Esko Kilpi on Interactive Value Creation

The art of interaction, the design of digital and the science of social complexity

Month: April, 2014


The way we want to make sense of the world around us often has to do with causality. The question we ask is what caused “it” to happen. The mainstream approach is that an arrow, or arrows, can be drawn. There is a variable, the “it”, that happened, that is now to be explained. In scientific study this variable is regarded as dependent. An independent variable, or variables, that cause it are then sought. Causality means that X causes Y. If there is more X there will also be more Y. This is the if-then model of management. In organizations, a familiar explanation for success is that a particular manager or a particular culture caused it.

But there is something significant happening today. Scholars are increasingly pointing out the fact that this view of the relationship between cause and effect is much too simplistic and leads to a very limited or even faulty understanding of what is really going on.

Cybernetics recognized a much more complicated causality. In this kind of system the arrows, the links, between cause and effect can be distant in terms of time or place. The system can be highly sensitive to some changes but very insensitive to some others. For the first time, it was understood that it is a non-linear world.

Complexity challenges the assumption of earlier systems theories that movement in time can be predictable in the sense that X causes Y, or that the movement follows some archetypes. The modelling differs significantly from all previous systems models.

Complexity means a different theory of causality.

The most important insight is that it is often not possible to identify specific causes that yield specific outcomes. Almost indefinite number of variables influence what is going on. The links between cause and effect are lost because the tiniest overlooked, or unknown, variable can escalate into a major force. And afterwards you can’t trace back, you can’t find the exact butterfly that flapped its wings. There is no trail that leads you to an independent variable.

The future of a complex system is emerging through perpetual creation. Complexity is a movement in time that is both knowable and unknowable. Uncertainty is a basic feature of all complex systems. It is a dynamic in time that is called paradoxically stable instability or unstable stability. Although the specific paths are unpredictable, there is a pattern. The pattern is never exactly the same, but there is always some similarity to what has happened earlier.

In the end it is about the combination and interaction of the elements that are present and how absolutely all of them participate in co-creating what is happening. None of the elements cause the end result independently. From this standpoint a lighted match does not cause a fire. Rather, the fire took place because of a particular combination of elements of which the lighted match was just one. In the same way, a rude remark does not start a fight. The argument starts as a combination of an offensive remark and a coarse response.

The big new idea is to reconfigure agency in a way that brings complex relationships into the center. The task today is to see action within these relationships.

Complex relationships cannot be understood through spatial metaphors such as process maps or network charts. Unhelpful or wrong models and metaphors are often a big obstacle to moving our thinking forward after the technological constraints are gone.

We need to move towards temporality, to understand what is happening in time.

An organization is not a whole consisting of parts. There is no inside and outside. An organization is a continuously developing or stagnating pattern in time. Industrial management was a particular pattern based on specific assumptions about communication, causality and human psychology.

Recent developments in psychology/sociology have shown that human agency is not located or stored in an individual, contrary to what mainstream economics would have us believe. The individual mind arises continuously in communication between people.

The focus of industrial management was on the division of labor and the design of vertical/horizontal communication channels. The focus should now be on cooperation and emergent interaction based on transparency, interdependence and responsiveness.

Looking at communication, not through it, what we are creating together.


Thank you Ralph Stacey, Ken Gergen, Doug Griffin, Jim Wilk, Marko Ahtisaari and Katri Saarikivi

The wiki way of working

Physical tasks can normally be broken up in a reductionist way. Bigger tasks can be divided by assigning people to different smaller parts of the whole. For intellectual tasks, it is much harder to find parts that make for an efficient workflow. Intellectual tasks are by default complex and linked. Knowledge work is a social construct.

The machine metaphor led to the belief that if we can only arrange the parts in the right way, we optimize efficiency. The demands of work are different now: how efficient an organization is reflects the number of links people have and the quality of the links they have to the contexts of value, the things that matter.

How many handshakes separate them from one another and from the things that matter most? We are beginning to see the world in terms of  relations.

We have examples of new social architectures that redefine some basic beliefs about work and cooperation between people.

At the moment the wiki is the best departure from the division of labor and workflows. Wikis let people work digitally together in the very same way they would work face-to-face. In a physical meeting, there are always more or less the wrong people present and the transaction costs are very high. Unlike email, which pushes copies of the same information to people to work on or edit separately, a wiki pulls non co-located people together to work cooperatively, and with very low transaction costs. Email and physical meetings are methods which exclude. They always leave people out. A wiki, depending on the topic, the context and the people taking part, is always inviting and including. The goal is to enable groups to form around shared contexts without preset organizational walls, or rules of engagement.

In 1995 Ward Cunningham described his invention as the simplest online database that could possibly work. An important principle of the wiki is the conscious emphasis on using as little structure as possible to get the job done. A wiki does not force a hierarchy on people. In this case, less structure and less hierarchy mean lower transaction costs. A wiki always starts out flat, with all the pages on the same level. This allows people to dynamically create the organization and, yes, also the hierarchy that makes most sense in the situation at hand.

People work together to reach a balance of different viewpoints through interaction as they iterate the content of work. The wiki way of working is essentially a digital and more advanced version of a meeting or a workshop. It enables multiple people to inhabit the same space, see the same thing and participate freely. Some might just listen, some make comments or small edits, while others might make more significant contributions and draw more significant conclusions.

New work is about responsive, free and voluntary participation by people who contribute as little, or as much as they like, and who are motivated by something much more elusive than only money. Society has moved away from the era of boxes to the time of networks and linked, social individualism. Being connected to people, also from elsewhere, is a cultural necessity and links, not boxes, are the new texture of value creation.


Architectures of work and Internet-based firms

The characteristics of work in the network economy are different from what we are used to: the industrial production of physical goods was financial capital-intensive, leading to centralized management and manufacturing facilities where you needed to be at during predetermined hours. The industrial era also created the shareholder capitalism we now experience. In the network economy, individuals, interacting with each other by utilizing free or low cost social platforms and relatively cheap mobile, smart devices, can now create information products.

The production of information goods requires more human capital than financial capital. And the good news is that you are not limited to the local supply. Because of the Internet, work on information products does not need to be co-located. The infrastructure of work does not resemble a factory but a network.

Decentralized action plays a much more important role today than ever before.

Work systems differ in the degree to which their components are loosely or tightly coupled. Coupling is a measure of the degree to which communication between the components is predetermined and fixed or not. The architecture of the Internet is based on loose couplings and modularity. Modularity is the design principle that intentionally makes nodes of the network able to be highly responsive.

The Internet-based firm sees work and cognitive capability as networked communication. Any node in the network should be able to communicate with any other node on the basis of contextual interdependence and creative participative engagement. Work takes place in a transparent digital environment.

As organizations want to be more creative and knowledge-based, the focus of management thinking should shift towards understanding participative, self-organizing responsiveness.

The Internet is a viable model for making sense of the new value creating constellations of tomorrow.

But something crucially important needs to change:

The taken for granted assumption is that it is the independent employer/manager who exercises freedom of choice in choosing what is done and by whom. The employees of the organization are not seen autonomous, with a choice of their own, but are seen as rule-following, dependent entities. People are resources.

Dependence is the opposite of taking responsibility. It is getting the daily tasks that are given to you done, or at least out of the way. We are as used to the employer choosing the work objectives as we are used to the teacher choosing the learning objectives. The manager directs the way in which the employee engages with work, and manages the timing and duration of the work. This image of work is easy to grasp because it has been taught at school where the model is the same.

In contrast to the above, digital work and the Internet have brought about circumstances in which the employee in effect chooses the purpose of work, voluntarily selects the tasks, determines the modes and timing of engagement, and designs the outcomes. The worker here might be said to be largely independent of some other person’s management, but is in effect interdependent. Interdependence here means that the worker is free to choose what tasks to take up, and when to take them up, but is not independent in the sense that she would not need to make the choice.

The interdependent, task-based worker negotiates her work based on her own purposes, not the goals of somebody else, and chooses her fellow workers based on her network, not a given organization. The aim is to do meaningful things with meaningful people in meaningful ways utilizing networks and voluntary participation.

It is not the corporation that is in the center, but the intentions and choices of individuals. This view of work focuses attention on the way ordinary, everyday work-tasks enrich life and perpetually create the future we truly want through continuous learning.

The architecture of work is not the structure of a corporation, but the structure of the network. The organization is not a given hierarchy, but an ongoing process of organizing. The main motivation of work is not financial self-interest, but people’s different and yet, complementary expectations of the future.

The factory logic of mass production forced people to come to where the work is. The crowdsourcing logic of mass communication makes it possible to distribute work/tasks to where the right/willing/inspired people are, no matter where on the globe they may be.

Knowledge work is not about jobs or job roles but about tasks. Most importantly knowledge work can, if we want, be human-centric. Through mobile smart devices and ubiquitous connectivity, we can also create new opportunities and a better future for millions of presently unemployed people.

It is possible!