Esko Kilpi on Interactive Value Creation

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

Tag: Kenneth Gergen

A pattern language of post-industrial work

At the core of the post-industrial era is the idea that people should design for themselves. This principle applies also our value creating entities. This may sound radical but comes from the observation that most of the value on global scale is not created by firms but by people. People, then, should learn to be better designers. When designing something we always rely on certain patterns. We are in the midst of a shift from the industrial pattern of supply and demand to social, interactive patterns.

The customer is now seen as being directly and actively involved in the key moments of value creation as opposed to passively consuming value. There are profound implications that result from this change of thinking. Products and services are not reproducible as such any more. Solutions are by default contextual, but they can be starting points for someone else to create value. Creative, connected learning is at the core of the post-industrial business.

The most important principle is to build the organization around three design patterns: (1) Relations, (2) Network effects and (3) Solving problems /Asking questions.

Relations

Cultural homogenization is a theme of our time. It is apparent in fashion, food, music, and many services with a unified user experience. Everything is made to be basically the same everywhere. According to some psychologists, the desire for this sameness arises from anxiety about differences. This is one of the reasons why Gregory Bateson argued that the history of our time can be perceived as the history of malfunctioning relationships. More homogenization leads to more anxiety (when experiencing differences) which leads to more homogenization and the “differences that make a difference”, as Bateson put it, are lost.

Human behavior is learned in relations. Our brains are wired to notice and imitate others. Computational social science has proved that behavior can be caught like a disease merely by being exposed to other people. Learning and also non-learning can be found in communication. It is not that people are intelligent and then socially aware. Social intelligence is not a separate type of intelligence. All intelligence emerges from the efforts of the community.

To succeed you need relationships and interaction. When customers are identified as individuals in different use contexts, the sales process is really a joint process of solving problems. You and your customer necessarily then become cooperators. You are together trying to solve the customer’s problem in a way that both satisfies the customer and ensures a profit for you.

The industrial make-and-sell model required expert skills. The decisive thing was your individual knowledge. Today you work more from your network than your skills. The decisive thing is your relations. The new structures and new designs are about communities continuously organizing themselves around shared contexts, meaning shared interests and shared practices. 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.

The really big objective of the digital transformation is to reconfigure agency in a way that brings relationships into the center. Success today is increasingly a result of skillful participation: it is about how we are present and how we communicate. Through new technologies, applications and ubiquitous connectivity, we have totally new opportunities for participation and communication — potentially changing the way we work together.

Network effects

The new platforms can be a valuable, shared resource making value creation possible through organizing and simplifying participation. Sociologists have called such shared resources public goods. A private good is one that the owners can exclude others from using. Private was valuable and public without much value during the era of scarcity economics. This is now changing in a dramatic way, creating the intellectual confusion we are in the midst of today. The physical commons were, and still often are, over-exploited but the new commons follow a different logic. The more they are used, the more valuable they are for each participant.

The ongoing vogue of business design transforms asset-based firms to network-based platforms. The effects of Moore’s law on the growth of the ICT industry and computing are well known. A lesser-known but potentially more weighty law is starting to replace Moore’s law in strategic influence. Metcalfe’s law is named after Bob Metcalfe, the inventor of the Ethernet. The law states that the cost of a network expands linearly with increases in the size of the network, but the value of the network increases exponentially. When this is combined with Moore’s law, we are in a world where at the same time as the value of the network goes up with its size the average costs of technology are falling. This is one of the most important business drivers today.

The implication is that there is an ever-widening gap between network-economy companies and those driven by traditional asset leverage models. The industrial economy was based on supply-side economies of scale inside the corporation. The new focus is outside, in demand-side network economies.

The most important model is a network structure where the value of all interactions is raised by all interactions; where every interaction benefits from the total number of interactions. These are the new network businesses. In practice this means that digital services can attain the level of customer reach and network size, required to capture almost any market, even as the size of the company stays relatively small. This is why network-economy based start-ups have such a huge advantage over asset leverage based incumbents. The key understanding is that it is now the customers or members of the network who create value, not the network owner. The customer will be transformed from being an audience to an actor.

The central aggregator of enterprise value will no longer be a value chain. The Internet is a viable model for making sense of the value creating constellations of tomorrow. Perhaps the next evolutionary step in the life of the firms is a transformation from platforms to open commons with shared protocols. Perhaps Bitcoin/Blockchain is going to be part of the new stack, the TCP/IP of business.

Solving problems /Asking questions

Success in life has been seen governed by two concepts: skills and effort; how bright you are and how hard you work. Recently, researchers have claimed that there is a third and decisive concept. It is the practice of lifelong curiosity: “knowing what to do when you don’t know what to do” as Piaget put it.

The collective intelligence of our societies depends on the tools that augment human intelligence. We should welcome the fact that people today are smarter in large measure because they have invented and use smarter tools. Making tools is what human beings have always done. The interactions between tools and human minds are so complex that it is very hard to try to draw a line between humans and technology. Neither is it a zero-sum game where the human brain is losing to technological intelligence, but as technology changes, people and what people do, are necessarily changed.

Work starts from problems and learning starts from questions. Work is creating value and learning is creating knowledge. Both work and learning require the same things: interaction and engagement. With the help of modern tools, we can create ways for very large numbers of people to become learners. But learning itself has changed, it is not first acquiring skills and then utilizing those skills at work. Post-industrial work is learning. It is figuring out how to solve a particular problem and then scaling up the solution in a reflective and iterative way — both with technology and with other people.

The new design patterns create new opportunities. It is not about having a fixed job role as an employee or having tasks given to you as a contractor. The most inspiring and energizing future of work may be in solving problems and spotting opportunities in creative interaction with your customers.

A new theory of growth

For most of human history, creativity was held to be a privilege of supreme beings, initially, the gods who shaped the heavens and the earth, and then it was extraordinary human beings who were the creators and not the helpless, dependent subjects of the wrath of the gods. We switched our views further as we began to understand more how the world worked. Whether this has helped the human race is debatable. But it would help us if we realized the responsibility that comes with our new role.

Our future is tied to human creativity.

You would think that given its importance, creativity would have a very high priority among our concerns, but we face a disturbing reality if we look at what is really going on today. The arts are seen as unessential luxuries and instead of exploring creative new solutions, cutting expenses is the approach of most managers trying to deal with global competition.

What holds true for the arts and the economy, also applies to education. The models of mass society and mass production still prevail in the world of mass education. The industrial society is re-born daily at the expense of a different sociocultural context that would embrace creativity.

The sociocultural context matters because creativity is a systemic rather than an individual phenomenon. Workable new solutions to our most pressing concerns will not appear by themselves as isolated ideas of independent people. Creativity is born in connections and in enriching interaction.

To say that Thomas Edison invented electricity or that Albert Einstein discovered relativity is a popular, but misleading simplification. These breakthroughs would have been inconceivable without (1) the social and intellectual network that stimulated and advanced their thinking and (2) the people who recognized the value of their contributions and spread them further. A good, new idea is not automatically passed on. 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 one. One cannot be creative alone. These qualities are co-created in an active process of mutual recognition.

The creative era is about interdependence, not about superhuman individuals.

MiinaAn inspiring person is only inspiring by virtue of others who treat her this way. A good decision is only good if there are people around to agree with it. It is not enough to look at the individuals who seem to be responsible for a new idea. Their contribution, although important, is always a node in a network and a phase in a movement of thought. Creativity takes place in connections and communication. The network is the enabler and amplifier. It is time now for a new epistemology; new ways of talking about knowledge creation.

However, people have always networked. Scholars depended heavily on correspondence networks for the exchange of ideas before the time of the universities. These communities, known as the “Republic of Letters” were the social media of the era, and resembled the communication patterns of today astonishingly closely. The better-networked scientist was often the better scientist. Today, the better-networked knowledge worker is usually the better worker. In the future, the better-networked student will always be the better student.

The main difference from the time of letters and the printing press is the transformative efficiency of our new interaction tools. A “man of letters” may today be a man of tweets, posts and updates, but the principle is the same: what matters most is the way we are skilfully present and communicate using all the different means that are available.

Mutually recognizing and mutually supporting relationships are the core of creative progress and growth.

To be human means communicative interaction. Creativity is an emergent pattern of that interaction.

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Thank you Ari Manninen, Pasi Aaltola, Katri Saarikivi, Kenneth Gergen, Doug Griffin, Edmund Phelps, Esa Saarinen and Mihaly Csikszentmihalyi

More on creativity and non-routine work

Complexity

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.

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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.

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The Social Graph of Work

The approach of the industrial era to getting something done is first to create an organization. If something new and different needs to be done, a new and different kind of organizational form needs to be put into effect. Changing the lines of accountability and reporting is the epitome of change in firms. When a new manager enters the picture, the organizational outline is typically changed into a “new” organization. But does changing the organization really change what is done? Does the change actually change anything?

An organization is metaphorically still a picture of walls defining who is inside and who is outside a particular box. Who is included and who is excluded. Who “we” are and who “they” are.

This way of thinking was acceptable in repetitive work where it was relatively easy to define what needed to be done and by whom as a definition of the quantity of labor and quality of capabilities.

As a result, organizational design created two things: the process chart and reporting lines, the hierarchy.

In creative, knowledge based work it is increasingly difficult to know the best mix of people, capabilities and tasks in advance. In many firms reporting routines are the least important part of communication. Much more flexibility than the process maps allow is needed. Interdependence between peers involves, almost by default, crossing boundaries. The walls seem to be in the wrong position or in the way, making work harder to do. What, then, is the use of the organizational theatre when it is literally impossible to define the organization before we actually do something?

What if the organization really should be an ongoing process of emergent self-organizing? Instead of thinking about the organization, let’s think about organizing.

If we take this view we don’t think about walls but we think about what we do and how groups are formed around what is actually going on or what should be going on. The new management task is to make possible the very easy and very fast emergent formation of groups and to make it as easy as possible for the best contributions from the whole network to find the applicable tasks, without knowing beforehand who knows.

The focal point in organizing is not the organizational entity one belongs to, or the manager one reports to, but the reason that brings people together. What purposes, activities and tasks unite us? What is the cause of interdependence and group formation?

It is a picture of an organization without walls, rather like contextual magnetic fields defined by gradually fading rings of attraction.

Instead of the topology of organizational boxes that are still often the visual representation of work, the architecture of work is a live social graph of networked interdependence and accountability. One of the most promising features of social technologies is the easy and efficient group formation that makes this kind of organizing possible for the first time!

It is just our thinking that is in the way of bringing down the walls.

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A Christmas Letter

Gregory Bateson wrote that the major problems in the world are the result of the difference between how nature works and how people think. Mainstream economics still sees the economy and society as ultimately predictable and controllable (machines), although the repeated financial crises have shown how deeply flawed this view of the world is.

Luckily, during 2013, more scholars than ever before saw organizations as being more analogous to nature. There, it is not about predictions and control, but about perpetual co-creation, complex responsive processes and fundamental interdependence. Their claim is that we should study links and interactions. Many aspects of our social and economic world would start to look completely different from this complex network perspective.

2013 also brought us closer to understanding how work itself is changing.

Knowledge work is creative work we do in interaction. Unlike the business processes we know so well, where tangible inputs are acted on in some predictable, structured way and converted into outputs, the inputs and outputs of knowledge work are ideas, information and decisions. Even more, there are no predetermined task sequences that, if executed, would guarantee success. Knowledge work is characterized by variety and exception rather than routine. It is thus impossible to separate a knowledge process from its outcomes. Knowledge work is not “just work”, a means to doing something else! Knowledge work is about human beings being more intensely present. Thus, a business today needs to be human-centric – by definition.

The good news then, is the advances during 2013 in network theory and knowledge work practices. The bad news, as we now look ahead to 2014, is that today we are as far from being human-centric, as we have been for ages. As one example, people still tend to see their work and personal lives as two separate spheres. Although this conflict is widely recognized, it is seen as an individual challenge, a private responsibility to manage.

It is now time to challenge this and see the conflict as a systemic problem. It is a result of the factory logic, which saw human beings as controllable resources and interchangeable parts of the main thing, the production machinery. The context and logic of work are dramatically different today. In knowledge work we need to create an explicit, new connection between work and personal life. We talked earlier about balancing work and life. Here we are talking about connecting work and life in a new way, with a new agenda. Human beings are the main thing.

Traditional management thinking sets employee goals and business goals against each other. The manager is free to choose the goals, but the employee is only free to follow or not to follow the given goals. This is why employee advocates mainly want socially responsible firms, nothing else, and the management of those firms wants committed employees who come to work with enthusiasm and energy. Must we then choose between the goals of the people or the goals of the business, or can the two sides be connected? As we know, passion and commitment are best mobilized in response to personal aspirations, not financial rewards. We need a new agenda connecting people and businesses! The aim, however, is not to have a single set of common goals, but complementary goals and a co-created narrative for both!

Linking personal lives with corporate issues may seem like an unexpected, or even unnecessary connection. But if we don’t learn from network theory and knowledge work practices, and continue to deal with each area separately, both individuals and organizations will suffer. The lack of a connecting agenda may also be one of the big challenges facing the emerging post-industrial society.

We need to study the intersection of business strategy and personal narrative and use the new agenda to challenge our industrial age practices and flawed ways of thinking. Knowledge work needs whole human beings. People who are more fully present, people with responsibility and ownership. We are accustomed to taking work home, but what would the opposite be? This may be the next frontier of social business. More on this next year!

Christmas is a special time for family and friends. Perhaps the rest of the year can also be made very special through rethinking and reinventing some of the basic beliefs we have about work!

Happy New Year!

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Thank you Deborah Kolb, Lotte Bailyn, Paul Ormerod, Ken Gergen, Ralph Stacey, Joyce K Fletcher, Doug Griffin, Kim Weckström and Katri Saarikivi

More on the subject:

Futurice. A company that is already in the future. HBR: “To Optimize Talent Management, Question Everything” HBR: “The Ideas that Shaped Management in 2013” “Essential Zen Habits” “The Third Way of Work” “a way of working where the people doing the work matter as much as the work being done” “Bring Your Own Device is really Bring Your Own Mind” “work is you, you are the work. So what is the future of You?

Resilience, rationality and how we make decisions

We have been studying companies’ connections and disconnections for more than twenty years and have worked inside a huge number of them. Across all this research, common themes have emerged and intensified during the past few years: good communication in the era of the Internet and the new interactive tools does not mean any more that companies should listen carefully to their customers or that leaders should talk clearly with their subordinates. The linear view of communication, the movement of messages or sharing of content between people is giving way to a totally new understanding of what interaction, and work, are all about.

The first emerging theme is that communication is in fact a process of continuous coordination and knowledge creation. Knowledge is not shared as contents, but arises in action. Knowledge is never transmitted from one mind to another. It is a change from the movement of messages to a joint movement of thought. The future and viability of an organization depend on this process.

Economics still makes the assumption that individuals, the agents, as they are called, operate autonomously, separately from the influences of others. When choosing something, making a decision from a set of alternatives, the agent compares the attributes of the alternatives and selects the one that corresponds to her preferences. It is a world where independent individuals carefully weigh up the costs and benefits of any particular course of action.

However, scientists have emphasized the limits of our understanding. An important point is that these limits apply to everyone. They apply to politicians, to central bankers and to top executives of multinational companies. John Maynard Keynes once wrote that we have, as a rule, only the vaguest idea of the consequences of our actions. Herbert Simon and Stuart Kauffman on the other hand have argued that the number of future paths open to us at any point in time is so vast that it makes no sense at all to speak of the best or optimal decision.  But we still think the world works like a predictable machine operated by rational agents

Behavior that does not follow an economist’s definition is often called irrational, but it may be that in a world of ubiquitous networks, a proliferation of choice and an abundance of information, the economic definition of rationality has itself become outdated and irrational.

We need a new model of rational behavior and a new understanding of how we make decisions. We need a new decision model!

The second emerging theme is that the assumption that people make choices in isolation, that they do not adopt opinions simply because other people have them, is no longer sustainable. The choices people make, their buying decisions and their political views, are directly influenced by other people. That is to say that we construct our world together in communication. Network scientists such as Duncan Watts and Mark Granowetter have proved that the world comes to be what it is for us in our relationships. In the end it all depends on the company you keep and the conversations you have.

This leads to the importance of emphasizing relations instead of reductionism and separations. Reductionism means that the organization is understood as being split from its environment and one functional team is seen as being separate from another function. The worst mistake we make as a result of reductionist thinking may be that we assess and reward employees as if they were disconnected from other employees.

Links and communication are at the centre of organizational life. Depending on the quantity of interdependent links and the quality of communication, the organization lives or dies. Work is interaction between interdependent people.

The third emerging theme is that communication creates patterns. Words become what they are through the responsive actions of the people taking part. The relational view means in practice that if a conversation goes badly, it is always a joint achievement. On the other side, a conversation can only be successful if both participants join in and make it so as Ken Gergen points out. In management, it means that there is nothing one person alone can do to be a good manager. Good ideas don’t count as good ideas, if other people don’t treat them as such.

New leadership is about an awareness of creative and destructive patterns and having the ability to influence what is going on. In a creative pattern, the participants build on each other’s contributions. The conversation, thinking and action are in a process of forward movement.

Destructive patterns are the most harmful in terms of organizational viability. These patterns don’t contain forward movement but running in circles. People and organizations get stuck! People slow down in bitterness and silence, or even to the breaking of the link. The most destructive patterns often begin subtly, but unless they are worked with soon, not only will relations suffer but the whole network will deteriorate.

Being aware of the patterns includes being aware of the roles that we play. Whenever we speak, we do two things: we subtly define ourselves and define the other. Does the speaker in a company context define herself as one who can talk down to others or as an equal? What we say is important to the viability of the organization but the way we say it can be equally important. Talking down or talking up between people creates an asymmetry that leads to bad decisions and inefficient movement of thought.

The machine metaphor meant that we tended to think that the people “above” us have significant power. They are in control. We thus talked up to them. They should decide. They should do things for us because they were the ones who were responsible, not us. Knowing that they are not in control raises the question of a need for a new distribution of responsibility. Bottom-up as a metaphor is as harmful as top-down when the common goal is resilience.

There is no aspect of work or leadership that takes place outside the realm of communication. Human agency is not located or stored in an individual, contrary to mainstream economics. The individual mind arises continuously in communication between people.

Being skilfully present in the forward movement of thought and relational action is the new meaning of being rational.

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Thank you Ralph Stacey, Doug Griffin, Ken Gergen, Marcial Losada, Katri Saarikivi and Paul Ormerod

Links: “Resilient Performance in an Age of Uncertainty” “Possibilianism” “Stanley Milgram and the uncertainty of evil” “The fluid core“. “On functional stupidity and trust“. “Tulipmania” “Neuroeconomics

Business and complexity

Up to now, we have seen the world around us as systems that, we thought, could be described and understood by identifying rational causal links between things: if I choose X, then it will lead to Y. If, on the other hand, I choose A, it will lead to B. We are accustomed to drawing boxes and arrows between those boxes. We try to model the world as predictable processes based on knowing how things are and how they will be. We want to be certain, and we think we are.

Management thinking is based on the sciences of certainty. The whole system of strategic choice, goal setting and choosing actions to reach the given goals in a controlled way depends on predictability. The problem is that this familiar causal foundation cannot explain the reality we face. Almost daily, we experience the inability of leaders to choose what happens to them, to their organizations – or to their countries. Things may appear orderly over time, but are inherently unpredictable. We live in a complex world.

Complex systems are, as their name implies, hard to understand. Social systems, like organizations consisting of people, are accordingly complex and hard to understand. There is no linearity in the world of human beings. There are no arrows and people are not boxes, or fit inside of boxes. This is why our thinking needs to develop from the sciences of certainty to something more applicable, the sciences of uncertainty, the sciences of complexity.

Complexity refers to a pattern, a movement in time that is, at the same time, predictable and unpredictable, knowable and unknowable. Chaos theory explains how these patterns form. A parameter might be the flow of information in the system. At low rates, meaning no input or more of the same input, the system moves forward displaying a repetitive, stuck behavior. At higher rates and more diversity the pattern changes. At very high rates the system displays a totally random behavior. The pattern is highly unstable. However, there is a level between repetition/stability and randomness/instability. This level where simultaneous coherence and novelty are experienced is called the edge of chaos.

Classical physics took individual entities and their separate movement (trajectories) as the unit of analysis in the same way we have analyzed and rewarded individuals. Henri Poincaré was the first scientist to find that there are two distinct kinds of energy. The first was the kinetic energy in the movement of the particle itself. The second was the energy arising from the interaction between particles. When this second energy is not there, the system is in a state of non-dynamism. When there is interactive energy, the system is dynamic and capable of novelty and renewal.

Interaction creates resonance between the particles. Resonance is the result of coupling the frequencies of particles leading to an increase in the amplitude. Resonance makes it impossible to identify individual movement in interactive environments because the individual’s trajectory depends more on the resonance with others than on the kinetic energy contained by the individual itself.

We are the result of our interaction. We are our relations.

The conclusions are important for us: firstly, novelty always emerges in a radically unpredictable way. The smallest overlooked variable or the tiniest change can escalate by non-linear iterations into a major transformative change in the later life of the system.

Secondly, the patterns are not caused by competitive selection or independent choices made by independent agents. Instead, what is happening happens in interaction, not by chance or by choice, but as a result of the interaction itself.

The new social technologies have the potential to influence connectivity and interaction as much as the sciences of complexity are going to influence our thinking. The task today is to understand what both social business and complexity mean. The next management paradigm is going to be based on those two, at the same time.

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John Hagel on “harnessing the power of randomness” and “resilience

Communication and cognition

Economic growth is about value added. In manufacturing adding value was a transformation process from physical raw materials to physical goods. Economic growth is still today about value added. The difference is that the generic, homogeneous raw materials of the industrial era are now unique ideas and the transformation process is an iterative, interactive, non-linear movement, rather than a linear, sequential chain of acts.

The worlds of manufacturing-based added value and creativity-based added value require very different skills. Before the Internet and smart devices, most professional occupations required individual competencies that in most cases had accumulated over years. This experience base, often called tacit knowledge, was used to retrieve answers from memory and to independently solve situations arising at work. Knowledge was situated in the individual. In order to help individuals cope with the challenges of everyday life, individual competencies needed to be developed. This is why our whole education system is still based on independent individuals learning and, as a consequence,  knowing.

The cognitive load of work has increased as a result of manufacturing giving way to creative, knowledge-intensive work. The content of work is changing from repetitive practices to contextual, creative practices. This makes the individual experience base, by default, too narrow a starting point for efficient work. Experiences can be a huge asset but experiences can also be a liability, creating recurrence where there should be novelty and innovation.

Creative work is not performed by independent individuals but by interdependent people in interaction. A new way to understanding work and competencies is unfolding: knowledge that used to be understood as the internal property of an individual is seen as networked communication. This requires us to learn new ways of talking about education and competencies. What is also needed is to unlearn the reductionist organizing principles of industrial work. Work is communication and the network is the amplifier of creativity.

People have always networked. Scholars depended largely on correspondence networks for the exchange of ideas before the time of the universities. These communities, known as the “Republic of Letters” were the social media of the era, following the communication patterns of today astonishingly closely. The better-networked scientist was often the better scientist. The better-networked worker is today usually the better worker. The better-networked student in the future is always the better student.

The main difference from the time of the Republic of Letters is the efficiency of our tools for communication, meaning thinking together. A “man of letters” may today be a man of tweets, blog posts and Facebook, but the principle is the same: the size and quality of the network matters. What matters even more than the network, is networking, the way we are present and interact. It is time to acknowledge the inherently creative commons nature of thinking, creativity and economic growth.

Life is a temporal pattern of emotional and intellectual interaction. We are our interaction.

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Noam Chomsky interview.

People, machines and the future of work

I took part in a high-level workshop on technological intelligence and the future of work. One of the questions raised was: “If machines can replace people’s minds in knowledge work as well as machines replaced their muscles in manual work, what will ultimately be left for human beings to do? Are we going to run out of jobs?” My answer was that this concern is based on a totally incorrect assumption. Working life does not consist of a finite number of problems and opportunities to which the human mind and human effort can be applied.

The challenges that confront us are unlimited. Every solution to a problem generates several new problems and also new opportunities. No matter how many problems are solved, there will always be an infinite number ahead of us. Although modern technology has reduced the number of things that in the past had to be dealt with by human beings, it increases the complexity of the challenges that require our attention now and in the future.

Technology: robotics, machine intelligence and cognitive computing do change what people should be doing and how organizations come to be what they are. This is why we need to revisit and rethink our conceptualizations of work.

When the Industrial Revolution began, the dominant Newtonian worldview meant that what was happening in the world was thought to be understandable without any reference to the environment in which things happened. Physical laws described what things following a linear, rational causality would do. The dominant view was that there are no significant uncertainties, or unknowns, messing things up. Most academic experiments were constructed accordingly, with the effect of the environment being eliminated. The aim was often to study the effect of one known variable on another.

Business enterprises were consequently thought of as machines. Enterprises conceptualized as machines, like all machines, didn’t have a will of their own. They were serving the intentions of their creator, the owner. The principal purpose was to obtain a return on the investment. Employees were, of course, known to be human beings, but their personal intentions were seen as irrelevant. People were retained as long as they were needed to fulfill the intentions of the employers.

The biological, meaning a systemic and cybernetic conceptualization, then replaced the notion of an enterprise as a machine. One, often overlooked, reason for this was the changing structure of ownership. When a firm went public, its creator disappeared. Owners were seen as anonymous, and too numerous to be reachable. The Industrial Revolution turned into the Managerial Revolution we are still living through today.

The Managerial Revolution changed the thinking around the purpose. Like any biological entity, the enterprise now had fitness and longevity as raisons d’être of its very own. Profit came to be thought of as a means, not an end in itself. Success came to be measured by growth. It was seen as essential, just like in nature.

The systemic view was a profound change in thinking compared with the mechanistic view. A biological organism is not goal-oriented in the sense of serving external purposes or moving towards an external goal. The movement is toward a more fit or more mature form of itself in a particular environment. An organism can adapt, but cannot choose to be something else.

But humans are creative and humans can choose.

Things are changing again. The sciences of uncertainty and complexity have helped us to understand that organizations are patterns of interaction between human beings. These patterns emerge in the interplay of the intentions, choices and actions of absolutely all the parties involved. No one party can plan or control the interplay of these intentions. But even without being able to plan exact outcomes, or control what others do, people accomplish great things together.

The thing is that people can only accomplish their work in the necessarily uncertain and ambiguous conditions through ongoing conversations with each other. This is why the next revolution is dawning.

The social revolution, the next industrial revolution, is about deeply rethinking the value of human effort. An increase in value can only occur if the parts of a “system” can do something in interaction that they cannot do alone. Social business may be more about complementarity and coordination than collaboration and working towards the same goal.

An enterprise that is conceptualized as a social business should serve the purposes of all its constituents. It should enable its parts to participate in the selection of both the ends and the means that are relevant to them personally. If the parts of a system are treated as purposeful, they must have the freedom to choose and to act. This means that the defining characteristic of a social business is the increased variety of behaviors that is available. It is not necessarily about common goals or shared purposes any more.

The way our organizations are conceptualized has a great effect on what people do, and what they do affects the way organizations are conceptualized. Enterprises have always consisted of people who have ideas, intentions, creativity and purposes of their own.

This, in the end, is what makes people different from machines.

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Background:

Kevin Kelly: “dream up new work that matters”. The Atlantic: “The Robot Will See You Now”. Russell Ackoff on Systems Thinking. David C. Aron on Systems Thinking, Complexity Theory and Management. Changing the social contract of work. Gary Hamel on the invention of management. McKinsey Quarterly: “The next revolution in interactions”. MIT Technology Review: “The brain is not computable and no engineering can reproduce it”. Race against the machine by Brynjolfsson and McAfee. Greg Satell blog post. Ross Dawson and John Hagel on the humanization of work.