Organizations As Complex Adaptive Systems – New Management Theory

If you are part of an organization, you should spend time to understand and be familiar with the history of management theory. There are different ways to manage organizations. Some approaches are more than 100 years old (although you’ll find them in today’s organization), Few of the existing management theories are more contemporary. Knowing what the alternatives are can help you to change your and your company’s future by advancing to a better management system. If you want to get an updated view on management theories this blog post: “The 11 Most Important Management Theories For Small Business” is doing a pretty good job.

In this blog post, I want to introduce a new Management theory: The organization as a complex adaptive system.

The best and simple definition of Complex Adaptive system can be found in Wikipedia: “A complex adaptive system is a system in which a sound understanding of the individual parts does not automatically convey a complete understanding of the whole system’s behavior. The study of complex adaptive systems, a subset of nonlinear dynamical systems, is highly interdisciplinary and blends insights from the natural and social sciences to develop system-level models and insights that allow for heterogeneous agents, phase transition, and emergent behavior.” – The only two lines that I’ll add to this definition is that Complex Adaptive Systems (CAS) behavior is not expected, and can’t be predicted by observing individuals. CAS also defined by the system ability to learn and adapt to changes in the environment.

Complex Adaptive Systems define a set of properties that explain how those systems are working and manage to operate a complex system in a bigger complex system. CAS are also fractals. CAS are all around us (your brain, your body, group of people, the market are all examples of CAS). CAS also manage to succeed and progress in a complex environment. Those two facts indicate that using CAS principles as a base for management theory might create a system that can deal better with complexity. To be honest enough today’s systems fail miserably to operate in complexity.

So, what are the main principles of management theory based on complex adaptive systems? The short answer: Completly different from management theory you know.

In more details ten basic principles shape CAS Management:

Organizations are complex adaptive systems: To understand the organization and operate it all parts of the organization need to focus on understanding the system as a whole and not parts of the system. As a network of people, groups, and connections there aren’t one direction interactions; any interaction is bidirectional. Any change to one element in the system might end up with unknown outcomes impacting the entire system.

Purpose: The organization must have a clear and appealing purpose. Each group within the organization should have its purpose, directly derived from the company’s purpose.

No central control: Control and authority should distribute to different groups and individuals in the organization. The organization should be decentralized. There’s always a need for coordination and collaboration, but not central control. The organization structure can be fractal, but not the hierarchy of authority and power. The organization needs to enable self-management as much as possible.

Self Organized: People and teams will organize by themselves to reach a common goal or reach emergent property that they can’t achieve alone. Although it looks like chaos, the organization needs to give people and groups to self-organize. There shouldn’t be a higher entity that defines groups and decides who will be part of a group.

No-silos: individuals contribute to the organization at least one area of expertise and a set of competencies. Groups should be a collection of people with different expertise needed to reach the group purpose. Grouping people into groups based on their expertise creates silos that impact the purpose of the organization severely.

Govern by feedback loops: Instead of boards and governance body, which are an attempt of few to understand the complexity of the organization’s internal and external environment, organizations need to establish many feedbacks loop between environments and the groups or functions that need to respond to the feedback. Feedback loops send in real-time direct messages to the function that needs to respond. As an organization establishes more feedback loops, it can get a more accurate picture of the environments.

Always emerging: The ability of groups to create properties that their members cant create by themselves (emergent properties) is a critical capability of a system to be adaptive and to adjust itself to feedbacks coming from the environments. Organizations need to focus on finding new emergent properties or increasing existing emergent properties. There should be a dedicated function within each organization responsible for developing emergent properties and creating an environment where emergent properties can develop.

Clear boundaries: To enable decentralization and distribution of authority all roles/function and groups/entities within an organization should have a clear definition of their purpose, managed assets, responsibilities and connection to other roles or groups. Descriptions should be publically available to enable any member of the organization to understand who is responsible for what.

Continuous indications: Each group should define simple to track and understand an indication on how a group or function progressing to reach their purpose. Those indicators should always be available publically to anyone in the organization. Indications make it clear if a group or a role achieve their defined purpose.

Define conflict resolution: Without central authority organizations need to agree on a common conflict resolution mechanism. This mechanism should be available for anyone to use and its decision should be respected. The most common mechanism now is voting with merit factor.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.