Is complexity measurement of organizations posible and feasible?

Organizations can be seen as hierarchical systems with business line / unit and departmental ‘modules’ that allow execution of specific functions through specific capabilities concentrated in particular areas. This confers economies through separation of work but also leads to interpretation and filtering problems in non-standard or changing situations - interpretative blindness and inertia are fostered in organizations. Therefore, organizations need to be heterarchical. Particularly in conditions of increased complexity and speed of change we face today. 

Heterarchical structures allow faster and broader interpretation of information, but also demand higher interpretative capabilities by management. Given traditional and often still normal ‘linearly’ organized procedures and structures, these interpretative capabilities determine to a large extent the success of an organization – as Edith Penrose already highlighted.

On the other hand, functional and departmental decomposability, i.e. separable modularity of an organization correlates with flexibility, adaptability and ease of change of an organization.

Does measurement of decomposability (e.g. based on Simon’s near decomposability) allow for a measurement and thus management of organizational complexity? What do you think?

A discussion I have started in the Quantitave Complexity Management Group on Linkedin:

How can strategy models be developed further on the academic level?

As argued in a discussion on the limitations of strategy models, I would seek to extend strategy concepts, models, or frameworks in two areas to cope with the shortcomings of strategic decision making: 

a) by researching and formulating the psychological of strategy to deal with framing issues, filtering and selection of information that is used in deriving and 'updating', resp. challenging strategy conceptions in firms.

and

b) it still remains an issue why relevant information is not 'used' by an organization, even if individuals take account of information.

Thus, the psychological perspective needs be complemented by a organizational perspective on how the different views of actors are aggregated into strategic decisions and actions on the relevant organizational levels: How do organizations weigh the different pieces of information and 'compute' the strategy / action result(s)?

What is your opinion on this approach?

A discussion I have started in Strategy Professionals Group on Linkedin:

Towards improved strategy concepts

Where and how do we need to beyond existing models of strategy? 

What are the issues that need to be tackled by 'improved' strategy models? 

How should strategy models address these issues?

There seems to be a certain need to go beyond existing strategy concepts based on an increasingly complex and changing competitive landscape. This requirement does not result only from a thirst for novelty and marketing, but rather an inability of existing approaches to deal with today's situation. However, how these models should look like, what they should address in terms of structural features and on which level of granularity they should be constructed remains unclear.


As argued in the discussion existing strategy models, I would look into issues such as:
a) Why are certain players (not) seen as potential competitors or entrants? 

b) Why are developments not perceived? 

c) How are current and potential markets 'defined'? 
How are alternatives perceived, framed and 'sold'?
d) What is filtered out and discounted in strategic decisions and why?
How can the above view and questions be operationalized from your point of view? Or: Why might they be wrong?

A discussion I have started in Strategy Professionals Group on Linkedin:

General Evolutionary Theory

In the transferability of systemic evolutionary concepts to the social sciences, we also find an indicator for a general evolutionary theory. It can be built on the competitive testing of hypotheses in fields as evolutionary biology and economics, social systems of sociology and science. These areas can be seen as subject to specific expressions of a general process of epistemological evolution, in which hypotheses (biological mutations as simple hypotheses about "the environment", hypotheses about working business models, expectations about prices, expectations about interactions with others, plain scientific hypotheses or whole theories) are tested, selected and cumulatively developed. Research into and practical doings in each area can probably profit from the specific knowledge gained in the other areas.

Industry, Product and Technology Life Cycles and Evolutionary Theory

One could integrate the different and partially opposing (or thought to be opposing) observations about technologies, industry and product development into a cyclical pattern of change over time where organization and innovation shift from one innovation regime to the other. Alternatively, one could also see this as a pattern that depends on industry and technology characteristics, as done by e.g. Malerba and Orsenigo. However, there do not seem to be specific analyses of data on the long-term developments of industry structures, organization forms, innovation that allow to decide the question easily.

If the hypotheses about cyclic patterns in industry, product and technology life cycles associated with differing technological, organizational and market characteristics are correct, than one could seriously link the development patterns of these fields to mechanisms causing punctuated equilibrium in evolutionary biology. The significance of punctuated equilibrium is that it serves as signal for evolutionary search processes which involve a shift between radical and incremental variations. The patterns of PE can be explained by systemic evolutionary theory, which adds to the Neo-Darwinian synthesis the explanation of the evolution of complex structures. Systemic evolutionary theory explains the development of complex structures on the basis of possibilities and limits for change of existing systems (or emergence of novel ones) leading to phases of radical, rapid change and incremental change (stasis) in organisms characteristics.

Research Interests: Schumpeter and Strategy

Presently, a rapid pace of technolgical, business and social changes begs the question in how far "creative destruction" by entrepreneurs favors the emeregnce of new companies versus established old and often large scale organizations.
The reason to connect strategy and Schumpeter is that industry development seems to involve a shift from entrepreneurial small companies to large scale bureaucratic ones, that produce innovations in a mechanized, routinized fashion. This shift in technological characteristics and organization size requires a switch between different tools and methods of strategy formulation, planning and implementation if companies go through the transition. Companies that are in different phases on this path or are faced with these different environments need different market entry (or defense) and innovation strategies. Companies that operate under different conditions need different tools and approaches that reflect their needs, obviously.

Entrepreneurs need different strategies than established companies. Likewise they have different sets of resources and capabilities. However both may posses what the other needs such that they could learn from one another.

Schumpeter has described the entrepreneurial type of company in his "Theory of Economic Development", while he the second one is depicted in "Capistalism, Socialism and Democracy". The later description is influenced by observations on industry concentration in the US running up to and large scale research projects during WWII.

In the 1980s, Foster and Kaplan's book on the Attacker's Advantage put small innovative companies back onto the screen, management literature-wise and academically, after increasing limits to growth had been experienced by established large companies in the 1960s and 1970s.

Nowadays, the creative and innovative virtues of young companies are widely acknowledged. There are calls for organizational giants to learn to dance (like these small companies). Successful change and rejuvenation programs such as GE's six sigma initiative have been implemented. However, the question is whether the emergence and importance of small companies, high speeds of technological change and associated fluid organizational forms are there to stay at relatively elevated levels - which also involve cost in terms of social strain and coordination cost. Alternatively, one can ask whether there will be a (relative) shift back to more routinized, bureaucratic, large-scale organization regimes, when todays start-ups grow into large organizations. These then explore the incremental possibilities of radical breakthrough innovations that have been discovered and developed until a certain point in time (which we might already have passed unwittingly). This issue is about the relative importance of radical and incremental, small and large scale organizations and fluid or stable patterns of development, not complete either-or scenarios.

These questions have important practical implications in terms of managing organizations and technologies and for strategy formulation and implementation.

Research Interests: Strategic Change

How to change social systems? Use business organizations as research object.

Relation to strategy formulation implementation and update - Strategy as learning process.

The organizatinal perspective on change of social systems supplies a useful and simple area to study the micro-level of chnage in social systems. Analysis on this levels requires input from perspectives such as individual and social psychology, human behavior such as anthropology, humanethology and as linking field of evolutionary psychology.

Research Interests: Strategy and History

Laws of strategy and creativity? Are there laws of strategy, of strategic action in reaching defined goals? If so how does this reconcile with the notion of strategy as a creative process, in which individuals creatively recombine existing elements and discover new approaches to attainig goals and solving problems. Best suited seems an evolutionary perpecitive / framework that allows for patterns and laws of development and creative variation.

Laws of history - if processes of social development follow evolutionary principles, they should follow some kind of (possibly abstract) laws of development which can be translated into a perspective of laws of historical development. If these exist they can be linked to and used for the understanding of social processes around us.

Underlying philosophy

My view on science is the idea that scientific disciplines and schools of thought are each but one perspective on a complex reality. Although this sounds trivially obvious, most scientsists themselves tend to set their discipline as absloute in practice and deny the possibility of gaining integration of knowledge by switching their perspective. There is no other "true" representation of reality than that supplied by the filters, rules and assumptions of their methodology, tools, data, school of thought, and dicsipline. This leads to a tree of ever more fine-grained questions which are often not that important and productive compared to other untackled issues - the reverse salients of scientific endeavor. This effect seems to be particularly pronounced in economics, where the neoclasssical gold standard is based on the assumption of a hyperrational homo economicus.

However, different perspectives supply different information on the same reality that need to be integrated into a more encompassing famework of elements and their interactions than a single perspective allows to come up with. This problem is described in the example of several blind sages analysing the different parts of an elephant - coming to totally different conclusions on what an elephant is. Systems science has tried to solve this issue by supplying a common language that pertains to all disciplines. While it has had some successes, largely it has failed as scientists working in a specific perspective did not perceive the need for another, at times woolly, description language. They had theirs already. So we need to increase the perception that scientists can profit from increasing (not to say getting) their perspective by taking a different view on their research issues. First, it allows to confirm information that is found in both perspectives. Second it allows to work towards a more general model by asking why some issues can not be integrated and third what is necessary to do so leading to the integrative framework. This position seems to go back to Moritz Schlick founder of the Vienna circle from which logical-empiricist methodolgical stances emerged.

Most other research interests are related to this question of framing social change processes in evolutionary terms. They supply the variety and need for openness arguments for democratic systems. I also think an evolutionary framework can supply the lattice or matrix of constraints, laws, rules heuristics that we need if we want to understand, analyse and influence the development of social systems.

Scientific Goals

(Instead of translating the German post below, I'll just put here what has evolved from that.)

Scientific Goals

The overarching perspective of my interests is the issue of strategic change of social systems. That means how we as individuals and groups can influence, steer and control the development of groups of humans and our societies and where the limits to such undertakings are. The latter of the two questions is probably the more relevant one, particularly if we want to preserve social systems / mankinds adaptability to unforeseen and unforeseeable developments. This approach to social change leads to an evolutionary foundation and "Begründung" of democracy as state form that allows for, gives room to and preserves variety in the face of social pressures for uniformity, similarity, and pressures against all kind of influences perceived as "foreign". Today is and in the future democracy should become even more under pressure from rising power aggregations of increasingly larger, powerful (multinational) companies, difficulties of politicians in handling and society in dealing with social and economic problems arising from technological change, globalization and the associated social repercussions.

Obviously, one can use this approach for good and evil goals. My intention is of an humanistic kind.

PILE and user interfacing

Apple's NeXT (as I understood it from some info available on the net) was in its object oriented fashion working in a slightly similar direction as PILE. At least in so far as it allowed to exchange information easily between applications based on its object orientation which greatly facilitated communication between appliactions themselves and application and operating system. Mac OS X has inherited some features from NeXT, but apparently (afaik) lacks this ease of interactzion between program data respectively objects as it is based on BSD which is not an object-oriented system from the ground up.

Nelson "applitudes" are a great conceptualization of how computers should work: they allow to manipulate data on the basis of a separate set of data without enclosing these data into application (and vendor) specific formats. The latter greatly reduce the usability and economics of using computer applications, because conversion / transfer of data is time consuming and thus economically and psychologically costly.Personally I did not buy many program precisely for that reason. Paper and pencil or mind and keyboard plus copy and paste from text-files are often still quicker than working with enclosed data.

One big promise in the PILE endeavor is that PILE allows to work with data in a context dependent fashion: if some data occur in a specific context than they can be handled differently than when they occur in another context of relations.THINK APPLITUDES.

PILE would in principle allow to realize such applitudes based on a layer above the relation-network that contains user data. The question then is how primary and meta data are handled. In principle PILE does not require a separation between data and meta data. In practice existing applications will have to be able to work with PILE as well which requires them to understand PILE data and separate primary from meta-data or PILE to provide program specific data interfaces.

Knowledge, perspectives, relations: PILE and others

I have just had an interesting conversation with Peter Krieg, CEO of Pile Systems. For an evolving trial at a computer science oriented understanding and description see Ralf Westphals blog.

Krieg seems to be in on the technical basis for sth. that I have learnt to crave for deeply in writing my dissertation. The basis for a system that lets you work with relations between "elements" in such a manner that you can lay different filters over a pieces of knowledge (a set of "elements" which are made up by relations). One could pick out individual "elements" (which are not really elements or objects because the whole thing is constituted by relations alone) that serve as focus for organizing the rest of the "elements" in a if you want "hierarchical" fashion.

This view relates to personal construct theory that has been used in knowledge management tools, e.g.at U Calgary http://pages.cpsc.ucalgary.ca/~gaines/pcp/ -- for a BRINT overkill of info on personal construct theory see here: http://www.brint.com/PCT.htm

The technology of the PILE system would (among other things) allow to organize and quickly access pieces of knowledge such that the contents and differences of perspectives on a field of knowledge are visible. One could for instance look for all articles which relate to a certain subject (such as creative destruction) from the point of strategic management, switch to a prespective on creative destruction based on innvation studies and then go to the economics perspective on Schumpeter's famous concept. One visual interface for such a system has been implemented in TheBrain, and similar to some functions implemented by Beat's Biblionetz.PILE presently has no visual interface, so this is a nice project for some computer science students.

Projects that work in similar directions have been planned and/or implemented by Gunnar Sömmestad (Literary Machine), Ted Nelson (Xanadu and ZigZag), and derived from that GzigZag by Tuomas Lukka and Fenfire by Benja Fallenstein and coworkers based on RDFs. The problem with these is either some limitation in the functionality (e.g. LM programmer Gunnar Sommestad is somewhat reluctant towards network visualizations of the text elements in LM) or some technical limits such as limited scalability in (G)zigzag (according to Peter Krieg). Now PILE is behind these in terms of usability for specific tasks since at present it is not more than a platform. However, if the claims of the PILE team are true and the system lives up to their expectations they have something really interesting. To validate the claim a mathematical (or practical) proof is needed though.

Application areas probably include all areas where connections respectively patterns of connections between pieces of information are important or need to be figured out such as literature exploration and management for scientists, knowledge management in business and science, bioinformatics.


Some links - which I could not properly include on my Apple / Safari ;((


Fallenstein and Lukka's RDF based hypertext system http://fenfire.org/

Sommestad's Lietrary Machine http://www.sommestad.com/lm.htm

ZigZag implementation http://gzigzag.sourceforge.net/nutshell.html

Vannevar Bush's Article on Memex http://www.theatlantic.com/unbound/flashbks/computer/bushf.htm

Plattform / Netzwerk Strategie - Unternehmensgründung - Innovation

Gerade die Entwicklung radikaler, kreativer und ökonomisch weitreichender Ideen und Konzepte und ihre Umsetzung stösst auf viele Kommunikations-, Verständnisschwierigkeiten und Widerstände. Langfristig ist daher eines meiner Ziele eine Institution für "kreative Spinner" zu schaffen, wo diese sich der Entwicklung ihrer Ideen widmen können, um diese mittelfristig erfolgreich zu kommerzialiseren. Kreative Freiheit und ökonomische Umsetzung sollen verbunden werden. Die kreativen Spinner profitieren von den Resourcen und Kontakten der "Institution" und die Institution von Wissen und ökonomischem Erfolg der Kreativen.

Kollegen aus der Wissenschaft und ich arbeiten nebenbei an dem Aufbau einer Plattform / eines Netzwerks von Forschern und Praktikern, die sich für Strategien, Innovationen, und Unternehmersgründung interessieren und voneinander lernen wollen. Ausgangspunkt ist dabei zwangsläufig unser wissenschaftlicher Hintergrund im Strategie-,Innovations-, und Gründungsbereich. Interessensbekundungen, Ideen und allgemeines Feedback sind willkommen.

Publications - paper based

some publications - partly relevant to the next post

Reschke, C.H. and Kraus, S. (2005): An Evolutionary Approach to Innovation and Strategy in Small and Medium-Sized Enterprises, in: Rebernik, M., Mulej, M., Rus, M., Kroslin, T. (Hg.): Shaping the Environment for Innovation Transfer, IRP (Maribor) , 175-186.

Kraus, S., Reschke. C.H. (2004): Evolutionäres Strategisches Management von Gründungsunternehmen, FGF Entrepreneurship Research Monographien, Bd. 44, Eul Verlag.

Reschke, C.H. (2005): Strategy, Action, Perception and Performance: An Evolutionary Learning Perspective on Organizations, Proceedings CD, British Academy of Management 2005, Oxford. ISBN 0-9549608-1-5

Reschke, C.H. and Kraus, S.K. (2005) Strategy and Strategic Management as Process of Social Evolution - An Introductory Overview over Relevant Perspectives, Proceedings CD, BAM 2005, Oxford.

Kraus, S.K., Reiche, B.S., Reschke, C.H. (2005) The Missing Role of Strategic Planning In SMEs: Literature Review and Research Implications, Proceedings CD, BAM 2005, CD, Oxford.

Wissenschaftliche Interessen (dt.)

Wissenschaftliche Interessen
----------------------------

Gerade (Ende 2005) habe ich meine Dissertation an der Universität Witten/Herdecke über "Evolutionary Processes in Economics. The Example of Strategy and Research in the Biopharmaceutical Industry" bei Carsten Herrmann-Pillath abgeschlossen.

Wissenschaftlich interessiere ich mich für die Verknüpfung kognitiver und evolutionärer Ansätze in den Bereichen Strategie, Innovation und Management. Evolutionäre Ansätze können einen Rahmen für die Analyse langfristiger Entwicklungen bereitstellen. Sie können auch helfen, Lernprozesse von Gruppen von Menschen zu modellieren, wie sie bei Forschung, Innovationen und Strategien auftreten. Dabei sollte man sich allerdings von der Vorstellung einer zufälligen Generierung von Variationen (Erfindungen, Innovationen, ges. "Veränderungen") verabschieden. Vielmehr scheinen Innovation (zumindest) in der Pharmaindustrie eher einem Muster zu folgen, dass dem des punktierten Gleichgewichts von Stephen J. Gould entspricht. Dies wird von der systemischen Variante der Evolutionstheorie theoretisch untermauert.

Der Prozess der Innovation stellt sich in Anlehnung an bekannte Konzepte aus Evolutionstheorie und Innovationsforschung wie folgt dar: Zuerst tauchen radikale, die Eigenschaften und ggfs Strukturen von Gegenständen oder Konzepten betreffende Veränderungen auf. Diese werden einerseits vom Umfeld und ggfs Markt selektiert und andererseits (soweit relevant) in immer neuen Kombinationen "ausprobiert". Zwischen diesen radikalen Innovationen kristallisiert sich nach einiger Zeit ein "dominantes Design" oder eine feste Konfiguration von Eigenschaften heraus. D.h. zwischen den grundsätzlichen Möglichkeiten zur Lösung eines Problems wird selektiert. Wenn eine bestimmte Struktur oder Konfiguration von Eigenschaften akzeptiert worden sind, verlagert sich die Selektion auf inkrementelle Innovationen, die die grundlegende Struktur verbessern sollen oder dem Vermarkter einen Wettbewerbsvorteil in den Augen der Kunden verschaffen sollen.


Die Auswahl der Innovationen führt nicht immer zur Auswahl der technisch oder ökonomisch besten, sondern derjenigen, die in bestehende Strukturen und Abläufe hinreichend gut hereinpassen, oder von den Entscheidungsträgern aus anderen Gründen favorisiert werden.

Implikationen dieses "kognitiv-evolutionären" Ansatzes sind:

* Die Bedeutung gewachsener, z.B. organisationaler und technischer Strukturen für die weitere Entwicklung von Systemen wie Technologien, Unternehmen, Gesellschaften.

* "Blinde" Variation bringt uns eher selten weiter, sondern Veränderungen müssen gezielt und auf kritische Punkte abgestimmt angegangen (und für die Wissenschaftler: so modelliert) werden. Ansätze, die am Anfang einer Innovation untereinander um die Vorherrschaft ringen, werden wahrscheinlich teilweise integriert werden (müssen), um eine breite Akzeptanz im Markt zu finden.

* Die unterschiedliche Natur der Innovation über den Lebenszyklus von Gegenständen, Konzepten. Zuerst Ausprobieren und Kombinieren von unterschiedlichen Ansätzen, dann Einpassen in bestehende Systeme, ggfs. weiter Kombinieren und viel Verbessern.

* Das Konzept könnte sich gerade auch für die Anwendung auf die Analyse, Modellierung (und ggfs Vorhersage) historischer, gesellschaftlicher Prozesse eignen. Hier besteht allerdings das Problem entsprechend lange Zeitreihen von Veränderungen zu finden, anhand deren sich diese Aussage überprüfen lässt.

(engl. translation follows)