or small group to the whole (one to many) - and, if the controlling body is democratically elected, the other way around (many to one). Market equilibria emerge from interactions between all members of the group (many to many). Of these, only legal control can (arguably) be fitted into the classical, hierarchical control paradigm... In spite of their sometimes wide-ranging and subtle effects it is obvious that the mixture of control mechanisms we see in our present society is far from optimal. What is most obviously lacking is any form of integration between these mechanisms. It is easy to imagine situations where the restrictions imposed by the different mechanisms are mutually inconsistent, religious tradition demanding one type of behavior, law another one, the market a third one, and peer pressure a fourth one."

Francis Heylighen & Donald T. Campbell, Selection of Organization at the Social Level , 1995, 4.5

Mutual monitoring requires 'the open society', e.g. 'freedom of information' acts. We can see the extent of the negativities within our societies today in the effects of such acts on political and bureaucratic behaviours, e.g. the introduction of such a act into the U.K. (just recently) led to a absolute panic as bureaucrats and their political masters shredded in bulk every document that could possibly incriminate them - millions of them ! But note the perverse effect of such a law - instead of making the 'secret' information available, it ensured that it was all buried for ever... Such knock-on effects are typical of the misuse of badly designed 'adaptive' systems (and they certainly 'adapted' effectively to the 'threat' here).

The problem with all such laws is that they cannot control behaviours, only make certain acts subject to 'punishment' later (always negative-sum, of course, for someone !). In fact they allow people to hide in the 'cracks' and then exploit the endless loopholes (that 'law' didn't explicitly prohibit destruction of information !). Because you cannot possibly regulate any infinite system, these 'laws' effectively end-up perversely rewarding socially destructive parasites (like 'politician' lawyers of course - who surprise, surprise make those laws !). And a 'punishment' that takes years to arrive and costs society far, far, more than the crime ever did is really quite absurd. This is a total disincentive to justice and an incentive to greed ! Instant justice is the only reasonable way, and here a variant of the game theory idea of 'tit-for-tat' illustrates the concept. Players (i.e. individuals) ostracise people that cheat and only associate with those that are cooperative, and they do so instantly. This is of course what so-called 'primitive' societies understand intuitively... This relates to the first 'mechanism' mentioned, that of 'internal restraint'. If we can 'persuade' people that these sorts of immediate feedback will occur then they may be dissuaded from even attempting them, and to look for better options, to society's benefit !

But if 'rules' (in whatever form) are really disincentives - then just tear up the book ! Why do we not do this ? Why do we always add more 'rules', 'constraints', 'laws', 'control' to every one of our systems ? Why do we never 'choose' to remove them ? Again we have a mismatch between what 'adaptive' self-organizational concepts tell us to do and what fearful 'control' modes encourage us to avoid. This brings us to the last mechanism, the so-called market equilibria, which in our terms is just a far-from-equilibrium metastable state. Here self-organization comes to the fore, but we must recognise that 'disincentives' appear as soon as any 'actor' can manipulate the 'market', i.e. can distort the whole process - as in today's corporate monopolies...

Simulation - what happens next ?

"I have given a definition for 'emergence', based upon a notion of predictive complexity. Emergence implies computational irreducibility - which can be seen to be the finite analogue of formal undecidability. Hence, the strange lack of understanding in emergent systems has its roots in complexity theory, from which it would seem that emergence itself is an undecidable proposition.

I conclude that not only do emergent systems exist, but also that they match very closely our working definition of the term. Simulation is an optimal means of determining the outcome of such systems, and is thus an important means of investigation."

Vince Darley, Emergent Phenomena and Complexity , 1994, Conclusion

Given that we have identified the incentives and disincentives, what we can now do is to create multi-agent computer models incorporating these beliefs or biases. The models can then be run to simulate the behaviour of the people in the real-world operating with such belief structures. What we can then see is the likely dynamics of such a scenario. We will have to perform many runs, with different random starting positions, to see all the possible results of course (given that such complex systems do not approach a single equilibrium, but may arrive at any one of a number of alternative attractors. This simulation procedure allows us to easily change the incentives and disincentives, to determine which are useful and which destructive, and perhaps to refine our actual social structures to better achieve our long term goals. This procedure replaces the mathematical analysis associated with more traditional systems models with something much closer to actuality.

"Mr. Meyer [a partner at Ernst & Young] concurs. "M.R.P. [manufacturing resource planning] and strategic planning are a disaster," he says. "This is not what people really do." Simulations from complexity theory have the great merit of feeling like real organizations with real people in them, he says. That's one clue that they are on the right track. After all, the universe is full of markets, ecosystems, solar systems, brains and other complex wholes that seem somehow more than the sum of their parts - and rather than being designed, they assembled themselves."

David Berreby, Between Chaos and Order: What Complexity Theory Can Teach Business, 1996, Pg. 2

By such techniques it is possible to identify critical points, areas where the most leverage exists, such that a small change can have large results (positive or negative !) and to note which variables are irrelevant to the overall result (such that controlling them is wasted effort). Thus we can target attention onto just those issues that actually matter, often not the ones that traditional systems thinking assumes are important - since self-organization (innovation driven) automatically compensates for and cancels out any interventions using such 'obvious' controls, social systems have a high resistance to 'policy changes'.

"The first important difference between the early concept of self-organization in cybernetics and the more elaborate later models is that the latter include the creation of new structures and new modes of behaviour in the self-organizing process."

Fritjof Capra, The Web of Life, 1997, Pg. 85

Distributed Control - or engineered bottlenecks ?

"While working with partial truths, system thinkers see the world made of parts (systems, sub-systems, components, elements, particles) that can be separated and analysed independently from one another. The underlying assumption is that the whole is more than the parts, where 'more' usually relates to 'more complicated' or 'more difficult to study and understand'; consequently, the parts are simpler and therefore easier for studying and understanding. For artificial (human-made) systems, such an assumption can be accepted. In nature and society, this assumption fails.

With complexity thinking, one can easily see the reason why system thinkers are so preoccupied with the future. The swirling dynamics of life hardly tolerate pre-defined goals and objectives, pre-set requirements and criteria, long-term predictions, plans, blueprints and scenarios - most of them turn to be meaningless or illusory when the future becomes present; so, the only way to meaningfully discuss their 'realness' is by keeping them attached to a 'tomorrow', which, unfortunately, never comes."

Vladimir Dimitrov, Complexity, Chaos and Creativity: A Journey beyond System Thinking , 1999

In many of today's organizations it is common for supply, manufacture and sales to become completely decoupled from the customers and also from other aspects of the business - which being 'outsourced' can never be considered as a 'whole' in traditional systems fashion, since they are then independent and autonomous entities. Each aspect of the business (and each product line) is concentrated and optimized (for efficiency and cost), as isolated systems, independently of all the others - which effectively means that nothing the customer says or does has any immediate (or even ultimate !) effect on relevant aspects of the operation - it is resistant to any small (or large !) perturbations, and the separate parts will even ignore negativities that their 'optimization' imposes on the other aspects of the business (e.g. the imposed extra transport delays, inflexibility and costs resulting from 'centralization').

"It is important to realize why the ROLM account representative-TM [telecomms manager] relationship became generative, and those between, say, ATT salesmen and the TMs were not... The problem was not that ROLM listened to its customers and ATT did not: it was that the customers had nothing to say to ATT that could change how either ATT or the customers thought or acted."

David Lane & Robert Maxfield, Foresight, Complexity and Strategy, 1995

Complexity thinking stresses local interactions, so suggests that the forms of organization that most over-large corporate companies adopt are very poor, only giving the outward appearance of efficiency (based only upon departmental 'bottom lines') whilst being totally non-adaptive and wasteful overall, with massive negative side-effects. In this sense, a return to a form of decentralized organization, where all operations are small (quickly changed) and localized (responsive to local preferences) is suggested - since self-optimization works better at smaller scales (rather than today's globally scattered organizations, which are the opposite to decentralization in reality !).

"Organizations and social systems operating within a chaotic environment are being continually challenged to maintain their purpose and structure. The paradox, however, is that larger and more established structures are usually less able to change. The inertia resulting from their size (e.g., number of people) makes it difficult to introduce planned organizational or social change. Large institutions generally encompass well-established patterns. The stability of these structures makes them less able to adapt to environmental and internal system changes. All other things being equal, small structures can adapt to change more efficiently than larger ones."

David S. Walonick, General Systems Theory , 1993

This form of organization is essentially bottom-up, not the corporate (and political) 'idolatry of giantism' as Fritz Schumacher called it, but instead conforms to his 'Small-Is-Beautiful' idea, also promoted by RMI. It seems obvious (given 'requisite variety' ideas), that if we are to manage complexity, then the smaller the chunks become the easier it will be to control them (if we need to) ! In other words, we have global knowledge but local action. It could be possible (as some think) to retain large companies (made up of these many small adaptive chunks), but in every large company today it seems almost impossible for, say, the CEO to resist interfering, especially when something goes 'wrong' - which usually leads to disastrous results, because of their basic ignorance about what it really is that they are interfering in !

Actual Behaviours - smokescreens of deceit

One of the reasons for this is the culture of dishonesty endemic to large groupings of people, who because they don't know each other well, do not develop trust or suffer the consequences of their lying. Politics, Merchandising, Staff Relations and Competitive behaviours all suffer from this incentive to deceive, and this actively prevents effective self-organization - since 'cheaters' can disrupt any resultant emergent order or prevent the cooperation that gives rise to it (intended for mutual advantage !). How can we address this potentially lethal problem, this tendency (especially today) for all information to be manipulated (either 'hyped' or 'concealed') - usually to better feed the profit addiction or similar 'against the whole' motivations ? We have seen already that we must change our incentive and disincentive structures, and thus this will (partly) reduce the incentive to lie. But we can do more, and here we must differentiate between costs and values.

"Let me explain how efficiency and effectiveness can work in an organization. Let's examine a company that is downsizing to become more efficient. Most companies start the downsizing initiative by asking people to take early retirement and voluntary severance. This way of downsizing is quite efficient. It's easy and doesn't use a lot of resources. People choose either to leave or to stay. It may be efficient, but is it effective ? If the company loses some of its most talented and experienced people, it may have downsized itself out of business. Being efficient is easy, as long as you don't look at the effect of your decisions and actions on the company. Being both efficient and effective requires a very different way of thinking, a way of thinking that considers the parts, how they are connected to each other, and the whole that they produce. This is called systems thinking, and it's a way of thinking that is foreign to most of us"

Sonia Herasymowych, The New Sciences and the Learning Organization, 1999, Part 1

Complexity thinking recognises many more values than the traditional 'bottom line'. By incorporating some of these into our 'reward' structures we can drive behaviours in much more positive directions. We reward people today based upon 'static' position in an hierarchy (which incentivises many negative behaviours). Instead we could reward them, say, according to the respect of their colleagues, their recognised expertise as part of a team, and do so not in 'money' terms but according to their own values, i.e. what is important to them (which may be time off, support of the local environment, school or whatever). In this way we motivate them not only to do a good job in the eyes of their friends, not only to be truthful (so as not to lose respect), but also because it helps their own quality of life. In this way the self-organizing nature of bottom-up interactions will encourage mutual help, and the knock-on effect of this will be a much more effective (and, quite often, profitable !) company. People will simply stop doing what is useless to others, i.e. many of the 'imposed' (and designed), but actually wasteful, company behaviours !

Get On With It - sorting out these messed up systems

"Places to Intervene in a System:
9. Numbers (subsidies, taxes, standards).
8. Material stocks and flows.
7. Regulating negative feedback loops.
6. Driving positive feedback loops.
5. Information flows.
4. The rules of the system (incentives, punishment, constraints).
3. The power of self-organization.
2. The goals of the system.
1. The mindset or paradigm out of which the goals, rules, feedback structure arise.

But complex systems are, well, complex. It's dangerous to generalize about them. What you are about to read is not a recipe for finding leverage points. Rather it's an invitation to think more broadly about system change."

Donella H. Meadows, Places to Intervene in a System , 1997

This list is in reverse order, i.e. the least effective is number 9., the most valuable is number 1. This may seem surprising - especially given the amount of effort managers (and politicians) devote to fixating about 'numbers', but systems are very counterintuitive, most interventions here go in precisely the wrong direction - making matters worst ! This list runs in fact from infrastructure to information, from things to thoughts, and fits in well with our focus here on targeting the most effective actions, i.e. those related to our beliefs or paradigms. But which beliefs should we adopt if we wish to change current systems ? Firstly we should learn from the past, in which we see that any belief is always limited, so the more of them we have to choose from the better. Thus a belief in diversity is valuable. And look, that is just what nature 'believes' too ! The diversity in nature allows new forms to arise, so diversity in people should do the same for organizations, and hey presto, this is just what we originally wanted - creativity and adaptability !

"There are four key qualities that make a crowd smart. It needs to be diverse, so that people are bringing different pieces of information to the table. It needs to be decentralized, so that no one at the top is dictating the crowd's answer. It needs a way of summarizing people's opinions into one collective verdict. And the people in the crowd need to be independent, so that they pay attention mostly to their own information, and not worrying about what everyone around them thinks.

Essentially, any time most of the people in a group are biased in the same direction, it's probably not going to make good decisions. So when diverse opinions are either frozen out or squelched when they're voiced, groups tend to be dumb. And when people start paying too much attention to what others in the group think, that usually spells disaster, too... The paradox of the wisdom of crowds is that the best group decisions come from lots of independent individual decisions."

James Surowiecki, The Wisdom of Crowds , Q & A, 2004

What is Creativity - and why should we value it ?

"These are the pragmatics of innovation: Until a previous possibility has come into existence, an adjacent possibility couldn't exist. The questions that organizations must ask is, What are the adjacent possibilities within an industry that allow for the creation of something new ? In highly competitive markets this is vital information, because once an adjacent possibility becomes possible, it will occur. Someone will discover it. There's no way to predict when, but it will happen."

Howard Sherman & Ron Schultz, Open Boundaries, 1998, A New Way of Thinking, Pg. 23

Well this is one reason for wanting it - that competitive edge again. But humans do not create only from such a motive, creativity is inherently rewarding, it gives us a sense of achievement, of self-fulfilment. But what this quote tells us is that each 'discovery', each 'innovation', builds on all the rest that surround us, so the richer our environment (including our social network) becomes then the quicker we can innovate. Whereas it may well take a 'genius' to think totally 'outside-the-box', small forms of creativity are available to all of us - all we need to do is to dare to try something 'new' in context, to vary what we do in different ways until we get better results ! This is the basis of the complexity technique of the genetic algorithm which emulates nature by using mutation and evolutionary techniques to automatically explore 'adjacent possibilities', in order to gradually locate better solutions in a totally unbiased way.

"Creativity is thus also contextualized: we are not either "all" creative or not at all. We are sometimes creative, again depending on time and place, contexts and choices, constraints and possibilities. Unlike earlier formulations, which spoke of the "creative person" as if it were an individual who is constantly creative in all areas of life, we recognize now that we are dealing with a less "universal" phenomenon, even as we recognize that the capacity for creative thought in all areas of life - the cultivation of what Morin calls "complex thought" - is becoming increasingly necessary."

Ronald E. Purser and Alfonso Montuori, In Search of Creativity: Beyond Individualism and Collectivism , 1999

Creativity is using the relations and structures of our current world to bring into being 'novelty'. It adds connectivity, structure, complexity to the world. It provides new choices, new options, new directions - again all provide added-value to us all. As well as the adjacent possibilities, those small steps-for-mankind, that allow us to hill-climb the fitness peak (and we can get from absolutely anywhere to anywhere else in such a fashion !), we see in nature also sexual recombination, which takes two distinct genomes and juggles them. This relates, in our social world, to merging different ideas, perhaps from different fields or cultures. This cross-disciplinary fertilisation is central to system thinking in all its forms, but especially when we realise that many difficult problems can be solved if we employ this form of creativity - using knowledge from one field to apply analogously to another. The common language of systems and complexity thinking helps tremendously here.

Conclusion - who is our world for ?

"This humanistic concern of general systems theory, as this writer understands it, marks a difference to mechanistically oriented system theorists speaking solely in terms of mathematics, feedback, and technology and so giving rise to the fear that systems theory is indeed the ultimate step towards the mechanization and devaluation of man, and towards technocratic society. While understanding and emphasizing the role of mathematics and of pure and applied science, this writer does not see that the humanistic aspects can be evaded unless general systems theory is limited to a restricted and fractional version."

Ludwig von Bertalanffy, The History and Status of General Systems Theory , 1972, Pg. 424

We have seen how, despite its non-reductionist perspectives, traditional systems thinking (as von Bertalanffy feared), often still adopts the top-down mode common to a science viewed as 'control of nature'. This mode then privileges some aspects of the world (e.g. those doing the 'controlling') over the rest. Whilst this can work very well for some systems, it does not recognise the diversity of values and emergence associated with human self-organizing behaviours. Complexity thought, by taking a bottom-up approach, treats all aspects as equally valid and just sees what emerges dynamically. This then potentially frees people from 'rules' and enables the adaptive creativity we need today to break out from our self-destructive mindset.

"It is the full attribution of autonomy and responsibility for one’s decisions and actions, which makes the application of complexity principles possible within an organisation. This of course changes the nature of the business process and the organisational form."

Eve Mitleton-Kelly, Organisations as Co-evolving Complex Adaptive Systems , 1997

Crucial to doing this is to recognise the distortions we have imposed upon our incentive and disincentive structures, the way in which we constrain people from attempting improvements and actually reward non-adaptive behaviours ! By recognising that 'requisite variety' rests in our planet as a whole and cannot be subsumed into any subset of it, we allow a nonlinear multiple-strategies dynamic, based upon multiple objectives, to replace the linear simplified strategy (often 'bottom-line' oriented) common to most of today's organizations. This mimics the 'niching' seen in ecological systems, but brings these niches into every system - they are all then free to adapt and to coevolve in positive ways. And when we look around our world today, this is in fact just what we see happening !

"The information society with all its aspects will be modelled as a highly complex self-referential social and technical system, which never can be totally understood, not in the whole, nor as parts. The future of our society, economy and technology therefore will not be predictable, plannable nor totally controllable. Since due to non-linearity all slightest actions can influence the whole and vice versa, no reliable strategies could ever be found. From this point of view, not the information society nor any part of it could be strategically built.

Based on self-referential and non-linear systems theory, new ways of dealing with this complexity are possible. Normally, we reduce complexity and then find solutions. More and more, these solutions have nothing in common with the given problems. So nowadays we solve problems that we do not have and we have problems that we do not solve."

Henk Goorhuis, The Self-Organizing Information Society , 1995

We live today in a world beset by these unsolved problems, and 'managers' that cannot manage them, plus the many extra problems self-created by their misdirected 'solutions'. We have looked at some of the bottom-up methods of dealing with such irreducible complexity - by decentralizing decision making and allowing agents to self-organize, as happens on the Internet. The chief inhibitor preventing us doing this more widely, in organizations of all sorts, is mental. It is the long-established mindset of 'control', of 'bosses', of 'superiority' that in all of today's societies reward (incentivise) bullying and suppress (disincentivise) individual creativity. Despite much evidence that 'leaders' are no better than those that they lead (at achieving anything of real value), this delusion seems to remain almost unshakeable.

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