Apr 17, 2012

Management information systems and organizational worldviews

Management information systems reflect and control an organizations outlook on its 'world'. They control and steers information, incentives, the interpretation and filtering of information, affecting strongly its reaction on environmental and internal developments. 

They are causally related to the success or failure of innovative approaches and products as the filters used in determining 'key performance indicators' influence perception and interpretation of new markets and revenues.

These are usually handicapped relative to established markets and products. Nevertheless, again and again established players are superseded by new entrants as they discount information and chances that new players used to build franchises based on their 'attackers advantage'.

Modularity, networks and growth of complexity

Herbert Simon and Albert Ando (Simon and Ando 1961) have developed the concept of near decomposability, which is based on the idea that systems of interactions can be separated into groups (modules) according to the strength of interactions. If there are groups of elements among which interactions are much stronger than among other elements, while they show less strong interactions with other groups of interactions, it is assumed that these intergroup interactions can be neglected.

The obvious danger in this assumption is that interactions between groups are neglectable, which may be correct in the short run or under normal conditions but may also be wrong under longer terms and more unusual conditions, which leads under positive feedback to the crossing of thresholds and phase transitions and then may be observed as increased stress, risk and ‘catastrophes’.

While the system can be applied to the analysis of systems it may, under conditions, also be turned around to the explanation of emergence and system change.

Simon-Ando decomposability implies that microstates may be aggregated into (different) macro-states that describe aggregate system behaviour respectively macro-state variables. This is relevant for the analysis of different views, explanations and approaches to the analysis of an issue such as it occurs in science in general and in social sciences in particular.

Decomposability, i.e. separable modularity of a system correlates with flexibility, adaptability and ease of change of a system such as an organization. Thus, decomposability, innovation and the inverse of risk correlate. Decomposability is related inversely with risk as non-decomposable systems are characterized by systemic interlinkages that are more difficult to account for and manage. Near decomposability (Simon ) involves the assumption that interlinkages among a systems (possibly developing) modules can be neglected for analytical and extrapolation purposes. If non-decomposable systems are taken to be decomposable or decomposed according to non-fitting schemes, risk increases relative to a better match between partial model and its extrapolation. It is a viable assumption that interpretation schemes associated with non-fitting problem decompositions based on erroneous models are at the root of individual organizations threatening business failure as well as the economic crisis currently affecting the world economy.

Apr 16, 2012

How to deal with business complexity?

Business and state organizations face today a multitude of historically grown complex structures on which they depend for execution of processes. Examples range from technical infrastructure for communication to regulatory rules operating in bureaucracies. At the same time technological and associated social changes demand increasing speed, flexibility and adaptability of organisational structures and processes. How to cope with this situation that puts increasing stress on economic, social and political members of advanced and less advanced societies?

In the past numerous re-engineering projects have been executed to cut down on the jungle of organisational processes with limited success improving short-term figures, often creating images of short-term or even fake successes (e.g. through rules put into accounting systems) and increasing stress and susceptibility to failures. What if the jungle is a complex eco-system of organisational processes whose relations have been insufficiently understood and messed with?

The 'obvious' solution is to rationalize historically grown large scale organizational systems in meaningful ways by streamlining their structures based on an organic understanding of the important interlinkages among their 'modules' and their historic development. This view subsumes and at the same time limits a rational, analytic view of the world (as will become clear in the section on the decomposability of systems).

However, what that obvious solution entails is less clear. The above description entails a number of value judgements, whose resolution can only be based on very generally principles to be most widely acceptable. One of these values should be the long-term survival of the enterprise. Depending on the regulatory environment that entails a certain level of risk acceptable for an organization, which is related with specific degrees and processes of change.

The answer to the issue depends on our model of the world and its development. Fusing economic and evolutionary views, economic survival and even more economic success is about the realization of new chances and optimization of existing structures, i.e. two forms of adaptation. Competitive advantage as ex-post measure of 'realised' economic fitness is a relative measure of how an ensemble of organizational modules (e.g. departments, business units, legal entities) with certain characteristics that work better than other such ensembles (together).

The development of a complex systems, such as organizations, is a path-dependent build up of complex forms of organization glued together by information flows. The organizational build up takes places through learning about what does not work in markets captured in hierarchical structures and controlled by regulation of information blocks in modular components. It is based on an evolutionary process of learning about what survives in 'the environment' and reflection in organization characteristics, which is followed by a subsequent optimization process that leads to a more or less heterarchical entanglement of structures and processes.

Organizations can thus formally be seen as hierarchical systems with departmental modules that allow execution of functions through specific capabilities concentrated in particular departments. This confers economies through separation of work but also leads to interpretation and filtering problems in non-standard or changing situations as interpretative blindness and inertia are fostered. Therefore, (informal) organization structures need to be heterarchical in order to cut across departmental and disciplinary boundaries to successfully deal with the increased complexity and speed of change. This requirement is reflected in informal structures, which change the seemingly simple, modular hierarchy to a heterarchical form interlinked across hierarchical levels. Heterarchical structures allow faster and broader interpretation of information, but also demand higher interpretative capabilities by management. Given process and product related capabilities, these interpretative capabilities ('dynamic capabilities') determine to a large extent the success of an organization.

Apr 9, 2012

Ernst Mach workshop on scientific philosophy

Academy of Sciences of the Czech Republic

Ernst Mach Workshop / Werkstatt Ernst Mach

The first Ernst March Workshop, to be held on June 25-26, 2012, will host

Prof. Barry Loewer (Rutgers University)

Beginning in Spring 2012, the Department of Analytic Philosophy of the Institute of Philosophy in Prague will host annual workshops on the current work in analytic philosophy - philosophy of science, mind and language, metaphysics as well as value theory. Each workshop will center on the work of a distinguished keynote speaker who will give a lecture and respond to presentations by a limited number of workshop participants. On occasion, the workshop may have the format of a symposium on a recently published book by the keynote speaker.

Department for Analytic Philosophy
Institute of Philosophy
Jilská 1, 110 00 Prague 1

Prague Organizing Committee:
Vladimir Havlik, Tomas Hribek, Juraj Hvorecky, Ladislav Kvasz, Zuzana Parusnikova, Jaroslav Peregrin

International Advisory Board:
Tim Crane (Cambridge), Konrad Talmont-Kaminsky (Lublin), Friedrich Stadler (Vienna), Marián Zouhar (Bratislava), Zsofia Zvolenszky (Budapest), Hong Yu Wong (Tübingen)

Paper by Simon Robinson on Complexity, innovation and history of science

This paper of +Simon Robinson is really interesting as it points at the connections between the history / philosophy of science, information ecology and evolution, a complexity perspective, organisational worldviews and the need for complexity reduction in business. 

Personally, I take a Machian / Jamesian monist, pragmatist resp. radical empiricist position, which stresses the importance of considering the partial, evolutionary character of knowledge, which grows over time based on observation and inclusion of facts into thought systems, that happen to influence what is seen and collected as further observations. 

This matters also for organizations in general and businesses in particular that are build around values and cultures that define customer needs (problems), solutions (products), and approaches to identify and validate these through the lenses of market research, accounting / management information systems as well as softer foresight tools.

Institutional and organisational cultural systems are hard to change because underlying worldviews and information filters in internal and external data collection and analysis systems are strongly intertwined and reinfoce each other, creating a shared illusion which may be in alignment with market / stakeholders 'demand' - or not.

g+ keyword links: 
#complexity #philosophy of science #information ecology #innovation #strategy #foresight #organisational culture #worldviews

Enabling associative connections on the 'net

Re a post on a g+ post by Tim O'Reilly:

As far as I have understood fluidinfo, it should not only allow complex searches, but mimicking associative connections between information sources on the web - or other information storage / computing systems - helping "to free data from the siloes of tree-like-information storage" as explained by +Ralf Westphal here in a post on another system: http://weblogs.asp.net/ralfw/archive/2006/06/20/Freeing-Data-From-the-Silos---A-Relationistic-Approach-to-Information-Processing.aspx

Westphal there describes Pile, a recursive information storage / database system conceptualized by Erez Elul and funded / marketed by Peter Krieg (http://en.wikipedia.org/wiki/Peter_Krieg). It stores information as connection between elements which composed of connections of elements and so on. 

Krieg was a documentary movie maker and afaik influenced by Pile writing about the computer as the 'paranoid machine'. 

So take this as an example of of an associative post linking several concepts in a stream of thought.

N.B.: I happened to come across fluidinfo, when I checked out +Terry Jones as programmer working on Echo - an evolutionary ecological complex adaptive system simulation (see e.g. here: http://www.mitpressjournals.org/doi/abs/10.1162/artl.1997.3.3.165). 

Evolutionary simulation in computer systems hit upon the constraints of pre-defined system states, while real evolutionary processes are open in that they can build on any changes and re-combinations of information codified in 'the genes'.