Esko Kilpi on Interactive Value Creation

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

Tag: Paradoxes

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.

.

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

Emergence and self-organization

Many people say that open source software developers have the most efficient ecosystems for learning that have ever existed. What is it, then, that is so special about the way developers do things? Is there something that could act as a model for the future of work, or the future of education?

What takes place in open source projects is typically not the result of choices made by a few (powerful) people that others blindly implement. Instead, what emerges is the consequence of the choices of all involved in the whole interconnected network, “the connective“, as Stowe Boyd puts it. What happens does not follow exactly a plan or a design, what happens emerges. It is about the hard to understand process of self-organization.

We still don’t quite understand what emergence and self-organization mean. The problem is that we believe that the unit of work is the independent individual. Self-organization is then thought to mean that individuals organize themselves without the direction of others. People think that it is a form of empowerment, or a do-whatever-you-like environment, in which anybody can choose freely what to do. But connected people can never simply do what they like. Cooperating individuals are not, and cannot be, independent. People are interdependent.  Interdependence means that individuals constrain and enable each other all the time. What happens, happens always in interaction and as a result of interaction.

According to the present approach to management, planning and enactment of the plans are two separate domains that follow a linear causality from plans to actions. From the perspective of open source development, organizational outcomes explicitly emerge in a way that is never just determined by a few people, but arises in the ongoing local interaction of all the people taking part. For example GitHub “encourages individuals to fix things and own those fixes just as much as they own the projects they start”.

What emerges is, paradoxically, predictable and unpredictable, knowable and unknowable at the same time. This does not mean dismissing planning, or management, as pointless, but means that the future always contains surprises that the managers cannot control. The future cannot be predicted just by looking at the plans.

Emergence is often understood as things which just happen and there is nothing we can do about it. But emergence means the exact opposite. The patterns that emerge do so precisely because of what everybody is doing, and not doing. It is what many, many local interactions produce. This is what self-organization means. Each of us is forming plans and making decisions about our next steps all the time. “What each of us does affects others and what they do affects each of us.”

No one can step outside this interaction to design interaction for others.

An organization is not a whole consisting of parts, but an emergent pattern in time that is formed in those local interactions. It is a movement that cannot be understood just by looking at the parts. The time of reductionism as a sense-making mechanism is over.

What we can learn from the open source ecosystems is that organizational sustainability requires the same kind of learning that these software developers already practice: “All work and learning is open and public, leaving tracks that others can follow. Doing and learning mean the same thing.”

The biggest change in thinking that is now needed is that the unit of work and learning is not the independent individual, but interdependent people in interaction.

.

Thank you David Weinberger, Ken Gergen, Ralph Stacey and Doug Griffin

More on the subject: the GitHub generation, Sugata Mitra. Video: “Knowledge in a MOOC” Steve Denning on complexity. The mundanity of excellence.

Why do I have to cooperate?

Somebody recently asked me: “Why do we have to cooperate? I know my job. If I do my job and everybody else does his, we will be fine. The people I work with every day know what to do. I don’t get it why I need to be communicating with those other guys.”

Today’s organizations are complex systems that require continuous, responsive coordination to be effective. Work is much less repetitive than before. Job roles and work instructions can never be complete descriptions of what needs to be done. Work is not separate actions but connected tasks. It is all about links. Who needs to connect can never be fully  planned in advance. Interdependence is contextual, situational. In order to be successful, the constantly changing people forming the organization have to be able to connect effortlessly.

The days when we could just do our own thing are over.

When it comes to understanding the organizations in which we work, most of us understand best our own jobs and the work groups we have been part of. As a result from individual, reductionist scorecards, most people are ignorant of the larger network in which they work. When problems arise, this unawareness of how things affect one another often leads to short sighted and suboptimal solutions. Issues are resolved in favor of just one point of view.

When the circle of involvement is larger many changes occur. When people see where they fit in the bigger picture they are able to see the interdependencies and are able to respond much, much faster to changing conditions. Our research shows that transparent processes are more than four times faster than corresponding processes where people just see their own part.

Any one person or any one function cannot meet today’s challenges alone. We need a community of people who willingly participate and provide their insights to address the increasingly interdependent issues. Cooperation is necessary because one person no longer has the answer. Answers reside in the interaction, between all of us.

The challenge today is engagement. Widening the circle of involvement means expanding who gets to participate. It is about inviting and including relevant, new and different voices.

The unfortunate misunderstanding is that engaging people requires managers to let go. As managers contemplate to widen the circle of involvement they sometimes believe that it means to have less ability to provide input based on their knowledge and experience. Paradoxically, engaging more people requires more from managers than the current management paradigm. Instead of being responsible for identifying both the problem and the solution, they are now responsible for identifying the problem and identifying the people whose voices need to be heard. Who else needs to be here? How do I invite people who do not report to me? How do I invite people from outside our organization? Success today is increasingly a result from skillful management of participation: who are included and who are not, who are excluded.

Another misunderstanding is that productivity will suffer if larger numbers of people are involved. The new social platforms and interaction technologies have dramatically reduced the cost of participation. Temporal communities can be formed to solve a problem or to tackle an opportunity easier, cheaper and faster than ever before – if people are invited and if people want to engage.

We all have the experience of teams discussing among themselves about what is working and not working. People often degenerate into blaming the parties that are not present. “If only the other group would get their act together!” This kind of thinking never produces learning, responsiveness and agility. Bringing more people into the conversation is essential. When you widen the circle of participation, you widen the solution space.

“If there are enough eyeballs, all problems are shallow” as Linus Torvalds put it

.

More on the subject: Lessons from wikipedia. A HBR blog post by Gartner.

How to fight group-think

The mainstream approach to groups and teamwork underlines the need for consensus and cohesion. It is believed that members of an organization should commit themselves to its policies and chosen direction. Many writers claim that people should share the same vision, be positive and work harmoniously together. Seeking consensus often becomes so dominant in a group that its members tend to leave out of any alternative thinking. The symptoms of what is called group-think arise when people are not motivated to judge or criticize views and assumptions. People are positive and seek harmony on issues with no conflict to spoil the “we” atmosphere.

Often the more cohesive the group, the greater the inner compulsion on the part of the group members to avoid creating a disturbance. This often leads to people believing in the soundness of whatever proposals are promoted by the leader, or by the majority present. The danger is not so much that each individual will fail to reveal ideas that conflict with what the others propose, but that he will think that the proposal is a good one, without attempting to carry out any critical study of the possible alternatives. When this kind of group-think becomes dominant, there is often a considerable suppression of deviant or creative thinking. But it takes the form of each person deciding that his differing thoughts are not relevant and should be set aside.

Evidence of the group-think symptom is that things are left unsaid.

James C Thomson was a historian who studied the Vietnam War through observing decision making in the US State Department and at the White House during the war. He writes about the victims of group-think ignoring warnings. People collectively construct rationalizations in order to discount any negative news and feedback that, taken seriously, might lead the group members to reconsider their assumptions, as they recommit themselves to past decisions. Thomson’s findings came into my mind as last Wednesday I listened to Anssi Vanjoki defending Nokia’s past strategic decisions – no mistakes have been made!

Thomson writes about the fall of 1964. Just before the bombing of North Vietnam began, some of the policymakers predicted that six weeks of air strikes would force the North Vietnamese to seek peace talks. When someone asked: “What if they don’t?” the answer was that “Another four weeks would certainly do the trick!” The assumptions behind the decisions were never questioned.

What is being discussed in groups is often unclear. The lack of clarity is the very reason for having the conversation. We come to know what we are talking about as the conversation develops over time, if it develops. Communication is not one person saying something and others listening in order to understand what is being said, and thus formulating a joint decision. Whatever people do in groups is accomplished in communication, which always has a thematic pattern. The thematic patterns are, in turn, iterated over time as repetition, group-think or creativity. The demand that (management) group meetings are carefully planned and agenda-based may actually kill the possibility of any new meaning to emerge.

A group’s ritualistic adherence to meeting procedures and idealized rules of behaviour may create a false justification of the decisions made.

Research on complexity and creativity has shown the importance of diversity. If members join a group and have nothing in common at all, obviously, joint action will be impossible. But perhaps the bigger challenge today is if they conform too much in the name of group cohesion and thus block the emergence of the new. Organizations have the capacity to change only when they are characterized by diversity and deviance.

What is needed in groups, is paradoxically, conformity and deviance at the same time.

.

Thank you James C Thomson, Irving L Janis, Clay Shirky and Patricia Shaw

(Mårten Mickos blogs about this topic in Finnish)

More on group-think

Competitive and collaborative games

When coordinated behaviour takes place without the intervention of a regulating authority, we often attribute the coherent action to the existence of values and ethics. We tend to think that the existence of a strong value base means that less or even no regulation is needed. A decay of values conversely means that rules and regulation are needed.

A game theory approach to values assumes that people choose the kind of behaviour that gives them the highest expected benefit over time, given their expectations about what the other players will do and the rewarding or punishing feedback they get as a result of their own actions. Players learn by trial and error, keeping strategies that work and altering the ones that turn out badly. Players always observe each other. Those with a poor performance often tend to imitate those who are doing better. What has worked is likely to be used again.

In most games who wins and who loses is the whole point of playing. It would be hard to imagine a more unpopular outcome in the reality TV-series that today are watched by millions, than an announcement that all the players ended up as winners! It is, of course, beneficial that the place of the lazy, the incompetent, and the unmotivated is taken by better-motivated and more enterprising players.

Competitive games require rules to prevent players from cheating. Competition should be as fierce as the existing laws allow, we think. Any ambiguity in the regulations is immediately exploited. This is where our thinking does not serve us any more. Innovations by the players often make existing rules obsolete and call for new ones, as we have recently experienced in the financial markets. The present relationship between regulators and financial institutions is a competitive game in itself. Instead of a home audience watching, here we have the markets watching. The principle is the same.

There are also other growing problems with the games we play. In competitive games, there is always a lack of appreciation for the need of complementarities. You are supposed to manage without help from others. As a result of competition which excludes, diversity is reduced in the system that the game is played in. There are also more losers than winners in our games. Losers multiply as winning behaviours are replicated in the smaller winners’ circles and losing behaviours are replicated in the bigger losers’ circles.

As losers are excluded from the game, they are not allowed to learn. The divide between winners and losers grows constantly. This is why, in the end, the winners have to pay the price of winning in one way or another. The bigger the divide, the bigger the price that has to be paid. The winners end up having to take care of the losers, or two totally different cultures are formed, as is happening in the big US cities today. Psychologically, competitive games create shadow games of losers competing at losing.

The games we play have been played under the assumption that the unit of survival is the player, meaning the individual or a company. However, today the reality is that the unit of survival is the player in the game being played. Following Darwinian rhetoric, the unit of survival is the species in its environment. Who wins and who loses is of minor importance compared to the decay of the (game) environment as a result of the competition.

In games that were paradoxically competitive and collaborative at the same time, losers would not not be eliminated from the game, but would be invited to learn from the winners. What prevents losers learning from winners at the moment is our outdated zero-sum thinking and the winner-takes-all philosophy. In competitive/collaborative games the winners would be all those whose participation, comments and contributions were incorporated in the development of the game.

The most important reason why we need a new concept of games is because the players and their contributions in the real world are, at best, too diverse to rank. They are, and should be, too qualitatively different to compare quantitatively. In competitive games the players need to have the identical aim of winning the same thing. Unless all the players want the same thing, there cannot be a genuine contest. Zero-sum games were the offspring of scarcity. In the era of creativity and abundance, new approaches are needed.

In competitive/collaborative games the approach to rules is very different from before. The rules should be created, agreed upon and changed by the players themselves as the game continues. As there absolutely cannot be pre-existing rules for every conceivable situation that might arise, we have to move beyond seeing the players and the rule-makers as separate parties. The games are too complex to be governed totally from outside. We desperately need values-based participation as a prerequisite for taking part.

The players have the responsibility not only for adhering to the existing rules, but also for developing the rules further – specifically when the game (environment) decays as a result of the actions of the players.

The criteria for success in competitive games do not lie solely in winning but in the development and continuation of the game itself through collaboration.

Thank you Fons Trompenaars and Robert Axelrod

Background

Situational values or sustainable values.

Communication and diversity secure system-wide performance

In our competitive view of the world, we often think that the most capable are those who are the most competitive, and accordingly that competition creates and secures efficiency. It may be that high performance is incorrectly attributed to competition and is more a result of diversity, self-organizing communication and non-competitive processes of collaboration.

Competitive processes lead to the handicapping of the higher-level system that these processes are part of. This is because competitive selection leads to exclusion: something is left outside. Leaving something out always means a reduction of diversity. The resulting less diverse system is efficient in the short term, but always at the expense of flexibility. Agility and complex problem solving require diversity. Everything goes fine if nothing changes and if there are only easy problems to take care of!

Self-organizing, non-competitive processes are about interdependent individuals and groups solving problems in a shared context. Interaction creates capability beyond what could ever be predicted just by looking at the performance of the individuals involved. The higher performance and robustness are emergent properties of interaction. They are not attributable to the parts of the system. Social networks provide problem-solving capability that results directly from the amount of communication and level of diversity of communication.

Most organizations would soon fail if all their employees thought alike or had little or no contact. There are two new challenges. The first is to understand the need for networking with views and values that are different. The second challenge is even bigger because of the mainstream reductionist thinking: our assumption has been that by understanding the parts in detail, we understand the whole. This is simply not possible! What happens in interaction between the parts is more important than the parts. The whole is the emergent pattern of that interaction, not the sum of the parts.

Diversity here means the degree of unique information in the network. If all contribute the same information, then diversity is low. If each agent contributes relevant, unique information that is not shared by others, then the diversity measure is high.

Networks with a wide spectrum of filtering information are resilient to noise. This facilitating effect of diversity is critical when dealing with difficult problems where false information can lead to expensive consequences. Higher system performance and robustness occur through the simple collaborative combination of the different experiences of individuals, even though each individual takes part in communicative interaction from their own limited perspective.

The importance of self-organization and diversity is unfortunately still greatly underestimated today, particularly in centralized, monoculture systems – like firms. One of the great societal promises of social media is that interaction in wide-area networks, with enough diversity, can solve problems beyond the awareness of the individuals involved.

.

Background: On serendipity

Thank you Stuart Kauffman, Sari Baldauf and Norman Johnson

The problem of strategic choice

Either or thinking in strategy arises from the Aristotelian logic, which requires the elimination of paradoxes and dilemmas. Examples of these dilemmas are competition and collaboration or saving money and creating more value – at the same time. These dilemmas, if not resolved through choice and decision were seen as a sign of faulty thinking. As an alternative one could think of the problem of competition and collaboration or saving and providing a better service as a creative dilemma and a positive paradox. There are many different definitions of a paradox. It may mean a contradiction, a situation in which two conflicting elements exist at the same time. A paradox in this sense can be removed by choosing one side instead of the other or by reframing the problem to remove the contradiction. A paradox may also mean a state in which two opposing needs are simultaneously present, neither of which can be eliminated. There is therefore no possibility of a choice between the opposing poles or possibility of locating them apart without halting the process in time.

What is then required is a different kind of logic, such as the approach of Hegel instead of Aristotle. In Hegel’s thinking, the word paradox means the natural, and necessary, presence of conflicting ideas at the same time. A paradox is then the essential requirement for creativity and transformation. Paradoxes are a requirement of life. We live in a time when we have compartmentalized ourselves into disciplines, using engineered processes. Instead of these separations, we need to cross boundaries and interact to make new connections and insights. Crossing boundaries is always about working with differences. Differences are potentially conflictual in nature, and this is something we should now welcome. Conflicts give rise to the possibility of innovation and the potential for finding new solutions. Another example of this is the mathematical concept of chaos in the sciences of complexity. There the edge of chaos is a dynamic pattern in time that is stable and unstable at the same time. Stability and instability are inseparable. The dynamic is paradoxically both predictable and unpredictable. It is about predictable unpredictability or unpredictable predictability, stable instability or unstable stability. The contradiction and dilemma between stable and unstable cannot be resolved, but gives rise to the potential for creativity and innovation. It is time to refresh our thinking about strategic choice. It is time to embrace complexity and the enormous creative potential of live paradoxes.

Thank you Doug Griffin, Tomi Laamanen and Ralph Stacey