Risk DNA: how robust yet fragile a system really is!

Experienced business people look at me like I am mad when I use the human body or brain to illustrate how important it is that a business be properly structured!

But I’m not mad, I’ve just taken the time to give it more thought, ask more questions, read more research and to assess the hard quantitative evidence that led me to this conclusion…and I am not alone!

If you can believe me that there is a universality about systems and that, if a single letter in a DNA sequence is missing a person may not be born at all or be destined for a life of ill-health, perhaps you will understand that, the performance of a business system too will be determined by its internal structure. Check this out:

“the prospect of using the genome as a universal diagnostic is upon us today”

I love this quote from the presenter: “the prospect of using the genome as a universal diagnostic is upon us today

Systems that have a “flawed” structure or processes (at nano or micro level) generate risk that can have enormous consequences at macro level, upon the systems with which they are connected or can limit the number/nature of networks with which it can communicate.

As businesses focus upon macro they are ignoring valuable insights.

Too much focus upon managing risk “overlooks” endogenous, often, self-generated risks, that CAN be addressed – making the system more robust. Preferring instead to assume a greater threat from exogenous risks, over which there can be only limited influence or uncertainty – for which a fragile system is ill-prepared!

More lessons from nature: Fragile systems are not resilient.

Einstein would be ecstatic…Darwin, maybe, not quite so

Each one of us is a miraculous and immeasurably complex system formed, according to a genetic code so vast and complex that it has taken us until recently to “understand” something that, according to some, happened “by accident” and without any apparent purpose! We are robust, with “redundancy” (two lungs, eyes, etc.) built-in. Nature has endowed us with the ability to adapt and to survive.

But that is only part of the story.

“Life is a self-replicating hierarchy of levels. Biology is the study of the levels that compose the hierarchy. No phenomenon at any level can be wholly characterized without incorporating other phenomena that arise at all levels. Genes prescribe proteins, proteins self-assemble into cells, cells multiply and aggregate to form organs, organs arise as parts of organisms, and organisms gather sequentially into societies, populations and ecosystems. Natural selection that targets a trait at any of these levels ripples in effect across all the others.”

E.O.Wilson and Bert Holldubler in “The Superorganism”

Complex systems are, by definition, “Robust yet fragile” and none moreso than is shown in this superb, short, video (from IBM). It may provide some useful insight: Read more of this post

"For Want of a Nail" – A Proverb of Chaos (via Catagenesis)

Gaining an understanding of “Chaos & Complexity” and how they affect or underpin just about every aspect of modern life is highly recommended. This is a great little “taster”.

YOU are the ultimate complex system! So it is something that is relevant to EVERYONE.Mammalian Lung

The understanding that, such as, Benoit Mandelbrot brought to the subject has been invaluable. If you struggle to get your head around self-similarity, with smaller and smaller recurring shapes or patterns, you may feel more inclined to consider it if you knew that, thanks to fractal scaling, the surface area of human lungs is equivalent to 160 sq. metres or a singles tennis court. They contain circa 300 million alveoli (pockets for storage of air to allow absorption into the blood stream). All contained within a capacity of 6 litres.

Needless to say our lungs are enormously complex on their own but when you consider that they only work as an interdependent part of our body it is EXTREMELY hard to be believe that these just evolved…a conversation for another day I think!!!

If the above and following don’t  whet your appetite to learn more or get you to thinking about our complex relationships with each other, with the environment, with technology, in business or the “unseen” networks that enable development, assembly and delivery of goods to your door then I can recommend the Dilbert widget although I can’t guarantee that you will be able to follow every storyline.

"For Want of a Nail" - A Proverb of Chaos

As a Christmas gift, I received a set of video lectures by The Teaching Company entitled “Chaos.”  The course, presented by a well known educator on the subject, Professor Steven Strogatz, explores the history, science and implications of chaos theory.  I feel confident in saying that chaos theory is still not nearly as appreciated as it probably should be, given how fundamental of a breakthrough in scientific perspective it represents. I am very … Read More

via Catagenesis


Introduction to an evolving world:

The human world has always been evolving. What is different is the speed, and the acceleration, of the change that is occurring within the span of a single lifetime. Change and evolution are now an integral part of the life of every person and every human institution.

Present human institutions and systems economic, financial and political are almost all based on a machine model of static processes that was appropriate for a time when change and evolution were proceeding at a significantly slower pace. Institutions and systems based on a machine model are able to cope and survive only as long as change and evolution are limited in scope. When they are confronted with changes that are too large or come too fast their static processes cannot adapt quickly enough and they break down.

The machine model is both a product of the Industrial Age and a creator of the Industrial Age. Like a machine, institutions and systems based on a machine model have the ability to function with great power but they can fail quickly if change overwhelms their ability to change their static processes.

A different model with dynamic processes is required for business, financial and governmental institutions and systems if they are to acquire the ability to thrive in a rapidly evolving world.

A biological model for business and finance:

The biological model is a model of dynamic processes that incorporates change and evolution. It has proven its ability over countless millennia to produce organisms and systems that change and evolve. Not all of the organisms survive, but their components are recycled into new and existing organisms, all part of a proven system of adaptation, change and evolution. Nothing is wasted.

I believe that applying a biological model to business and finance can produce organizations and systems with the ability to thrive on, and create, change. Not all of the organizations will survive, but the systems will recycle the components of failed institutions into new and growing organizations, thus creating a human world that thrives on increasing change.

Objectives of this essay:

Read more of this post