Complexity: “Cholesterol for business”


I have used this analogy before but it is certainly worth repeating as the similarities are apparent and potential impact “alarming”…

Business systems suffer from their own version of cholesterol…it’s called…COMPLEXITY. If you don’t test for it you don’t know if it is doing damage to the vital inter-connections upon which your system is dependent!

By the time the outward signs show themselves irreparable damage is done. Sufficiently fit and able to carry out the day-to-day tasks that sustain you but “found wanting” and unable to perform when put under stress e.g. confronted with a physical challenge, fighting a disease, adapting to a change of circumstance. We don’t know what the future holds but we can say that it is more uncertain now than at any time in (at least) a generation!

We are learning more lessons from nature than at any time in our history since “The Origin of Species”.

A business is a system, like the human body. It is reliant upon its component parts and its ecosystem (marketplace, supply chain, etc.) communicating, working efficiently and interdependently to enable it to perform and sustain itself and its stakeholders.

Unlike our bodies a business does have the ability to renew its structure and to thrive again BUT SURVIVAL IS NOT GUARANTEED! A business needs to have sufficient “reserves” and the means to re-generate.

A business that was once fit enough to survive in a familiar environment – like a stable, buoyant, economy – is, not necessarily adequately equipped to do so when the environment changes – a turbulent and unpredictable economy – where, what sustains it is in shorter supply or harder to come by. The business matures (ages) and can lose some of the skills or agility that were once its mainstays. Read more of this post

NY Times.com: Talking about Complexity and Its Discontents


Image representing New York Times as depicted ...

Image via CrunchBase

Image via CrunchBase

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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