Complex Adaptive System
What does viability as a Complex Adaptive System mean?
Viability is an emerging property of a Complex Adaptive System. As an introduction to the topic you should look at the picture below.
What do you see? The picture shows two separate systems with the governance potential in red and with the other potentials (Financing and Products: note there are several product potentials) in white surrounding the governance potential. It appears that the governance potential is bigger on the left side and smaller on the right. You can argue that the right system is stronger, and more viable, as the financial and product potential is bigger than in the left system. Think of a start-up for the left side and the right side of a mature profitable company.
This also makes sense if you approach it from a life-cycle perspective. You now need to see the systems as one; it grows from the left to the right over time. You see that the product and financial potential increases over time. Whereby in the start-up phase a greater governance potential (for example competent and talented resources) is needed to structure the company for growth. Later, this potential can decrease (fewer human resources are required and more can be automated by IT systems) due to more efficiency and effectiveness in the business processes.
The above explanation of the changing environment is an example of linear thinking whereby we analyze the different colors and sizes of the balls and try to identify causes and effects for their changes over time. This appears to be the correct way of thinking in many cases. However, our analysis is not correct as we are dealing with a cognitive optical illusion. In both scenario’s the governance potential has not changed. We only thought it did. They are the same! Look at it again and see for yourself.
Our thinking is based on the traditional Newton-Cartesian view that organizations consist of components and linkages between them. Management interventions get modeled as a sequence of events (actions-reactions) between a trigger and an outcome. This makes it possible to identify linear interactions of cause and effect. The case and effects are used to influence and control how the components function. It is now possible to measure its efficiency and control its output by manipulating the input. A complex organization is now simplified in a single set of components that can be measured and controlled. To put all the components back together, organizations build a hierarchy pyramid with at the top there is one human element (management team) that is responsible for integrating the system. In this way, the components can be controlled through a direct line of command.
The non-physical elements, like human elements such as personalities (traits) and culture, are treated as part of the DNA of the company. In real life, we only observe and experience it with our eyes and by being part of the organization (this give rise to the cognitive optical illusion). Also, because it is not captured in structured data. These defaults in our thinking explain why we accepted that the red ball should also change. We did not question if this was correct also, because the surrounding behind the balls stayed stable.
Therefore, important information is missed that can contribute to understanding the buildup of latent business failures which for example stop innovation, cause safety issues or destroy integrity (caused by systemic problems). It is important to understand that viability (but also culture or anything you cannot touch but we often refer to like trust) cannot be deduced from the different potentials. It is not part of the DNA of a company. Its emergence from the interactions between the agents in the system. If this is not understood the natural response to change it to add more structure to the system to control the outcome, which can solve the problem for a period, but which also unintended destroys the viability