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?