Introduction to Complexity

Complexity: Introduction to the Basic Concepts

This introduction to Complexity is intended to be easy to understand for all people interested in Complexity, with an emphasis on how it can be used to transform organizations. It is divided into three parts, all in one long "page" so you can print it in one section (actually 8-10 pages printed):

The basic terms and concepts of Complexity
Complexity in human organizations
Transforming an existing organization into a Complexity organization.

If you find anything in here that is hard to understand, or you have suggestions for improvement, please email us at info@lciweb.com.

PART I: COMPLEXITY - THE BASIC CONCEPTS

1. What Complexity Is

Complexity is a new field of knowledge based on how groups of living things - people, animals, organizations, communities, the economy etc. - actually behave in the real world. These behaviors are very complex - thus the name Complexity.

Complexity scientists use powerful computer systems to create visual and mathematical models of how living things behave, adapt to their changing environments, and evolve over time.

Complexity organizations are using this new knowledge to transform the way they work into new patterns of structure, relationships and activities which they find extremely beneficial. From international corporations like Monsanto and Citicorp, to ad agencies and hospitals, membership associations and small retail stores, Complexity is being used by more and more organizations all the time. This is a real revolution - not just another fad, but a whole new way of working and thinking which many people believe will become increasingly widespread in the 21st Century.

What is very interesting about this revolution is that it is based on the natural world as opposed to the mechanical-industrial world. It turns out that humans' natural way of working together is really much better than the unnatural ways of working which many organizations practice today. For over 100 years the model of an organization as a machine has dominated America and the Western World. This has in many situations been destructive of human relationships, innovation, the fun of work, and in some cases income and profits. Complexity restores the natural way of working together, and once people make the transformation to the Complexity way, it feels natural and has many benefits.

2. The Benefits of Complexity

Complexity offers many powerful benefits to organizations which use it:

People enjoy their work more and feel more energized.
Creativity, flexibility and innovation are maximized.
Continuous adapting to change is made easier.
The emphasis on continuous learning enables people to develop and grow.
Customer relations and satisfaction are improved.
New opportunities for increased income and profits are developed.
The organization is able to consistently outperform its competitors.

Of course the benefits of Complexity vary with each organization, and many other advantages are possible. To start you on your journey, let's begin by looking at the importance of complex systems.

3. Understanding Complex Systems

Complexity views all groups of living creatures, including people in organizations, as complex adaptive systems.

Any system is a group of two or more parts which interact to function as a whole. (The root word systema means "organized whole.") The parts of a system are interconnected and interdependent. Every system is composed of subsystems and is nested within larger systems. A person is part of a department, which is part of a company, which is part of a community, state, nation and world. They are all systems. The important thing to understand whenever we talk about systems is that we are emphasizing that everything and everyone are interconnected and the whole has characteristics different from the parts. For example an organization has a "personality" that is more than just a group of people.
Complex, as we have already said, refers to the fact that groups of living things and their behaviors are complicated. (The root word means "twisted together.") Creating computer models of these living beings and their behaviors is extremely challenging and has really only been possible in the past 10-15 years. These models give new insights into how organizations work and how to make them better.
Adaptive refers to the fact that living systems constantly adapt to their changing environments. (Adapt means "fit to.") In organizations people adapt to each other, to customers, the economy, competitors and many other things. They are able to adapt through learning. Continuous learning is very important in Complexity organizations.

4. Environments Are Systems, Too

Living systems are interdependent with their environments. Environments are everything external to organizations which affect them in some way, including customers, suppliers and community. Environments are complex systems, interconnected in complex ways. Organizations also affect their environments through their actions. In terms of the world, the impact of your organization's actions may be slight. But in terms of a customer who is depending on your organization, the impact can be substantial.

5. Feedback Impacts Systems

The primary way a system interacts with its environment or other systems is through feedback. When you move your hand, your nerves provide feedback signals to your brain so you know where your hand is. When a customer tells you he likes or dislikes something which your organization is doing, that is important feedback. Feedback in the form of information or signals is essential for an organization to be able to adapt to changes in its environment. Feedback within the organization is also essential for people to adapt to each other. Feedback occurs in two forms: balancing, which keeps the system stable by limiting change (like a thermostat), and reinforcing, which intensifies the change or activity.

6. Emergence

Complex living systems exhibit behaviors and characteristics that are different from the behaviors and characteristics of the parts or members. This is called emergence. An organization has behaviors and characteristics such as a "personality" and a "corporate culture" that emerge from individual behaviors but take on a "life of their own" and persist even when people come and go. People shape the organization and the organization shapes the people in a continuous feedback loop. Emergence is the source of creativity and innovation - it is unpredictable and sometimes amazing.

7. Self-Organization

One important example of emergence is self-organization. The parts of a complex adaptive system, including people, have a natural capacity to self-organize. No one knows exactly how this happens - it's a "wonder of nature." Birds naturally flock together. Bees naturally form hives. People naturally recognize their interdependence and work together to accomplish shared goals or tasks. They do not always have to be told what to do.

8. Powerful Attractors

As a complex system adapts to its environment, a preferred state or way of doing things is discovered, and the whole system converges on that pattern. This is called an attractor or attractor state. In human organizations, a desired future state may also be expressed through a shared vision. The attractor state may have happened naturally or it may be planned - either way, the organization as a whole is drawn to it. Over time a strong pattern of thinking and working can become so deeply ingrained that it is very difficult to change. If a new attractor state is desired, it must connect with the energies, needs and desires of the people in the system, or it will not last.

9. Small Changes Lead to Large Effects

In a complex system, small changes can lead to larger effects, which in turn lead to ever larger effects. This snowballing effect is one thing that distinguishes living systems from mechanical systems, where small changes only lead to small effects. This is sometimes called the "Butterfly Effect" because a butterfly flapping its wings in India may influence air currents that eventually lead to a windstorm in Chicago. In a Complexity organization, one person may discover something new, other people in the organization may "flock" to this discovery, and in a short time the change has swept through the organization. This is more likely to happen in a Complexity organization where there is a high degree of flexibility and communication, but it can happen in any complex system - often in unpredictable ways. The decisions of a few al Qaida members to seize jet planes and crash them into the World Trade Center had enormous effects on the American economy and ultimately the whole world - far greater than anyone expected.

PART II: COMPLEXITY IN ORGANIZATIONS

1. People Are Agents

The living parts (people) of complex systems are called agents. An agent is "one who acts, exerts power, and represents the organization as a whole." Agents interact with each other, affect each other, and in so doing are capable of a high degree of creativity and innovation which cannot be precisely predicted. Whether you call your people agents or not, it is important to recognize their power to act as agents and the value of their interacting with each other. In Complexity organizations, taking care of customers and creating innovative solutions are not just the responsibility of specific departments but of all agents.

2. The Importance of Teams

Agents naturally self-organize into small groups such as teams, which allow close communication, cooperation and working as united systems. The interactions among agents is the source of the most creative adaptations and solutions, and this works best in small groups (teams). Teams can be either permanent or temporary. They can be either functional (doing one type of activity such as accounting or sales) or cross-functional (combining multiple talents and skills to serve customers or accomplish projects). Teams can be self-organized or appointed. In general teams:

Save money and make better use of resources
Increase productivity
Improve communication
Improve decision-making and other processes
Produce higher quality products and services

3. A New Role for Leaders

Leaders in Complexity organizations are responsible for creating and nurturing conditions which will enable fast, innovative adaptations to change, not to try too much to control or direct people. Teams of people who are free to create new solutions will enable the organization to adapt much better than rigid control allows. Hierarchies (organization charts) are flattened and control is distributed as much as possible to the teams, not centralized. Managers who are used to controlling people must transform into caring leaders who serve as role models and focus on providing favorable conditions. (More in Part III.)

4. Learning Organizations

Living systems receive feedback from their environments, which enables them to learn from their experiences. Organizations which learn as a whole through sharing new knowledge are more adaptable and successful than those where people only learn as individuals. Organizational learning is very important in Complexity organizations and allows evolution to higher forms and behaviors. This requires a lot of shared information in a form which is easily accessible to everyone.

5. Experimentation

In fast-changing environments with a high degree of uncertainty, many small experiments are more effective than detailed planning. This is based on the way natural systems learn - through trial and error. Try a new idea and see how it works, then act on the basis of results and either intensify it or try another new idea. Creativity and innovation work best in organizations which accept errors and mistakes as a natural part of the learning process.

6. Caring

The most successful Complexity organizations have leaders and cultures which encourage genuine caring for people in the system. There is a sense of identity, of everyone being part of one united system, that makes working together more enjoyable. People realize that they are all connected, and helping each other helps the system as a whole. This culture of caring in turn allows people to be more innovative and take more risks because there is less fear of failure. The resulting higher level of creativity and innovation often has a positive impact on the bottom line. In other words, smart organizations know that caring for people is good business.

7. Communication Is Vital

Organizations working as united systems place high importance on continuous communication and information flow, which enhances relationships and cooperative work among people and teams. Continuous communication with customers is just as important as continuous communication with co-workers. This results in a higher level of organization and performance. The best communication occurs when many different forms are used and key information is repeated and accessible in a variety of ways, such as in print, on bulletin boards, via an intranet or web site.

8. A Few Simple Rules

Complexity scientists have discovered that complex behavior can result from a few simple rules. The most creative organizations have a few simple rules which reflect shared values and guide behavior. Too many rules constrict creativity and can lead to resentment. The fewer the rules, the higher the creativity. People are also able to keep a small number of rules in mind, which helps them act on behalf of the organization - as its agents. Four good rules which work well in Complexity organizations are:
Share information.
Trust each other.
Meet customers' needs.
Always seek better ways to do things.

9. Diversity Enhances Creativity

The greater the diversity of agents in teams, the more varied the patterns and solutions which emerge from their interactions. Diversity should include if possible different cultures, ages, genders, backgrounds and personalities for the most creative results. Teams which lack diversity tend to think more alike and generate fewer possible solutions.

10. We Are All Connected

The most important thing to focus on in Complexity organizations is relationships between people and continuous communication. In other words, connections. A single living organism has all its parts connected by a central nervous system and a circulatory system. But organizations do not have central nervous systems. To compensate for this and achieve the best results, Complexity organizations connect internally and with their environments (including customers) with continuous, free-flowing communication and caring relationships.

PART III: TRANSFORMING ORGANIZATIONS WITH COMPLEXITY

1. Creating A New Attractor State

Because of the strong tendency of all living systems to resist change and persist in an attractor state, transforming an existing organization into a Complexity organization is not easy. Some organizations have evolved into Complexity because of the pressures on them to adapt to rapid change. Others have had strong-willed leaders who learned about Complexity and decided to transform their organizations from the top down.

But the natural way is probably the best way. This involves tapping into people's natural energies and desires for improvements - changes which will make their work more fun and enjoyable, and in some cases more profitable. Studies of many leading organizations have found consistently that a shared vision of the desired future can be a powerful attractor that pulls people toward a new and better way of working and organizing.

So the first step for any organization wanting a Complexity transformation is to develop a shared vision, often facilitated by a skilled external or internal consultant. The power of that shared vision will be exactly equal to how much it represents what the people in the organization want - the improvements they personally desire. Involving all people in the organization - every single person (agent) - in participating in this visioning process, preferably through small groups or teams, is essential for energizing the transformation.

As famous "7 Habits" author Stephen Covey says, "No involvement, no commitment." Don't expect anyone to support the transformation if they are not involved in the process. In fact expect those not involved to feel hurt and rejected, resisting and in some cases sabotaging the change process.

In addition to the importance of a new attractor state, which is widely recognized in Complexity science and organizations, the following additional activities are highly recommended by this author as how to accomplish Complexity transformations, based on decades of experience working with a wide range of organizations. While these techniques and strategies are not part of the "Complexity gospel," we believe you will find them very helpful and effective, and totally consistent with Complexity principles.

2. Drawing Energy from Customers

The second powerful source of transformation energy is customers. After all, the whole purpose of your organization is serving the needs of customers. That's where the money comes from. Many traditional organizations make the mistake of undertaking change processes that do not include customer input. Complexity organizations understand that they are closely interconnected with their customers. So they ask them on a frequent basis, using internal or external professional assistance, questions like:

What do you value the most from an organization like ours?
How are we doing in terms of satisfying your needs?
How are we doing in terms of communicating with you and keeping you informed?
What do you like or not like?
What can we do to improve your satisfaction?

This process generates the customers' vision of the desired future state. It can be really energizing to get this information in fresh and candid form, and use it to shape the shared vision of the organization as a whole.

Going forward it is very important to communicate continuously with customers. Sending them information is just part of the job. Seeking feedback from them and listening to them provides powerful energy and direction for continuous improvement. This in turn can lead to increased income, profits, market share and other bottom-line benefits.

3. Creating A System Model

A shared vision is a vivid picture of how we want the organization to be or become. But envisioning it as a working system using a system model makes it far more tangible and likely to be achieved.
All living systems:

Input matter and energy from their environment. This includes food and warmth as well as, for organizations, raw materials, electricity, information and other supplies.
Transform that matter and energy into some other form. In animals food is converted into sugar and other chemicals needed to sustain, replenish and grow the body. In organizations this process involves adding value through production, services or other work so that what is sold or delivered to customers has more value than the imported materials.
Output matter and energy back into their environment. Animals eliminate wastes, carbon dioxide and heat from their bodies. Organizations produce products and services which customers purchase in exchange for money or other valuable items. This is input back into the system to continue the cycle.

So your task is to create a model, either with words or a diagram or both, that shows what is input, how it is transformed, and what is output. For manufacturers, this is fairly easy. But for service organizations, especially those which are in the information business in some form, this is more of a challenge.

In addition to these system components found in all living systems, there are five other critical success factors which need to be included in an effective system model:

People, how they are selected, organized, trained, developed and treated.
Purpose, what the organization is trying to accomplish - a combination of the shared vision, a few key goals (not too many) and basic strategies for accomplishing those goals, subject to continuous change.
Processes, not only the input-transform-output processes, but any other activity such as communication or innovation which is important to your success.
Physical resources, the financial, equipment and facility needs of your organization now and in the future.
Connections with other systems and the environment, especially customer relations, but also community, competitors, monitoring trends in the marketplace, the economy, technology etc. Connections include both relationships and communications.

When everyone in your organization understands this system model, and has some input into how it is shaped, this will greatly enhance your ability to work as one united system and achieve greater success.

4. A Continuous Flow of Information

All effective Complexity organizations have a continuous flow of information. This is the "central nervous system" that connects all the "parts of the body" so the organization can work as one united system. Internal communication is a real problem for most organizations today. There is just so much information bombarding us at all times, and so much pressure on us to do a lot of things in what seems like not enough time, communicating with others often gets shortchanged.

Organizing into teams can greatly improve the flow of information IF communication meetings are a regular practice and IF the teams are all interconnected so everyone knows what is going on. In Complexity organizations communication gets very high priority because this is the thing - the only thing - that enables the organization to work as one united system.

In addition to internal information, a continuous flow of feedback from customers and information on what's happening in the marketplace keep the organization in tune with its environment and better able to stay ahead of the wave.

People also need caring feedback about their performance. In a Complexity environment this is part of the ongoing dialogue within teams. The formal rating process which occurs once a year or quarterly in traditional organizations is often painful for all concerned. It treats other people as objects and is inconsistent with Complexity.

The five critical System Model factors listed in section 3 above are a good checklist of items which require measurement, feedback and communication at all times.

5. Restructuring Into Flexible Teams

As we said earlier, teams have many advantages, and they can take all sorts of formats. There is no one form of team organization that meets all needs. If teams are essentially departments, they are by definition apart from other units. Any organization has people with different skills, and it is natural to have accounting people in one group and production or creative people in another. This type of organization is called functional, because each group performs a different function for all customers. But teams may also be organized by market, customer, distribution channel, product, geography and other factors.

Most Complexity organizations put a lot of emphasis on flexibility. Regardless of which type of team structure provides a home base, members are free to move around or be assigned as the organization's or customers' needs change. Some organizations encourage spontaneous teams, or emergent teams as they are sometimes called. Any agent who needs help can ask other agents to form a team, and as long as they have available time and agree, the new team emerges naturally.

So the keyword about teams is flexibility. Keep structure loose. Let people move around as needs and opportunities arise. Promote the idea that we are all one, all united in one organization system, doing what is best for the whole. Teams are a means toward that end, not an end in themselves.

6. Focusing on Caring Relationships

As we said earlier, Complexity is all about communication and relationships, acknowledging the interconnectedness of everyone in the organization system. The most successful Complexity organizations realize that the "magic" happens in relationships between people, relationships characterized by authentic care.

Roger Lewin found in his studies of Complexity organizations "people share a mutual respect, and have a mutual influence and impact on each other. From this emerged genuine care. Care is not a thing but an action - to be care-full - to care about your work, to care for your fellow workers, to care for the organization, to care about the community. We saw that genuine care enhanced the relationships in these companies, with CEOs engendering trust and loyalty in their people, and the people being more willing to contribute to the needs of the company.... Care, which enhances relationships, in turn enhances companies' creativity and adaptability." (The Soul At Work: Embracing Complexity Science for Business Success, Simon & Schuster, 2000.)

While we sometimes think of care as an emotion, Webster's Dictionary defines the verb care as "1. To have or show regard, interest or concern. 2. To mind or be concerned." Caring is action based on thought, focusing the mind on someone or something. You don't have to love all your fellow workers or team members. You don't have to feel warm fuzzies for everybody. But you can act - work - listen attentively when they speak, consider what they have said, and respond in an informative, nonjudgmental manner.

7. Continuous Improvement

The Complexity model is based on evolution and assumes organizations continuously evolve. You never reach perfection in Complexity. The environment is constantly changing, including your customers' needs. The word co-evolution is often used in Complexity to point out that we evolve as other people and organizations we are connected to evolve. If we don't, they leave us behind and move on to others who can meet their needs better.

Yet if we are sensitive to the environment, carefully observe what is happening, and share that information with all our agents, we can stay on the cutting edge of change, perhaps even in some cases influence the environment. We can be trend-setters and not just trend followers. Such is the potential and the excitement of Complexity in the 21st Century.