Complex Business Systems:: anyone for Beer and cybernetics?

Modernity: business complexity beyond the capability of conventional management and hierarchical structureI first came across the name of Stafford Beer a few years back but, of late, have found myself “drawn” back to his work. As it now makes even more sense, when viewed from an inter-disciplinary perspective, than it did the first time around!

I thought Cybernetics were baddies from Dr Who!!!

First hand experience of the “unnatural”, hierarchical, business structures – that are a legacy of the industrial era – left me cold! Intended to manage people and adequate for managing “linear processes”.

That was my first experience of working life…in an Insurance company whose systems hadn’t evolved much from the days of Dickens. It was only 1979!

“Master and slave, squire and servant, boss and employee, ruling classes and proletariat … the notion of hierarchy is endemic to the human experience of social system. And yet it seems never to suffice as an organizing principle”                                                                                                                                           Stafford Beer

Years later, I was presented with the opportunity to work with a “blank canvass”, by creating a structure “agile” enough to adapt, to support a broking [insurance] strategy that achieved year-on-year growth. Thankfully, I instinctively knew that  a “flatter” structure, that aided and rewarded interdependent working, was a better option for ALL the stakeholders. So it proved.

When subsequently charged with designing and restructuring in other organisations, with engrained culture, legacy IT and fractured  internal communications, the same principles applied. Although “change management” will always be a major challenge, the task is so much easier (and adoption faster) when the people, who will be directly affected by change, gain an understanding of practical interdependence, if not complexity &/or systems thinking.

Inter-connected isn’t Interdependent

The realisation that the effectiveness of the organisation and, therefore, its success and sustainability are dependent upon the processes and relationships that, together, form the business ecosystem – within  which it exists and upon which it is reliant – is a powerful and engaging insight: not just beneficial for current (and future) employees but for business owners, particularly in tough trading conditions when it is all-too-easy to “overlook” customer needs in favour of the rewards of achieving short term results…a problem at the root of much that is wrong with the prevailing culture in Financial Services!

It is not sufficient for there to be a common purpose and understanding of individual roles or functions, for a business to excel in the Digital Age – of business systems and networks that are fractal in nature, dynamic [non-linear, possessing multi-equilibria] and inter-connected across scales. 

Hidden structure within DATA [INFORMATION-flow] across the system and networks reveals system COMPLEXITY.  

ADAPTABILITY and RESILIENCE are particularly important in such competitive and uncertain times – when the conventional approach to managing risk is incomplete and ineffective.

TRUST is a scarce and highly prized commodity: one that, only an organisation intent upon earning that trust, through TRANSPARENCY, is able to offer. Trust cannot be bought!

An holistic view of the business, its values and processes empowers and engages stakeholders – it affirms the validity of their contribution and loyalty.

As you will see from the graphics (above and below), there can be little doubt that the modern business is a highly complex structure. When the level of complexity associated with the day-to-day activities of the business exceeds the capability of management, the system becomes excessively complex. This is a source of risk..and so much more.

“Where the actions of a system causes some change in it’s environment and that change is fed to the system via information (feedback) that causes the system to adapt to these new conditions.”

My original interest in complexity was inspired by the work of Dr Jacek Marczyk at Ontonix. That interest stemmed, not from a desire to examine the conventional business structure or to create a model structure for the Digital Age but to gain a better understanding of risk in insurance and finance. Little did I realise how the research into one would keep bringing me back to the other! BUT the “Viable Systems Model” makes a great deal of sense as a starting point for managing complexity and resilience: improving effectiveness and profitability, by ensuring that the Operational Structure complements the “natural” Information Structure .

What makes “a group” out of a random assortment of people? It surely has to do with motivation, and in some way also morale. What brings people into cohesive groups is the shared information that had changed them into purposive individuals. Data themselves do not supply this cohesion: it is the interpretation of data that produces purpose, and it is the shared interpretation between individuals that produces group cohesion.

In management and other areas there are several ways of scheduling team meetings to make sure the most effective use of time, simultaneously ensuring a continuation of reverberation (echo-effect of the knowledge creation loop) through the systems. Joe Truss, who worked together with Stafford Beer in the U.K, has developed an illustrative figure that shows these interactions. Below you see the evolution of the models:

The 12 vertices and 20 faces are embedded in the dodecahedron. Inside the embedded dodecahedron is another icosahedron whose 20 faces correspond to the dodecahedron’s 12 faces. Inside of this icosahedron lies another dodecahedron, and so on.

Figure 1: The Icosahedron, Stafford Beer   Figure 2: A reverberating system of a polyhedral

The number of struts in each remains the same at 30, while the faces and vertices of the icosahedron and the dodecahedron change into each other. Seeing through any face of the outer icosahedron along a straight line to the centre, you are given a view of triangles contracting into points, thus expanding into smaller triangles lined up one inside the other, endlessly.

Visualizing all 20 faces at the same time going through this transformation exposes a perfectly symmetric diminution to regular polyhedral space within a regular polyhedral space, with each level summarizing the next through regular structural relationships and cooperation. Each level has a fractal self-similarity of shape and structure embedded and configured by the level before it afterward embedding and configuring the level after it, endlessly, granulated to smaller groups. The never ending recursions of equilateral triangles and pentagons, which are held in equilibration by an underlying regularity of shape maintained by the constant number of struts.  

2 Responses to Complex Business Systems:: anyone for Beer and cybernetics?

  1. Javier Livas says:

    I am glad you are interested in Stafford Beer’s work. Keep it going, it is THE FUTURE in management.

  2. David,

    Great post! Stafford Beer’s name doesn’t come up often enough I think; although I say this without agreeing with his politics (what little I know of them). If you have not already come across a recent (October 2011) publication entitled “Cybernetic Revolutionaries”, which deals with the Beer-influenced (please, no slight or pun intended) team working with Salvador Allende in Chile, you may find the book interesting. Later, Allende’s finance minister Fernando Flores ended up at Stanford, and together with Terry Winograd, and influenced by Heidegger, then did some foundational work on workflow and went on to found Action Technologies, which brought an interesting product (“Coordinator”) to market, based on their theories.

    John Morris
    Business Decision Models Inc.
    Toronto, Canada

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