What sustains your organization?

When we ask people what sustains their organizations they tell us it is an income stream (money) or the people who work there, the shareholders, the leadership or the customers. Some also say it is the process of  transforming some simple lower-value things such as raw materials or steps/actions into more complex products and services. In a way it is all of these things but none of them.

Some of us have begun to study organizations as complex systems so we can help people more successfully navigate accelerating change, uncertainty, complexity and ambiguity.

When we think of organizations this way, we soon discover it's a flow of energy through a system that  sustains the complex order. Simple interactions at a local scale help create the global order. The global order helps organize the local interactions. And if the energy flow declines or disappears - then the system collapses or disperses.

Prigogne and Stengers, whose 1984 book, Order out of Chaos, helped spark a revolution in the way we think about the world, calls these dissipative systems. Think the red spot on Jupiter (click to watch) and hurricanes (typhoons/cyclones).

Hurricanes form near the equator when warm, moist air rises, causing an area of low pressure. Cooler air flows in, which also becomes moist and rises. As the air rises it forms cloud, it starts to spin and becomes more organized. The hurricanes then travel either north or south into cooler water/air or cross over land where they lose their potency, the wind speeds drop and they become tropical depressions. Eventually they just simply "disappear".

Dissipative systems persist out on the edge, in a state of "dynamic stability", remote from thermodynamic equilibrium. Sometimes, these systems also undergo what is called a "phase transition" from one kind of order to another, like the shifts from a solid to a liquid to a gas or even a plasma.

Consider for a moment a social system as a flow of conversation. What might happen if the local rules of interaction shifted from "you must" to "what if we?" rather like the shift from solid to a liquid. How could organizations harness such a change.

In many ways we do. A team can be thought of as a dissipative system. When the players go out on the field their efforts can often be disjointed or poorly coordinated. Or they can somehow magically become better coordinated and develop a new and more powerful structure. When it does, the system taps into a flow of energy. It could be the players collective enthusiasm or new found affinity with each other, or the roar of the crowd. The system becomes sustainable at a higher level of organization and performance, until the crowd goes home!

So here are some questions to think about organizations as dissipative systems:

1. Give some example of dissipative systems, where the flow of energy through the system, sustains it. eg. hurricane.
2. Thinking of your organization as a dissipative system, what flows through your organization to sustain it? And how does this work?
3. What would happen if the flows through your organization was disrupted or stopped?
4. Thinking of your family, organization as a dissipative system, what changes in energy flow through the system might result in a phase-shift to a higher level of order?
5. How could you and your organization capitalize on a phase-transition to a new and higher level of order, closer communication and coordination?

Image of Jupiter Red Spot

A tragedy of the creative knowledge commons?

There's a new kind of tragedy of the commons emerging. But it's not the kind of "commons" we usually think of when too many villagers graze their cows or sheep on the public land.

This one seems to be a superficially good idea, but when you examine the concept closely, you realize it is the value of people's collective brainpower and skill that is being diminished. And our opportunities for earning a living off the resource reduced.

It's called crowd sourced innovation. It is being touted as a fabulous way for big corporations to connect with the creatives in our midst.

It works like this. Big company wants some new ideas/designs for product line. Hundreds of talented people slave away for hours or days, imagining, conceptualizing, designing and contributing (giving away) their ideas and their effort to a corporation in return for what? One of them wins the job. Several win consolation prizes. The rest of us try harder next time and in the meantime starve.

Odds 100-1

Some dole queues are really short. They are the queues where organizations can't find enough people to perform the work. There's 0.25 nurse practitioners queuing up for every job available. Email marketers are also hot, with 0.65 people applying for each job ....which means demand exceeds supply. There's 3.5 million jobs in manufacturing requiring high level maths, science and technology skills which can't be filled. Then there's the Silver Tsunami, the hundreds of thousands of skilled workers such as engineers and nurses who will be retiring in droves over the next decade. Some of them are being hired back as contractors as soon as they retire.

Odds of getting hired: absolute certainty.

Construction worker: It's a tough queue to be in at the moment, with construction in the doldrums. You wait on a dusty street corner with other manual workers for a man in a truck to pull up. The driver offers you a days work.  Here's a reasonable bet (maybe one chance in two or three) you will succeed.

Odds 3-1

Advertising: It's much worse than the handful of advertising agencies that spend a week of their time pitching  for new business. The pitch just cost your firm $4-5 million to be in the game. Which rather limits the field.

Odds: 4-1

RFPs: The Request for Proposals from government agencies for a training, consulting, workforce or economic development job often attracts dozens of potential providers. Each will slave away for several days developing a strategy in advance to win the implementation work.

Odds of 10-1

If this is the way that big corporations and government are going to avoid hiring talented young people and pay fairly for their work, then what can we expect to happen instead?

Perhaps, over time, enough of the creative people will become so tired of being ripped off  they will change the game. Maybe we can expect new highly interconnected forms of creative interactions between talents and customers to emerge. Maybe we will see close, trusted co-committed relationships for the creation of high value added "wise application of knowledge" products and services that make a difference and where the people who design/develop/implement them are really appreciated.

So here's a workshop to help us rethink a strategy for rewarding people in these rapidly change times:

1. Unemployment in the USA is running at 10 per cent. What in your opinion is the value of as many of these people getting back to work as soon as possible?
2. What might be the social/economic consequences of continuing high unemployment (until 2017 according to Government sources)?
3. What would you personally pay, from what you earn, to get someone you know back to work?
4. How should people be remunerated for their work or contribution to the economy or society?
5. How should we remunerate these unpaid workers: housewife or househusband, child minder, community volunteer, crowd sourced worker?
6. How could we resolve the mismatch between the 1 in 5 of people who leave school unable to read write or count properly, and the jobs (vocational, especially in maths, sciences and technology) that are available and remain unfilled?
7. If you were a creative type - designer, inventors, innovator - and you found that crowd sourcing innovation websites were a lottery, how would this change what you do in response to the hit-and-miss aspects?

The bigger picture

The excellent Shift Index Report produced by the Deloitte Center for the Edge, a Silicon Valley based think tank, is useful reading for anyone who wants to better understand why the world is suddenly more complex, uncertain and ambiguous.

There are two significant bumps in the index. One occurs at start of the 21st century. The other bump towards the end of the first decade, which the authors interpret as "the recessions in 2001 and 2008" which "particularly moved the needle, representing much greater pressures on firms, consumers, and talent during those times."

But what if the index is measuring only some of the factors contributing to the accelerating change we are experiencing? What if there are other factors in play which may have a more powerful impact on society than the three indices and 25 metrics the Centre for the Edge used to measure the forces of long-term change in terms of the impact on firms, markets and people. And what might these other factors be?

Here's an explanation of the Shift Index. A copy of the report can be downloaded here.

For markets the index tracks competitive intensity, labor productivity and stock price volatility. For firms it takes into account asset profitability, the return on assets performance gap, the firm topple rate and the shareholder value gap. The aspects of people change are consumer power, brand disloyalty, returns to talent and executive turnover.

The flow index factors in market flows, virtual flows and amplifiers. The virtual flows are shifts in Internet knowledge, wireless activity and internet activity. The physical flow component is made up of the migration of people to creative cities, travel volume and the movement of capital. The flow amplifiers are worker passion and social media activity.

The foundation index looks at changes in technology performance, with a focus on computing, digital storage and bandwidth. It also considers infrastructure penetration in terms of internet users and wireless subscriptions. On the public policy front it factors in economic freedom.

According to our Complexity Theory Model of Socio-technological change each wave of change is about one-fifth shorter than the one before, as many more people become involved in knowledge creation and ever more powerful tools are invented which ratchet up productivity, including knowledge creation productivity.

And according to this model, one of the blips The Edge identified should be the start of the shift from an Information Age world to a Knowledge Age world, and the second blip, the start of the shift from Knowledge Age to Wisdom Age way of performing work, engaging with others, or incorporating new, more powerful theories into products.

The model predicts these changes:

a) tools, technologies and methods automate the work of the previous paradigm and add a higher skill component to earlier periods e.g. currently the work of teachers is being displaced by on-line learning. Internet knowledge repositories and search tools are displacing the work of librarians. Middle-management work is being displaced by group decision support systems, simulators and rich new decision/learning methods from fields outside the world of business.

b) earlier classes of work decline as a percentage of the workforce composition. The latest new class of jobs emerging are "wise-application of knowledge" jobs which may be hard to distinguish from knowledge jobs (but include roles such as certified ethical hacker and global governance director), in the same way that many Knowledge jobs (librarian, teller, teacher) have been hard to separate from Information jobs (clerk, secretary)

b) just before the transition point, the system becomes more volatile, before settling down again to a new pattern of activity, as indicated in this figure from a paper, Beyond the Frontiers of Project Management, by Manfred Saynisch, a thought leader in the field of complex project management.

c) a greater proportion of people become involved in the process of new knowledge creation, which further accelerates the rate at which new technologies, methods etc. are developed and implemented.

d) more stages of socio-technological development remain "in churn", thereby increasing the complexity and volatility of the system.

e) after the fourth bifurcation, the system has many more states of stability (but more critical and hard to tune into). The lines on the logistic curve are dynamically stable states, the shaded areas are chaotic regions.

So here are some questions for any and every organization to consider:

1. What are the big shifts that are taking place in your world, and how are they different to 10, 50, 100 and 200 years ago?
2. In your experience, how is the rate of change changing for you? Gives examples, for example product development cycles are now....x years long compared to y years long in 19XX.
3. Who and how many people in your organization system are involved in the process of knowledge creation, sense making and strategy formulation and how does this compare to 10, 50, 100 and 200 years ago?
4. What kind of change is happening to products and services? How fast are they changing, how many fields/disciplines are products/services dependent upon compared with 10, 20, 100 or 200 years ago. e.g. a motor car mechanic now meeds a knowledge of computers as well as mechanics to be able to perform his/her job.
5. What has happened to relationships? Compare relationships of 10, 50, 100 and 200 years ago and the technologies that influenced them e.g. the letter, the phone, the internet, the jet aircraft.
6. What has happened to infrastructure systems (complexity, connectivity) over the past 10, 50, 100 and 200 years? Think about roads, telecommunications, rail, air, buildings, government, financial transactions).
7. Considering all these trends, what do you think are the factors driving greater complexity, uncertainty and ambiguity?

Man-made tsunamis the new challenge

Back in the days when the world around us changed ever so slowly it was the nasty surprises that nature delivered which caught us off guard.

Although we have built cushions into 21st century living that shield many of us from the most diabolical of what nature has to offer, the hurricanes, tsunamis, earthquakes, droughts, floods, plagues and volcanic eruptions have not gone away, and every so often, a bigger event than we expected wreaks havoc.

As a result of our efforts to smooth out nature's bumps, we have created a new kind of tsunami, that every so often washes through civilization and leaves a trail of destruction. Millions out of work, struggling to feed themselves and their families.

The man-made Tsunamis occur at the transition from one socio-technological age to another, when people and organizations don't realize they need to adapt to the new social, market and economic conditions in order to be successful.

It's the start of a new kind of economy - the Wisdom Economy.

The US Department of Labor (2001) shows that big dislocations occurred during the 20th Century in the 1930s which was the Great Depression where one in three were out of work, and again in the 1980s. We are in the middle of another big upset labelled the GFC or global financial crisis which began in 2008.

These epochs are well known to us. The Industrial Age (1700-1940), the Information Age (1940-1990) and the Knowledge Age (1990-2005). The timing of these dislocations broadly coincides with major shifts in the power of the knowledge we create, how we embed that knowledge in more complex and powerful tools, and the way we organize work.

We know from our history books that farm workers and artisans migrated to the cities in droves when their jobs were automated by machines. They found work in the factories that destroyed their old jobs, but miraculously created many more of the new.

Not only did we survive the extinction of clerical and secretarial work by computers and the automation of knowledge or professional work by expert and control system, but we also managed to upgrade the work, so that unskilled jobs now represent only a small fraction of what's available. It is now becoming more difficult to find adequately trained workers for the new jobs that are being created, especially maths and science trained vocational workers.

The really big dislocations occur just where we would expect, at the intersection between socio-technological paradigms. Each new wave is about one-fifth the length of its' predecessor, a constant which is the reciprocal of the Feigenbaum delta, 4.6669*.

We tend to think these dislocations are caused by some one's financial greed, but there appears to be a more likely culprit. All of us.

Our efforts to create a better life for ourselves and our children create a demand for smarter and better tools, products, services and methods. We then use these tools to create more  knowledge, which we turn into even better products and services to improve our lives. More and better trained people are needed to design and operate these more complex and powerful tools, which speeds up the rate at which we create new knowledge, and the rate at which everything changes.

The waves of change, from Industrial Age onwards, follow this pattern of knowledge use:

* knowledge transmission - experts tell you all you need to know.
* knowledge re-purposing - you get to work out what to do with an expert's knowledge
* knowledge co-creation - you play a role in creating new knowledge so you and your  organization can adapt more quickly to change
* the wise application of knowledge - everyone plays a role in creating new knowledge and applying it wisely by using tools with the wise application of knowledge" or "initial conditions" built in, like "Intel inside".

So paradoxically, our collective desire to reduce the uncertainties in life, creates more uncertainties.

The big question for society is can we continue to adapt to change, or are we sowing the seeds of our own ultimate destruction as a society? And what if those who can't keep up with the change (or don't want to), let the rest of us know they have had enough and forcibly drive us all back to a time when change was slower.

It is tempting to head back to the past when our world changed more slowly. Let's assume a generation is 20 years, about the time it takes for your kids to have your grandchildren. That's about 5 every 100 years, 50 every 1000 years, 500 every 10,000 years.

Since the big migration out of Africa, Hunter Gatherer society remain relatively unchanged for 2,000 generations. Sons and daughters were able to learn all they needed to know about life from their parents, who learned what they knew from their parents with hardly any variation for 40,000 years.

Our Agricultural Age ancestors lived in a world that stayed much the same for 400 generations or 8,000 years, plenty of time to settle down into a regular and reliable pattern.

For the next three stages of society, it is a totally different story. No sooner had the farmers left their farms and started work in factories, their world was turned upside down. Just 5-6 generations to get used to the concept of factory work, before the next 5-6 generations headed towards an Information Age world.

The Information Age came and went in three generations. The Knowledge Age is disappearing from view after one.

So here is a workshop to explore these ideas about the emerging Wisdom Economy:

1. Think back to some of your first memories of the world around you. What kinds of tools (products, services, methods and ways of learning) existed when you first arrived on the planet?

2. Think back over your life. What are some of the changes in technology that you personally have experienced?

3. Choose a technology with which you are familiar e.g. music players and describe the kinds of changes that have occurred.

4. Thinking about how knowledge is incorporated into the products and services that have changed during your lifetime, what shifts have taken place?

5. Give examples of each of the following kinds of knowledge processing (transmission of expert knowledge, repurposing of expert knowledge, co-creation of knowledge, wise application of knowledge)

6. Give an example of a group of people in society who have chosen to remain at an earlier stage of knowledge processing (transmission, repurposing, co-creation) How are they different to the leading edge of society?

7. What might be some of the consequences for human society of accelerating change/accelerating knowledge creation?

8. Describe a product or service for the Wisdom Economy with "the wise application of knowledge" inside"?

9. What might be the economic, social and political consequences of some people being unable/unprepared to adapt (i.e be educated to a higher level) to the societal change, and/or participate in the new kinds of "wise application of knowledge" jobs?

Is the MBA dead?

Is the MBA is dead in the water, as we know it?

Perhaps. But like any successful organism, the MBA is under pressure to evolve to something new, to meet the emerging needs of organizations, and probably will survive in a new form.

I earned my MBA 15 years ago. What I learned is still useful, but many of the central concepts about running a business or organization have been transformed by the changing times.

MBAs fill many management roles, including expert capabilities delivered into an organization;  functions such as change management, innovation, marketing and HR. But many of these roles are being shed and replaced by front line staff, not necessarily in supervisory roles, distributed throughout the organization who have a broad expertise in strategy, improvement, innovation, facilitation/leadership capacities, supported by new kinds of tools in which specialist knowledge is embedded, expert systems, group decision tools, simulators and calculators.

As society makes the shift from the current Knowledge Age paradigm to the emerging Wisdom Age world, the dominant work of the previous period is becoming automated by the newly emergent tools/technologies. The expert procedures/methods that are the jobs of knowledge workers, mostly people with degrees, are becoming embedded in the new tools, e.g. on-line learning (teaching), on-line conveyancing (legal), tools for dealing successfully with conflict (legal/judicial), on-line preventive health (medical) and financial management programs (accounting and share trading) so anyone can do the work, just by using the tool.

At the start of this new economic order, the Wisdom Economy, we are having to change the way we speak about everything we do.

The very name "administration" implies the need for organizations to be rule-based systems,  that are relatively unchanging. The situation for so called Masters of Business "Administration"  is thus complicated by the accelerating rate of change who find themselves operating in increasingly more complex, ambiguous and uncertain environments, where the rules must keep changing. So perhaps the course needs a new name, which  reflects its' future adaptive nature.

Perhaps we could keep the acronym, MBA, which might stand for the superlative, Magnificence of Business Agility, to celebrate our role as a player of infinite games, that we are in awe of the amazing possibilities ahead of us, and we are not the masters in the field, but excited learners, willing to wisely explore future kinds of agility, whatever may emerge.

Some organizations, at the leading edge now realize they ARE complex adaptive systems, to which traditional linear/serial tools derived from algorithmic and serial theories/models do not necessarily apply any more.

The methods that we will find in this new MBA course are being supplemented by (and in some cases displaced) by models/theories outside the world of business, as diverse as ethics, collective play, anthropology, neuroscience, complexity theory, fractal theory, biology, relativity theory, quantum dynamics, the creative arts etc. Although a Master in Fine Arts is now regarded by some as the new MBA, the theoretical repertoire required by a leader in business is more like the range of approaches available on TED and Poptech.

The new Wisdom Economy tools have "the wise application of knowledge inside", like "Intel inside" (decision support/rules systems, expert systems, simulators/simulations, calculators, calculators), and so perform many of the roles of a leader/manager/coordinator/expert. It's a kind of "transcend and include" thing.

Such products are likely to have automatic disposal/recycling of a worn-out/spent./outmoded "thingy" at the end of its' life, or the outputs from the use of the product/service are predesigned inputs to other services so they operate collectively as a sustainable system.

Tools such as the Zing complex adaptive learning go even further and incorporate "people skills" such as high-level thinking and relating skills, an etiquette to provide the norms for a group to quickly form as a team and reliably work together, the question sequences that guide the conversation to a successful conclusion, and the sense making step which results in the group creating new knowledge without having to be guided via the leadership/relating skills of a manager.

But there also seems to be a demand for MBA Lite, a kind of "quick and dirty" introduction to the principles and practice of business administration for those who are not from the world of business, such as managers and supervisors in community services, health and local government, to round out their skills. Think books like MBA in a Day from Professor Steven Stralser of Thunderbird Graduate School in Phoenix. Which bears out the "transcend and include" rule.

Here's a workshop to explore these ideas:

1. Brainstorm a new name for the Master of Business Administration course to reflect the need for the course to be a complex adaptive system in its' own right.
2. Give an example of a Wisdom Economy product or service that has "wise application of knowledge" inside and explain what it does and the value it delivers.
3. What might "wise application of knowledge" mean for organizations? What are some of the essential principles or "initial conditions" that "wise application of knowledge" organizations might adopt in terms of for product and services design, organization structures, relations with stakeholders, etc.?
4. If high-level strategy, planning, change, innovation and other capacities become more distributed how will organizations achieve a common sense of purpose?
5. What are some "transcend and include" strategies you might apply to business methods and processes, so that old "tried and true" methods become reinvented and incorporated in the new complex adaptive learning methods, wherever appropriate.
6. Go to TED, take a look at any video, make some notes about the theory, model, rules or concepts that the speaker describes.
7. Using the notes you have generated in 6, craft a set of rich questions that would allow a group to have a conversation about the consequences for an organization of the theory/concepts presented by the "thought leader".
8. Make a list of some of the critical people skills/principles required for organization success. Now develop an idea for a new product that has these skills or principles in the product.
9. Design a course for the Magnificence of Business agility.

Learning from nature

Sometimes we humans think we are super smart. But compared with nature we have the creative powers of a gnat. Or maybe not, for all we know, gnats may be more creative and intelligent than we have ever noticed or imagined.

Consider the skyscraper.  Tens of stories tall inhabited by hundred or thousands of humans and our fellow travellers. Like cockroaches. Bedbugs. Or rats and mice.

A human invention? Nope.

The craggy river red gum which inhabits river valleys all over Australia must surely be one of the first skyscrapers (Image, Peter Halasz). On average, each tree houses 150 households, in convenient hollows where the wood has rotted. Each hollow is a high rise apartment for possums, birds, insects and other creatures. All courtesy of nature, designed so that what we think of as waste - rotten wood- is recycled for another purpose. The outputs from one life process become the inputs to another, the very same principles of natural capitalism that Amory Lovens, founder of the Rocky Mountains Institute applies to organizations, to achieve greater sustainability.

So here a workshop to explore this powerful natural principle:

1. Describe a system where waste outputs spoil our/your way of life.
2. Choose one of the systems and make a list of all the components and how resources e.g. water, gases, minerals, soil, paper, organic matter flow through the system. How does each component arrive, e.g. as raw materials, where does it flow to, and how does it leave e.g. as finished products in trucks,
3. Thinking about the total system, what components of the system are "waste" or "pollution" and how do we currenly deal with those components?
4. Consider each of the waste outputs, what could we do, so they are inputs to another system, and are re-used or re-purposed?
5. Thinking about what is left over, that can't be re-used, what other way is there to design our system, so this waste is not produced, or produced in a re-usable form, just like nature.
6. What other natural approaches could we ideally adopt, so that the waste can be reprocessed or reclaimed in more natural ways e.g. harvesting heavy metals in water or soil using plants that soak them up, using biomimicry to use H, C or O to peform the save role as more complex/dangerous elements.