How complexity spilled the oil


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Notice for regular readers (thanks!) I did not write or influence this headline in any way. If you follow the link you will see it is all the work of one of the most authoritative sources global research companies, Forrester, via the, ever reliable, Computerworld who will keep you up to date on IT and general “geekery”.

If the subject matter looks familiar that is precisely because IT IS! I have written about this specific incident in the blog on several occasions and from a couple of perspectives, going back to the days when it wasn’t fashionable NOT to have a daily dig at BP and poor wee Tony Hayward: a man whose, now legendary, gift for miscommunication, could have been learnt at piñata finishing school!!!

They had just placed themselves, respectively, in the positions of “Big bad Corporate” and “sacrificial lamb” for an outraged global population and US administration desperate to find someone to BLAME. WE already suspected that so much of that rhetoric was about deflection…we ALL knew, from the collapse of global banking, that, when it came to Corporate activities, regulation was a fallacy, only an effective smokescreen and that risk management perceived a mere drain on potential profit and bonus potential…therefore tax revenue!

Current societies…are characterised by their extreme complexity at a moment in history in which traditional political institutions have lost much of the power, a power which has now passed into the hands of multinational companies with their relocation strategies. In this situation, a growing deregulation can also be observed which, in turn, redounds in the appearance of new risks and uncertainties.

Ulrich Beck

The best any of us concerned citizens could hope for was that this incident would be, not so much a disastrous oil spill as an inglorious watershed.

The Gulf oil spill of April 2010 was an unprecedented disaster. The National Oil Spill Commission’s report summary shows that this could have been prevented with the use of better technology. Read more of this post

BP Report: Black Swan …or just a bird covered in oil!?


Does complexity guarantee “system failure”? (revisited)

Even before this event became highly politicized it was shaping up to stand as a 21st Century monument to a culture of Corporate mismanagement: Economy before ecology! The incentives to “cut corners” were simply too great. I have argued before that, all too often, sound risk management comes a poor second to generating profits.

It tends to be “dressed up” as compromise…until it hits the fan!

Anyone care to draw a line?: Global financial meltdown – Toyota – Gulf of Mexico spill – ???

This was/is a hugely complex operation requiring enormous financial and human resource. A tight chain of command communicating and coordinating across several companies. Undertaking a range of interdependent functions as part of a feat of engineering that would not have been possible just a few years ago. NO SCOPE TO TAKE CHANCES, TO CUT CORNERS OR TO BE ABLE TO CONTEMPLATE GAMBLING WITH THE ECOSYSTEM OF A VAST AREA.

Even a company like Toyota (Lexus), whose reputation for quality was well-deserved, were tempted by the lure of $100m per annum savings! I’m sure someone better informed than me has already worked out what their direct financial losses have been, in addition to fines, settlements and the long lasting reputational damage for a proud brand.

BP said in a statement that the report, like its own investigation, had found the accident was the result of multiple causes, involving multiple companies.

Read more of this post

Does complexity guarantee “system failure”?


According to one journalist, whose speciality is deconstructing accidents, it does (see below). Naturally we at Ontonix would like to respond to this statement:

When complexity reaches the point of “critical complexity” system functionality is lost and failure can ensue.

System  complexity can be managed…that is what we do! More Complexity Facts from Ontonix


Nevertheless this is an interesting and worrying observation. One that, when taken in the context of Global Financial Services, begs the obvious question: Read more of this post

Beware Self-Inflicted Complexity


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Here is an insightful piece from Harvard Business Review, by Ron Ashkenas, a managing partner of Robert H. Schaffer & Associates and a co-author of The GE Work-Out and The Boundaryless Organization. His latest book is Simply Effective.

If you’ve read the papers lately, it sounds like “complexity” is the explanation for many of the world’s problems. A feature story in the Sunday New York Times business section, titled “It’s Complicated,” suggested that too much complexity was behind the financial crisis, the difficulty in understanding health care reform, and the oil spill in the Gulf of Mexico. The author of the article, David Segal, summed it up this way: “Complexity used to signify progress…the riddle of some advance in technology. Now complexity lurks behind the most expensive and intractable issues of our age.”

Of course blaming complexity for various problems sounds good and may even feel good, but it doesn’t really accomplish anything unless we can do something about it. But in order to move into action, we first need to look at the difference between naturally occurring (and perhaps inevitable) complexity and complexity that is unnecessary and self-generated. With the former, the best we can do is to learn how to live with it; while the second type of complexity we can attack. Unfortunately, the two are often intertwined. And that’s where things really start to get complex.

Let’s look at the ecological disaster in the Gulf of Mexico. Many aspects of this drama are just plain complex. Trying to stop the flow of an oil gusher 5000 feet below the surface in extremely cold water is a complex engineering challenge — as was the original exploration, drilling, and construction of the oil rig in the first place. Similarly, trying to contain the oil and limit the environmental impact is also complex, involving multiple technologies, the coordination of public agencies and private sector firms, and the mobilization of huge amounts of equipment and people. This is “inevitable complexity” — the application of advanced technologies and human ingenuity to solve new problems in uncharted and unclear waters (excuse the metaphor).

What makes the Gulf situation so frustrating however is that a certain amount of unnecessary complexity may have contributed to the disaster in the first place, and since has made it harder to resolve. On the BP side it seems like operating pressures and quality assurance procedures were not properly balanced; and the accountability between BP and the operating company was unclear. From a safety perspective, the mixture of regulatory authority and industry support made it difficult to insist on compliance to disaster prevention standards. Then after the accident the confusion of responsibility between BP, the oil rig operator, and federal and local government slowed down the response and created disjointed and unclear communications.

It’s possible to argue that these complexity issues are also the inevitable result of having multiple organizations trying to work together. But that would be a cop out. If the leaders of BP and government agencies had a constant and consistent focus on clarifying accountability, sharpening regulatory authority, and making it easy to do things the right way, the Gulf spill might have been prevented. This type of complexity is self-created by the way we structure and manage our organizations. And when combined with the already-existing complexity of technology and business, disasters can occur.

Doomed magazine cover

But this isn’t just a problem for large-scale public issues. Every organization includes a mix of inevitable and preventable complexity. We have complex technologies and manufacturing procedures, multi-stream product discovery and development processes, intricate partnerships with suppliers and customers. All of these are complex. But when we amplify the complexity by adding unnecessary layers of management, confused accountability, slow and unclear decisions, garbled communications, and lack of focus, it’s our own fault. Maybe we don’t create ecological disasters, but we do create small ones in our own organizations every day.

It’s easy to bash complexity. But we need to also look in the mirror and ask ourselves whether we are adding to the complexity.

What’s your view?

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NY Times.com: Talking about Complexity and Its Discontents


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Complexity and Its Discontents – Readers’ Comments – NYTimes.com
The worst-case outcome in the Gulf of Mexico raises questions about the human capacity to deal with some kinds of risks.

An interesting blog from NYT with some well informed comments…that isn’t self praise but NYT have highlighted my comments(!)…transcribed below for your “enjoyment”.

See, also, the item on “Can We Do Better at Managing Rare, Big Risks?”

COMMENT:

Discussions around complexity are EVERYWHERE! IBM & McKinsey have both pitched in with recent reports both emphasising
the dangers and need to manage complexity but with very little practical help, no worthwhile definition, no means to measure.
Future reports may warn of the dangers of getting up close and personal with vampires…assuming their is some form of garlic
or stake-based software or consultancy “solution” in the offing!I would like to offer some assistance or, at least, food for thought and discussion:

Complexity is a fundamental characteristic of every dynamical system…

“Complexity is the measure of the amount of structured information in a system”

The amount of fitness of a system is proportional to its complexity – higher complexity implies higher fitness

The amount of functionality of a system is proportional to complexity – more complex system can perform more functions

Each system can only reach a specific maximum value of complexity

Close to the upper limit the system is fragile – it is unwise to operate close to this limit

High complexity = difficulty in management – highly complex systems are able to perform more functions but at a price:

they are not easy to manageWhen a system is very complex and becomes difficult to manage, it is necessary to restructure it, add new structure or

to remove excess entropyMore components don’t necessarily imply more complexity – systems with few components can be more complex than

systems with many componentsWhen presented with two equivalent options, for example in terms of performance, risk or profit, select the one with the

lower complexity – it will be easier to manageSpasms or dramatic changes in dynamical systems are always accompanied by sudden changes in complexity

In nature, systems tend toward states of higher complexity, but only until they reach the corresponding maximum.

This poses limits to growth and evolutionSystems with high complexity can behave in a multitude of ways (modes)

Systems with high complexity are more difficult to manage and control because of the need to compromise

A system with a given complexity will be more difficult to manage if it is made to operate in a more uncertain environment

“High complexity is incompatible with high precision” – this is known as L. Zadeh’s Principle of Incompatibility.

In essence, you can’t make precise statements about a highly complex systemThe amount of sustainable development a given system has is proportional to the difference between its critical complexity

and current value of complexityA fundamental characteristic of highly complex systems: they are robust yet fragile!

I am VERY KEEN to expand upon the above…in particular I would like to get in touch with Nassim Taleb to demonstrate the

model-free technology to measure complexity within a system. Happy to discuss with parties who, like PF Henshaw,
have a depth of knowledge on the subject OR recognise a need within their own field to “GET FIT FOR RANDOMNESS”
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