Over the past 15 to 20 years businesses, particularly US businesses, have utilized a number of approaches to reinvent and restructure themselves. A plethora of techniques—from total quality management to business process reengineering, benchmarking, agile manufacturing and value-chain optimization—has been applied to business units and to entire corporations. The essential focus of such approaches has been to catalyze and guide change in organizations for which change is a necessary but difficult, if not unnatural, act.
In The Complexity Advantage, Susanne Kelly and Mary Ann Allison outline a different approach in which the objective is to develop the ability to adapt as an integral property of the organization itself. To do this, the authors turn to complexity theory or the science of complex systems. The reason for this is that the study of these systems has yielded numerous insights into attributes of complex systems that make them especially good at adaptation and particularly co-evolution with other such systems. The ability to self-organize dynamically is one such very important property. The emergence of order in complex systems that exhibit both convergent and divergent behavior (that is, positioned between order and chaos) provides a powerful insight into how it is possible to have simulta-neously appropriate order and predictability as well as adaptability. Biological and social systems represent well-known examples.
The title of the book refers to the commercial advantage that can accrue to companies that:
understand the structure of complex adaptive systems; embrace the prin - ciples by which such systems evolve; diligently apply these principles to designing organizations, and organizational practices and articulating valued behavior.
This advantage directly results in that such organizations are more likely to have the ability for dynamic adaptation preserved through a combination of their “genomes” and the processes by which the components of the organization evolve and are replicated.
The book is divided into four parts: Section One overviews concepts and features of complexity theory that are germane to its application in analyzing organization behavior; it also draws parallels between the selforganization evident in human biology and that in businesses; finally, it defines four key areas around which organizations make choices that explicitly influence their dynamic competitive fitness.
Sections Two and Three connect complexity theory with organizational behavior and illustrate the positive and negative emergent outcomes that result from different instantiations of choices in the four key areas. These sections represent the main content of the book in the form of 14 steps that businesses can take to produce a bias toward positive outcomes; characterization of the evolutionary fitness of an organization in terms of five possible states; and the nature and critical role of organizational change catalysts. Section Four illustrates many of the concepts using examples and experiences at Citibank.
The authors do a very commendable job of reducing a broad and abstract subject to a practical and implementable organizational framework and paradigm. A background in complexity theory or complex adaptive systems is neither assumed nor necessary. The text provides adequate grounding and contains sufficient and appropriate references for those readers who are interested in more information. The presentation is clear and non-mathematical and should be understandable by anyone who has experience with the design and operations of organizations.
I have two minor criticisms. The first is the authors' tendency to reduce their observations and recommendations to a series of steps that may be over-prescriptive. This results in enumerative constructs such as four simple rules that enable identification of dysfunctional behavior, fourteen steps for success, five levels of evolutionary fitness etc. The risk of this prescriptive approach is that organizations may focus more on following the steps rather than understanding and applying the concepts.
The second criticism is that certain terms from complexity science are introduced that are not necessary or not applied. The discussion of fractals, for example, is used to explain that if the overall organization and its components are self-similar, the ability to change direction quickly is enhanced. That fractals as geometric forms exhibit self-similarity as scale is changed is not really germane to the point, and fractal properties are not generally employed subsequently in the book. The jargon may detract from the substance of the observation.
Finally, aspects of conventional organization design such as compensation systems, performance evaluation, hiring practices and similar processes are not explicitly discussed. However, the framework of open systems, feedback loops and co-evolution provides a sound basis by which these more conventional notions or practices can be addressed via the processes described in the book. In fact, the chapters on Leaders, Catalysts and Eco-Technicians can serve as de facto job descriptions for critical roles that agents in adaptive organizations must execute. This speaks to the robustness of the framework and illustrates how the approach and exposition can be used as a starting point for a customized deployment.
One difficulty with designing organizations using conventional approaches is that applying well-known and well-adopted formalisms is likely to produce well-known results with little chance of novelty or competitive advantage. This book should be read and its principles adopted by any organization that is looking to define novel, effective and inherently adaptive organizations and processes. While managers and executives will find the content especially useful, all agents within the organization (especially all professionals) will find the concepts valuable.
PATRICK FORTUNE
Among complexity “how-to” books for business leaders, this one is the boldest and most explicit—but it’s hardly for the faint of heart. Anyone seeking short-cuts and quick “solutions” will not want to think as much as this book requires. Those who accept the challenge will discover concepts here that harbor the power to transform a business.
There is much here that is refreshingly original, perhaps even overly ambitious. The authors merge complexity science with the Jung-based Myers-Briggs personality system and fit all of that into classic systems thinking, creating what one might call a “complexity-plus” view of organizations. This melange has strong and intuitive appeal, though it’s unclear how the combination would withstand rigorous empirical scrutiny.
The work of management, the authors argue, is creating the most nurturing environment and the simplest rules possible. For instance, this means replacing political structures and power hierarchies with robust communications and personal independence, the hallmarks of any “self-organizing” system. “By wasting the intelligence, reasoning power, and adaptability of human beings, mindless compliance causes us to lose enterprise money and customers,” they write, “not to mention the pride of those whose capabilities are ignored.” Co-author Susanne Kelly drives home the point with her personal accounts of life as a Citicorp technology executive.
At times the authors’ heavy use of methodologies and prescriptive methods undercuts their emphasis on the need for self-organization. But these are big ideas. I am quite sure that the insights of complexity science will blaze a bright new trail for business. And there is no better place for the courageous to begin the journey than here.
THOMAS PETZINGER, JR.
The Complexity Advantage describes new roles, methods and paradigms arising from complexity science thinking, as they have been tried out and developed over the years in Citibank. This book is written by two individuals who were involved in all stages of these experimental developments at Citibank. Kelly and Allison do not attempt to present a comprehensive picture of complexity science, but focus on presenting and applying a number of concepts relevant to business organisations.
The authors introduce self-organization as the main concept in complexity science. Subsequently, complexity science is explained in more detail, in terms of nonlinear dynamics, open versus closed systems, feedback loops, fractal structures, co-evolution, and the natural elements in human group behavior (e.g., momentum, learning, commitment). Citibank became interested in complexity science because “many large and mature organizations slip into a sluggish mode of operation or succumb to unwieldy bureaucracy. Citibank didn't want that to happen. Many organizations seeking to avoid or trying to climb out of that dilemma had been using one new management program after another and had been less than satisfied with the results. Citibank was no exception” (p. 39). More particularly, problems in the area of computer software development triggered Citibank's attempt to apply complexity science.
Subsequently, Kelly and Allison describe several tools for identifying, undoing, and redoing the patterns of dysfunctional behavior in organizations. The failure of many traditional organization development and quality programs is explained in terms of a number of closed behavioral loops characterized by fear, limited learning, shallow commitment and irresponsible interaction. The authors then define four behavioral loops that generate effective self-organization, characterized by trust, open learning, deep commitment, and responsible interaction.
The core of Kelly and Allison's message includes 14 “steps for success” that should provide clear direction for businesses using complexity science to generate competitive advantage. These steps for success include: create urgency of purpose for sustaining the global enterprise; develop a web of diverse agents and visionary leaders; drive out fear and grow trust; build commitment across stakeholder boundaries; institute open learning for everyone; and do business on the basis of synergy and collaboration to maximize customer satisfaction. Subsequently, the Complexity Advantage Evolutionary Fitness Model describes a method of increasing business capabilities built on concepts taken from research into self-organization and evolution. This model is said to provide a map for encouraging the emergence of effective people, teams, and, finally, enterprises. Together with the 14 steps for success, the evolutionary fitness model forms the core of this book.
The next section, “Working in a Living System”, describes how business people in leadership, catalyst or eco-technician roles can apply the ideas explained in the previous section. For example, Kelly and Allison define habits, attitudes and techniques generating a more facilitative leadership style. Examples are given of how to apply these ideas, as well as how not to apply them. The latter examples include a “heartbreaking experience” of one of the authors, involving a new team in which the leader used the complexity retoric but was not, in the end, able to release the command-and- control paradigm. The last section provides more details of experiences within Citibank, and also includes a summary and quick reference guide.
The purpose of this book is realized to a large extent, in the sense that it presents a number of business concepts and tools derived from complexity science that were relevant to Citibank's business and development processes. Kelly and Allison have been able to translate the world of complexity science into actual practice, which distinguishes their book from most other publications in this area. From an academic viewpoint, however, the book could have benefited from references to other relevant studies, in order to explore how Citibank's complexity science project compares to other experiences and projects (e.g., McMaster, 1996; Sherman and Schultz, 1998). However, given the non-academic purpose of this book, this is not a serious flaw.
In view of the authors' intention to provide usable knowledge, the missing links to research on dysfunctional and functional closed behavioral loops is more serious (e.g., Argyris 1993; Argyris, Putnam & McLain Smith, 1985). These studies not only extend the empirical basis of Kelly and Allison's work, but also provide a detailed framework and protocol to develop knowledge that can be used to produce effective action in complex social systems. Moreover, the work of Argyris and others suggests that we do not need complexity science to uncover and change defensive behavior, limited learning and other dysfunctional outcomes in organizations. However, the book by Kelly and Allison shows that concepts such as self-organization, business landscapes and co-evolution may act as inte-grating metaphors in management research, which currently is suffering from extreme fragmentation and specialization. Moreover, The Complexity Advantage also makes a start in bridging the gap between theory and practice in the social sciences, and organization science in particular.
In the international banking industry, Citibank is widely seen as a success story. While dozens of competitors have tried to cross borders, Citibank has positioned itself as the first choice for (wealthy) businesspeople around the world. It is unclear to what extent Citibank's success in the financial services industry can be explained from its adoption of complexity science, or, alternatively, whether Citibank picked up complexity science after already having created a relatively strong competitive position, or both. Nevertheless, The Complexity Advantage stands out as an important contribution to the emerging literature on applications of complexity science. Practitioners and consultants rarely make a serious effort to report their experiments and experiences. Susanne Kelly and Mary Ann Allison not only made the effort to describe their ideas and experiences in detail, but have done so in an insightful manner.
GEORGE ROMME
Argyris, C. (1993) Knowledge for Action, San Francisco: Jossey-Bass.
Argyris, C., Putnam, R. & McLain Smith, D. (1985) Action Science, San Francisco: Jossey-Bass.
McMaster, M.D. (1996) The Intelligence Advantage: Organizing for Complexity, Boston: Butterworth-Heinemann.
Sherman, H. & Schultz, R. (1998) Open Boundaries: Creating Business Innovation through Complexity, Reading, MA: Perseus Books.
As biological organisms, we humans qualify as members of the class called complex adaptive systems. So do human cultures and the human cultural artifacts called organizations and businesses.
All complex adaptive systems are composed of semi-autonomous agents that communicate and exchange information with each other and with the “external” world. In all these systems, each agent has an internal model of its world, a model that guides its behavior, and that changes as a result of the consequences of the agent’s actions and of the information exchanges. (This is how these systems adapt to their changing worlds and it is why they are hard to predict.) In all these systems, one finds higher- level properties, properties of the system as a whole, that are often difficult to understand, let alone predict, based on study of the individual agents. These system-level properties are often said to emerge as a result of the agents’ interactions. Sometimes one says that these properties result from self-organization.
In most complex adaptive systems, the emergent, or self-organized, properties occur without benefit of an agent in charge of organizing and directing the system. I find it striking that in the entire spectrum of complex adaptive systems only when we come to human organizations do we typically find a powerful agent in charge of the whole operation. And these are precisely the complex adaptive systems that break all the time and that we are always struggling to fix.
Books on management of human organizations, such as The Complexity Advantage, are essentially about how to configure and influence these complex adaptive systems so that they won’t behave so badly. Some of us hope that insights from the sciences of complexity can help. This book is loosely based on some complexity metaphors and ideas, but the more important parts derive from the authors’ successful management experience. It is full of ideas that can help organizations work better.
Suzanne Kelly comes to the subject after more than 20 years of senior business management responsibility, much of it in the development of the software systems that contributed to the rise of Citibank as a dominant international consumer banking enterprise. Her collaborator, Mary Ann Allison, has her own strategic and organizational development consulting firm and has senior management experience at Citibank and elsewhere. The two know a lot about managing people in an enlightened way and about helping organizations to function better, and they share this knowledge in this book. It is well worth reading for its many nuggets of wisdom on these subjects.
The subtitle of the book is “How the science of complexity can help your business achieve peak performance,” and the book is full of complexity jargon. But the authors do not make a cogent case for how organizational features make contact with complexity principles, nor do they explain complexity well. Instead, they simply assert that their approach is complex-systems based and cite examples from their Citibank experience that their approach works. (I believe them, but that’s another matter.) Scientists working in complexity are properly very cautious about carrying over ideas derived from other complex systems to the arena of human behavior. Would that those writing about management were equally cautious. It can be misleading to use general complex systems concepts and metaphors in business situations without careful examination.
Not only won’t you learn much about the sciences of complexity here, but if you take literally what the authors say about science you will frequently be misled. Throughout the book the authors get scientific ideas wrong, explain them badly, or appear to have introduced them for no good reason.
Linear and nonlinear are often misused. For example, deterministic and linear are sometimes treated as equivalent; they aren’t, else we would not have deterministic chaos. Some established scientific ideas appear, including fractals, chaos, and punctuated equilibrium, which are unlikely to be useful in most business contexts. It is even less likely that more speculative concepts such as avalanches and memes would help, even if they were carefully explained. The discussion of power laws, cellular automata, and patches in the chapter on Eco-Technicians is, at best, not helpful. It won’t matter if you just skip this chapter; in fact, you’ll be better off if you do skip it. Otherwise, you might come away with the dangerous notion that someone called an “eco-technician” can actually build an accurate computational model of your organization that “shows the dynamic structure and patterns of the organization as it co-evolves with changing fitness landscapes.”
Citibank was an early and continuing sponsor of research at the Santa Fe Institute and belief in the importance of the sciences of complexity seems to be widespread at Citibank. Even though the authors do not explain the sciences of complexity well, the management ideas described in this book derive from an instinctive understanding of some key features of complex systems.
The authors value networked organizational forms, intensive webs of communication, reduced central control, allowing new structures to emerge through self-organization, reliance on adaptation to local circumstances versus central planning, and the power of distributed information gathering and processing. These notions are central to their approach, lb them they add trust building and the use of change agents. They ah 3 value some mathematical and computational modeling that is related to complexity, but don’t really explain what and why.
Despite critical flaws, this book contains important insights and is worth reading. It is basically a collection of sensible and even important ideas about managing organizations, derived from much successful experience, all dressed up with a lot of complex systems jargon. Don’t expect to learn much about complex systems. Don’t expect to learn in any logical way how the sciences of complexity relate to business. (If you already know something about the science, and can get past the many errors, you’ll understand where their business ideas make connections to what we’re learning about the general properties of complex systems. If you don’t know the science, you’ll be left wondering.)
Here are some of the parts that I liked best. Chapter 5: Surviving in Fear, describes some familiar examples of dysfunctional organizations and is a catalog of what not to do as a manager. The first part of Chapter 6: Thriving on Trust, focuses on this most important feature of productive human relations and is insightful. In Section Three: Working in a Living System, Chapters 10-12 are quite good, when stripped of the jargon, and there’s interesting summary material in Chapter 14. The concluding Chapter 15, with its insider’s view of Citibank, is both interesting and filled with nice illustrations of the authors’ ideas. The central part of the book is the material in Chapters 7 through 9, where the authors introduce their 14 Steps to Success, Evolutionary Fitness Models, and their
Complexity Advantage Evolutionary Fitness Model. This is a mixed bag: a combination of good ideas about management interleaved with attempts to make them fit into a list and relate to complexity.
In general, the reader interested in management can skip the stuff about science, and not worry about any of the technical terms. But do read their accounts of how to manage people, how to build trust, and how to build an organization that can discover for itself, using its own knowledge and intelligence, solutions to the day-to-day problems that it encounters.
MIKE SIMMONS