Re : Organizations versus natural systems
Lon and Simon and others:
Thankyou for your thoughtful remarks. I am still enquiring if anyone has
any statistics on organizational lifespan ? Like others who responded to
me you might be interested in why I am enquiring. The following article
will explain it. It might be difficult for those unfamiliar with the New
Sciences & Complex Adaptive Systems. I put it also on the Complex-M list.
ORGANIZATIONS VERSUS NATURAL SYSTEMS
THE COMMON CHARACTERISTICS OF ALL CAS
We have learned much from CAS (Complex Adaptive Systems) theory about
organizations. We have taken the characteristics common to all CAS,
natural CAS, CAS consisting of insects and bees and human CAS - and
applied them to organizations. Out of this has come the rich mine of
knowledge we are developing about organizations as complex adaptive
systems. The ideas we have made use of may be summarized thus:
"Each of these systems consists of a network of component systems
constantly mutually affecting each other. These systems consists of many
agents acting together. They may be nerve cells in the brain or
individuals in an economy. Each component continually affects and is
affected by the others.
These mutually interacting agents are not centrally controlled; patterns
arise from their interaction. There is no component that controls all
other components. The coherent behavior of the system as a whole develops
from the interactions of competition and cooperation between the
components.
Each level serves as building blocks for the next level. Just as a group
of cells will create a tissue, a group of workers will form a work team,
and so on at all levels and in all kinds of complex adaptive systems.
A basic mechanism of adaptation of these systems is that they are
constantly reorganizing themselves. They are all the time reorganizing
themselves into new patterns. Nations will constantly readjust their
relations with other nations.
They anticipate the future. The anticipation of insecurity in an area
may deter a person from taking a vacation there. All living creatures have
such predictions encoded in their genes and in their brains. The
predictions are based on changing internal models. Internal models of what
the world is like serve as a basis for prediction. These models are
constantly being changed and modified as a result of experience.
New possibilities and opportunities are always being created by the
system thus developing constant novelty. Each system is able to fill a
variety of niches and there is place for all kinds of systems in this
world. When niches are filled they create openings for other niches.
Everything is in constant changing process. A final optimal state is never
reached because this is always in relation to other systems that are in a
permanent flux. "(From Coping With Uncertainty- Uri Merry)
THE DIFFERENCE BETWEEN ORGANIZATIONS AND NATURAL CAS
Organizations as CAS (Complex Adaptive Systems) have much in common with
other human CAS such as communities. However, organizations as CAS have
several characteristics which distinguish them from other classes of
natural CAS such as physical or biological systems. Some of the
characteristics we might find in
organizations as CAS are specific to organizations only and some are
common with other human CAS (communities for example) versus natural CAS.
I have a hunch that clarifying the differences between organizations and
natural CAS might give us new insights and might have interesting
implications for us who work with and consult with organizations.
This is a tentative attempt to begin clarifying my thinking on this
subject. I would appreciate if others would join me in this effort which
needs discussion, clarification and exchange of ideas. You are invited to
join in this effort.
Here is a first very tentative and uncertain attempt to try to summarize
the differences between organizations and natural CAS, and suggest their
implications.
1 . Organizations like other human CAS have greater cognitive ability
than natural CAS.
2 . In organizations there is a higher level of communication &
cooperation between variable agents.
3 . In organizations, human beings individually and socially are the
adaptive element.
4 . The agents (human beings) can belong to multiple CAS, whereas in
natural CAS agents cannot.
5 . Organizations are coordinated by socially constructed rules; natural
systems by natural rules.
6 . The environment of organizations is generally man made; natural CAS
adapt to a natural environment.
7 . Organizations as CAS co-evolve with artifacts & technology; natural
systems co-evolve with nature.
8 . Organizations have to export value to continue functioning; natural
systems do not.
THE DIFFERENCES BETWEEN ORGANIZATIONS & NATURAL CAS
COGNITIVE ABILITY
What sets out organizations and other human systems from natural systems
is their qualitatively superior cognitive ability, possibly based on the
human capability to communicate in language. Animals have a limited
communicative ability in the form of signs, but they do not have language.
The ability to communicate in language and learn from each other probably
gave humans a cognitive advantage that no natural CAS comes close to.
This cognitive ability is the basis of an organization^Rs adaptive ability.
It allows organizations to learn and to choose between a large menu of
actions when adapting themselves to changing environmental conditions.
Robert Maxfield writes: "In non human biological CASs, the source of agent
variability is primarily genetic with inheritance; in human CASs the
primary source of variability in behavior is the immeasurably large
cognitive ability of the human brain." Organizations can choose different
and innovative strategies because they are made up of human beings who
have the cognitive, communicative, learning and cooperative abilities that
allow them to create these strategies and put them into effect. "Humans
are not bacteria with a simple repertoire of actions; they are broadly
cognitive with multiple fitness objectives to satisfy simultaneously".
(The Santa Fe Center for Emergent Action, henceforth SFEA).
MUCH COOPERATION BEATEN VARIABLE INDIVIDUALS
There is a very high degree of cooperation between human individuals in
organizations and in all kinds of social groups. Language gives people a
great advantage in learning and working together for common aims. This
high level of cooperative ability between people is the basic element
which allows organizations to function. And organizations are one of the
major elements in man^Rs adaptive ability.
There are other living species in which individuals cooperate together in
organizations to accomplish joint tasks that serve their adaptive
ability. Ants cooperate thus to create their ant nest and its stores of
food. However their is a major difference between human organizations and
the organizational structures of social insects.
With ants, bees and other social insects cooperation is possible by
suppressing individuality. In humans diversity and individuality enrich
the joint efforts. Diverse humans in different roles join together in
organizations in ways that enhance their individual ability to adapt. By
maintaining their individual creativity and diverse viewpoints and
cooperating synergistically together they are able to develop emergent
innovative forms of artifacts, technology and knowledge that better serve
human needs and purposes..
PEOPLE AS THE ADAPTIVE ELEMENT
If it is human cognitive ability which gives organizational CAS their
unusual adaptive ability, then in fact people are the adaptive element in
organizations. Their cognitive ability, communication, learning
relationships and cooperative action are what allows the organization to
adapt sustainably. As individuals and as teams they are the "agents" of
the organizational CAS. Their self-organization in different patterns and
structures is the blood flow of the emergence of new organizational
behaviors and adaptive capacities.
"... people are the key asset of any organization. Why? Because people are
the adaptive element of organizations. Learning and innovation come only
from human cognition. Perhaps someday computers will exhibit true
artificial intelligence, but that is a long time away, if ever. Humans are
great at pattern recognition, great in making sense of "messy" situations,
great at learning and adapting. The critical management task is to enable
employees to most effectively use these capabilities to learn and adapt
for the benefit of the corporation. High-tech companies have always been
the leaders in attitudes, cultures, and policies to keep their employees
motivated, happy, and productive." (Maxfield)
HUMANS BELONG TO DIFFERENT CAS
Humans are not like Russian dolls belonging to one level of nested
hierarchy. We have more and parallel levels of organization. A person is
nested in a family, clan, etc. On the economic side he is in a team, a
department, a company, a concern, an industry, a regional economy, a
national economy, the global economy; on the governing side we have
neighborhood, city, state, nation. So there are multiple levels of nested
complex adaptive systems to which people belong individually and
collectively.
Each person is usually a member of several other higher level
entities ^W family, employer, club, religion, city and nation. The
individual plays multiple roles in different CAS. "So self-organization is
not
strictly nested; complex webs of interconnections between human CAS exist
at all levels." (Maxfield)
This multilevel form of organization together with multi-membership of
individuals in different organizations increases the complexity of human
life by intertwining the different spheres of living. Events happening in
organizational work life effect family circumstances, children^Rs
education and social life. And vice versa family problems effect
organizational work functioning. No area of human functioning is shielded
from the effects of events and changes in other areas.
On the one hand this is a source of innovation as people bring ideas from
one kind of CAS to another kind. We know that many innovations are brought
into organizations by "marginal" people at the boundaries of
organizations. However this mult-belonging also increases the difficulty
of dealing with
basic human problems. They are complex multifactored, multi-caused,
intertwining complexes. This for example, explains the tendency of
Systemic Family Therapy to bring his family into the therapy when helping
a client. This is also why we cannot ignore environmental, economic,
technical and cultural changes when helping an organization in trouble.
SOCIALLY CONSTRUCTED RULES
The rules that govern the behavior and interactions of natural CAS are
natural laws and inherited traits. In organizations behavior and
interactions are not governed by natural laws and inherited traits. They
are governed by man made rules. "... organizations are social
constructions as opposed to natural constructions. That is, the entity
types are creations of our collective imagination to which we attach
names, such as firm, industry, and economy. And the rules that determine
the interactions between these entities are also socially constructed and
are not fixed laws of nature." (Maxfield)
The fact that behavior and relationships in organizations are determined
by man made rules effects how amenable they are to change. Inherited
traits take many, many generations to change, natural laws take eons.
While rules can be changed by human decisions. This gives organizations
their adaptive capability. But this can also be a source of trouble as:
"Rules and culture are more complex, and because they are embedded in
practice, they are more resistant to change than in a colony of bacteria.
There is consequently more inhibition within established collections of
agents (say, a political party) about new solutions, but great opportunity
for new assemblages of agents to find and occupy and expand emerging
niches... Yet the rules created by man are more amenable to change than
natural laws and inherited traits."( SFEA)
A MAN MADE ENVIRONMENT
The environment that organizations need to adapt to and co-evolve with is
more and more a man made environment and not a natural one. Throughout the
centuries, the weather, the change of seasons, the natural habitat and
such like play an increasingly diminishing role in affecting an
organizations fortunes, its adaptability and sustainability.
Organizations, in our times, are surrounded by other organizations and
other man made systems and to them they need to adapt.
The environment of complex adaptive natural systems is generally nature
or other natural systems. When they come into contact with human CAS,their
technology or artifacts, unless domesticated, generally they cannot adapt
to the new circumstances. Like the rain forests and much of the wild life
still remaining they become endangered species.
In our times, the environment of organizations is generally organizations
or other man made complex adaptive systems, such as the economy and the
state, technology, human made artifacts and such like. The common
denominator is that they are created by man. This has far reaching
implications for the evolution, adaptability and sustainability of
organizations. Their fitness depends a great deal on the man made
landscapes they need to traverse and climb.
CO-EVOLUTION WITH TECHNOLOGY
The synergy of cognitive ability and cooperation of diverse and different
agents - results in man^Rs amazing capabilities in creating artifacts,
technology and knowledge that serve his need to adapt successfully to his
changing environment.
However, the technologies and artifacts that humans create have an
evolutionary development of their own. A new technology breeds new
materials A new material breeds new artifacts. New artifacts create new
consumer demands. And so they interact and co-evolve. Human agents
co-evolve with the technologies and artifacts they create. People are
dependent on technology both as users and as producers.
Cars create roads and roads create gas stations and gas stations create
drive-ins. And drive-ins affect our life styles. The behavior of a
particular human agent depends very much on the artifacts at its disposal.
Iran with or without a bomb is a different story. The evolutionary
development of technology seems to have a life of its own, not always
serving the needs of organizational sustainability. The rate of change of
technology seems often to be not in sync with the adaptive capabilities of
human organization.
SFEA writes: "Organizations may have strongly imposed structures and
rules, but because of their co-evolving close coupling to markets,
changing artifacts and imploding technology they are subject to radical
change; they are inherently unstable... " while "Businesses: They operate
in an increasingly volatile environment; they have much higher mortality
than social organizations. They contend with "unnatural" time
scales--mismatches of internal and external paces."
As Kauffman has pointed out, technology grows at a combinatorial rate.
Part of this growth, such as growing computer capability serves people in
keeping pace with other technological growth. However the impression is
that at the end of this century we are having increasing difficulty as
individuals and as organizations to adaptively keep pace with the rate of
technological growth and its after waves in various other areas of our
life. We are being Future Shocked. As CAS, individuals and organizations
are having difficulty changing themselves at a rate that allows them to
co-evolve with technology which is changing combinatorially
ORGANIZATIONS HAVE TO EXPORT VALUE
Organizations versus natural systems are purposive complex adaptive
systems (PCAS). To continue functioning they must deliver value. They
deliver some kind of value both to member/participants and to their
environment. The value they deliver to participants ensures their
remaining in the organization and their functioning within it. The value
they deliver to the environment ensures the organization receives the
resources from the outside it needs to continue functioning.
I am not sure about this, but my impression is that natural systems are
not PCAS. The immune system does not deliver value to its parts. However,
in some sense, the immune system does deliver value to the body. An
anthill does deliver value to its agent ants that gain from cooperating,
but does not need to deliver any perceivable value to its environment in
exchange for resources to continue functioning.
"Both cybernetic and self-organizing in character, purposeful complex
adaptive systems (PCAS) choose and deliver values to participants as
operational goals through decision making. Task-oriented groups,
organizations and economies are PCAS. Processes exhibited by PCAS
constitute policy making, negotiation, group decision, and multiagent
problem solving with human and/or artificial agents. The processes involve
both cooperation and conflict." " Businesses are organizations that
deliver measurable value." (SFEA)
THE IMPLICATIONS OF THESE FACTORS
How do these differences between organizations and natural CAS interact
with one another and effect organizations.
GREATER EVOLUTIONARY ABILITY
The first five factors may be the key to the increasingly greater
evolutionary ability of organizations as CAS versus natural CAS. In other
words, throughout time and ages organizations are better able to evolve
themselves so as to maintain themselves, change and continue functioning
in their changing environments, and in different eras.
Humans have created organizations of some form beginning with primitive
hunting bands and continuing with the multi-national corporations of
today. Natural CAS curtailed by their heredital traits are less
versatile in this respect. When their environment changes drastically
they become extinct and their evolutionary story ends, like that of the
Panda or the tiger.
The greater cognitive ability of organizations allows them to find new
solutions to the adaptive problems they face in their environment. The
higher level of communicative and cooperative ability of the organizations
agents allows them to work together to deal better with changing
circumstances. The creativity of their human adaptive agents, is a key
factor in dealing with novel conditions. and the synergetic variety they
bring to organizations.
The fact that people as agents in the organization can simultaneously
belong to other organizations and other social groupings gives the
organization the differences and novelty it needs in order to cope with a
environmental change and variety. People bring in to their organizations
knowledge, competencies and experience gained in other CAS.
The socially created rules which coordinate organizational functioning and
adaptability are far more versatile, resilient, faster changing and
flexible than the natural laws and heredital traits that serve natural
systems in their evolutionary journey to adapt to changing circumstances
and new eras.
ADAPTIVE DIFFICULTIES
It is possible that the interaction of the three remaining factors
counteract the interactions of the first five factors. While the first
five factors interacting together help us understand the long term
evolvability of organizations versus natural systems, the last three
factors may explain a contradictory trend - the increasing adaptive
difficulties of organizations and especially businesses at the end of the
century.
While natural systems have generally needed to adapt only to the slow
changing environment of nature, organizations need to acclimatize
themselves mainly to an increasingly fast changing, turbulent,
complexifying, future shocked, uncertain man made environment.
In that man made environment organizations have to adapt to and co-evolve
with a world of technology developing, spreading and effecting everything
at an exponential rate and making it difficult for organizations to keep
up with the changes; a growing world market that has become a global
village with increasing interconnections reverberating local happenings
around the world, and fierce world wide competition.
The explosive growth of the communication, transport and networked
computer technologies have accelerated the growth rate of all other
technologies and shortened the replacement rate of new organizational
products and models. The hastening rate of changing eras from the
industrial to the knowledge era and now into the networked era are
necessitating organizational transformations at a faster rate.
These accelerating changes in the man made environment are making
organizational adaptation an ever difficult obstacle course. Organizations
that need to export value to their environment to be able to continue
functioning are finding it increasingly difficult to compete in the export
of such values.
Kevin Kelly describes this state as "churn".
" As networks have permeated our world, the economy has come to resemble
an ecology of organisms, interlinked and coevolving, constantly in flux,
deeply tangled, ever expanding at its edges. As we know from recent
ecological studies, no balance exists in nature; rather, as evolution
proceeds, there is perpetual disruption as new species displace old, as
natural biomes shift in their makeup, and as organisms and environments
transform each other. So it is with the network perspective: companies
come and go quickly, careers are patchworks of vocations, industries are
indefinite groupings of fluctuating firms.
Change is no stranger to the industrial economy or the embryonic
information economy; Alvin Toffler coined the term future shock in 1970 as
the sane response of humans to accelerating change. But the Network
Economy has moved from change to churn.
Change, even in its toxic form, is rapid difference. Churn, on the
other hand, is more like the Hindu god Shiva, a creative force of
destruction and genesis. Churn topples the incumbent and creates a
platform ideal for more innovation and birth. It is "compounded rebirth."
And this genesis hovers on the edge of chaos...."
SHORTENING LIFE SPAN
This churn of the knowledge/network era seems to be shortening the life of
organizations and especially businesses. They are having increasing
difficulties to adapt and are falling by the wayside.
"The dark side of churn in the Network Economy is that the new economy
builds on the constant extinction of individual companies as they're
outpaced or morphed into yet newer companies in new fields. Industries
and occupations also experience this churn. " (Kelly)
And the ones that fall the most are the young and inexperienced and
without redundant resources - new ventures, new organizations. They fall
before they have accumulated sufficient resources to take off and make it.
In organizations, as in other CAS, the higher the level of the CAS the
relatively slower it changes. As a general rule, in all CAS, upper levels
change slower than lower levels, contained by them. So economies change
slower than organizations. Organizations change slower than teams. This
allows a higher level CAS to maintain some relative measure of stability
while its agents change. The adaptive changes taking place in the agents
and their relationships is what allows the higher system to adapt to its
changing environment.
Notwithstanding this ability to change, there is growing support for the
observation that while the life line of natural systems is not growing
shorter, the life of organizations is shortening. A research in Texas
shows that since 1970 the average life span of an organization has
decreased by half. The average life span of businesses in Japan and most
of Europe is now about 12 years. There is no similar decrease in the life
span of natural systems, and in modern societies, human beings as
individuals are living longer and longer.
In the past 22 years the longevity of Texas businesses has dropped by
half since 1970. (University of Texas study). In Canada, in the last few
years there is a doubling of bankruptcies. One third of the Fortune 500
companies of 1970 disappeared by 1983. In the US, small companies
disintegrate 50% within 4 years, 70% within 8 years, 98% within 11 years.
Of all new companies 50% breakdown in their first five years.
These figure are not conclusive, but they do suggest that organizational
life span, in our times, is more like marriage life span and less like
individual life span. About 50% of marriages break up in our times and
this is far more than at the beginning of the century. In contrast
individual life span in modern countries has lengthened throughout this
century and is now around about 75-80.
The above statistics also suggest the possibility that we are getting an
increasingly higher infant mortality rate in organizations. However,
having no comparable data on this from earlier times, this is still
tentative.
ORGANIZATIONAL SUSTAINABILITY
All of the above point to three hypotheses:
1 . Conditions at the end of the century in the Knowledge/Network Era
are creating increasing difficulty for organizations, and especially
businesses, and this is leading to two trends:
2 . An increasingly shorter life span for organizations and especially
businesses
3 . A increase in the rate of organizational "infant mortality"
These hypotheses if confirmed by further study bring to our attention the
increasing importance to organizations of their ability to be sustainable.
At the end of this century sustainability becomes an organization^Rs major
concern.
I feel that "sustainability" captures the sense of what is needed now in
organizations more than "effective", "adaptive", "excellent", "high
performing", "fit". These all lack the qualities of "sustainability"
that differs along these dimensions: Sustainability expresses an ability
to weather many life cycles. Sustainability has a long time dimension that
is not associated with the other words (60% of the Excellent organizations
were not excellent after 5 years). Sustainability can refer to
adaptiveness with changing eras and under completely different
environmental conditions. This is essential in times of churn and
transformative change and renewal. Adaptiveness expresses one way - the
organization adapting to the environment. Sustainability may be two ways
- also the organization changing its environment. A sustainable society
is one that satisfies its needs without diminishing the prospects of
future generations. This aspect is not included in "fitness" or
"adaptive".
A THEORY OF ORGANIZATIONAL SUSTAINABILITY
If in the Knowledge/Networked Era sustainability becomes a major focus, we
need to try to clarify what are main factors effecting organizational
sustainability in our times. In other writings, I have suggested a theory
of organizational sustainability. It can be summarized thus:
Sustainable organizations continually renew themselves through
self-organization
To be able to continually self-organize themselves organizations must be
learning organizations.
To maintain themselves as learning organizations, organizations need to
function at the edge of chaos.
Functioning at the edge of chaos is better accomplished in an organization
with a fractal networked structure.
Sustainability is enhanced in an organization that has developed a
strategy that allows it to co-evolve effectively with a knowledge/network
era environment.
Each of these factors interacts and enhances the effects of the others.
Uri Merry
Website: http://pw2.netcom.com/~nmerry/Urihome.htm
--umerry@maaganm.co.il (Dr Uri Merry)
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