Complex Adaptive System Mastery as a Key Shaper of Our Competitive Landscape?

pictuesky lanternuniv of liverpoolComplex adaptive picture

By: Rudolf Tjandra, December 2011. Previously Published in the University of Liverpool Doctor in Business Administration’s Discussion Board

It is undeniable as the CAS models have noted that the world within which an organization need to survive and excel in (the competitive landscape) continues to change, and change they will in unpredictable, haphazard and incongruent manners. Organizations themselves are potentially chaotic. It is said to move from one dynamic state to another making a purposeful and concerted move towards one single desired state extremely difficult (Thietart and Forgues, 1995 in Stacey, 2011, pp 271-272). In the world of nonlinear relationships (encompassing the traditional hierarchical and other boundaries that made up a command and control system within an organization) with negative and positive feedbacks, the link between cause and effect of what is happening in between and among functions, departments, layers of an organization can easily be lost in translations (Stacey, 2011).

Take the long term popular Supply Chain Management (SCM), for example. The links between what is purchasing, production, inventory planning and the fluctuations of weekly and monthly demands at distributors, retailers, and consumers level produces not only a disequilibrium and distant in space and time due to the consistently unfulfilled gap (over/under) supply, distribution/deliveries and demand but also uncontrollable ‘creativity’ and independent (individually enacted) ‘sense making’ (Weick, 1995 in Stacey, 2011, pp 106-107) and ‘covert politics’ (Argyris, 1990 in Stacye, 2011, p 109) among and from the actors involved that seriously damage the very notion of effective planning. For instance, marketing forecast would higher demands in expectation of supply lag; sales forecast lower demand in anticipation of stop-gap deliveries of the right SKUs to even the most distant of retailers, etc.  Some forms of historical facts do of course present some precedence and/or pattern of demand for certain products. For example we may know that during certain sessions and/or months of the year an organization may experience a demand upside, but within the context of co-evolution of a complex adaptive system the level of accuracy presented by the precedence can be a highly unreliable source of planning.

Morgan (1997), Nonaka (1991) and Sanders (1998) offers a similar though varies in emphasis solution that call for reliance in self-organization in the face of uncertainty. The idea is for strategic plan to adopt a given outline of some ‘simple rules’, an ‘adaptive and/or contingency mechanism’ and leave the rest to ‘self-organization’ (Stacey, 2011, chapter 5).  To some extent I can see how ‘leaving ‘the rest’ to self-organization in the format of ‘logical incrementalism’ (ibid, p 154), that is “agents interact locally according to their own principles, in the absence of an overall blue print for the system they form” (Stacey, 2011, p 244) can lead to what Mintzberg described as ‘deliberately emergent’ strategy process (ibid, p 158).  I do however remain puzzle how few simple rules can be mono-interpreted, followed and adopted by highly independent individuals (interacting among subsystems and within subsystems- Simon, 1962) with and from different socio-economic-functional-educational backgrounds within what we view as an extremely complex, standing at the ‘edge of chaos’ (Anderson, 1999) and self-evolving environment – to form an effective form of strategic planning?

Reflecting on action and in search for the answer on how to best fit strategic planning within a complex system living in a turbulent world, I found the example form Shell as presented by Bovaird (2008) called ‘meta planning approach’ as opposed to the traditional form of strategic planning. The ‘meta planning approach’ tails Mintzberg’s emergent process which called for “constant exploration, parallel exploration efforts by different organizational members and the combination of incremental steps (adaptive walk) with occasional major leaps” (Grant, 2003, p 494). The approach embraces the notion of ‘bounded rationality’ (there is only so much we can know; we don’t what we don’t know) and aim to facilitate or even utilize the ‘nature and strength of connections between agents and their schemata’ within a complex adaptive system and subsystem to meet the ever changing environment of the competitive landscape of the organization (Anderson, 1999, p 225).

In the case of Shell the adaptation has resulted in shorter time horizons of strategic plan and the shifting of emphasis from the use of strategic plan as highly defined guideline to treating it as a coordinating mechanism, and a performance and output anchoring tool (Grant, 203). The latter perhaps would serve as the ‘strange attractor’ (Stacey, 2011, 238; 311) that leads to a form of a symbiotic actions that would bring the organization to new level of knowledge (knowledge creation), knowing (evolving realities) and effective timely actions? Or even as Kim and Mauborgne (2009) would argue help the organization ‘shape the environment’, create its own market space/ ‘blue ocean’ (Kim and Mauborgne, 2009). This ‘strange attractors’ would perhaps take form in a bonus/incentive tied to certain to be commonly shared outcome? Strategy meetings no longer strictly involved formal presentations but involved more “face-to-face discussion where assumptions and beliefs were challenged and critical issues identified” (ibid, p 511). It is a strategic move from a ‘rational design’ to the ‘emergent process’ in the aim of constantly forming a ‘dynamic equilibrium around the strange attractor’ (lecture note, week 2).

In conclusion, I would say that although the complexity of a complex adaptive system and subsystem is a reality, the weakness of the linear form of strategy process and planning is not because planning is completely useless and we should only deal with whatever comes up whenever they come.  More importantly, in my opinion, it is about the creation of an environment where communications are crucials, where changes are embraced, and where the content human behavior and interactions are explained and understood as much in term of beliefs and desires as they are about rules, hierarchies and boundaries.

References and Suggested Further Reading:

Anderson, P. (1999) ‘Complexity theory and organization science’, Organization Science, 10 (3), pp.216-232. http://ehis.ebscohost.com.ezproxy.liv.ac.uk/ehost/pdfviewer/pdfviewer?sid=add70dd6-a3ff-428e-9441-aabd4924cca6%40sessionmgr110&vid=2&hid=117 (accessed 7 December 2012)

Bovaird, T (2008) Emergent Strategic Management and Planning Mechanisms in Complex Adaptive Systems. http://ehis.ebscohost.com.ezproxy.liv.ac.uk/ehost/pdfviewer/pdfviewer?sid=d4af97bc-140c-4cc0-86c1-e75afaedbd02%40sessionmgr111&vid=2&hid=124 (accessed 10 December 2012)

Grant, RM (2003) Strategic planning in a turbulent environment: evidence from the oil majors. http://onlinelibrary.wiley.com.ezproxy.liv.ac.uk/doi/10.1002/smj.314/pdf (accessed 10 December 2012)

Kim WC and Mauborgne R (2009), How strategy shapes structure, Harvard Business Review, 2009, http://ehis.ebscohost.com.ezproxy.liv.ac.uk/ehost/pdfviewer/pdfviewer?sid=05627ea7-ce37-461d-8546-bd50c29d740a%40sessionmgr113&vid=2&hid=121 (accessed 5 December 2012)

Klieb L. Week 2 Lecture note, http://mym.cdn.laureate-media.com/UofLiverpool/DDBA/0007/01/downloads/UOL_DDBA0007_01_A_EN.pdf (accessed 8 December  2012)

Simon, H.A. (1962) ‘The architecture of complexity’, Proceedings of the American Philosophical Society, 106 (6), pp.467-482. http://www.informatics.sussex.ac.uk/courses/ModDis/Internal/SimonAoC.pdf (accessed 7 December 2012)

Stacey, R.D. (2011) Strategic management and organisational dynamics: the challenge of complexity. 6th ed. Harlow: Pearson

Posted in Articles, English, Home, Knowledge & Beyond, Perspectives to Ponder Upon, Processing Problem Soving, Rudolf's Articles, Wisdom Generator.