Comments on: Crises are a result of complexity

By: Peter Bodo

Peter Bodo — Sun, 28 Feb 2010 11:28:56 +0000

I guess the right behaviour is trying to create modular structures to fulfil our needs (energy, food, maybe money, etc.). These are less efficient in the short-term, but, as more robust, create some level of autonomy, sovereignty of the local level from the global complex systems. That would be the supply-side of thing.
The attitude should deal with the demand side, i.e. to be content with less or with whatever.

By: Bas Reus

Bas Reus — Mon, 22 Feb 2010 14:24:10 +0000

Thanks Noah. I must say that I was not yet aware of the “Normal Accident Theory” of Charles Perrow. So I’m glad I’m now The same is true for “Collapse Dynamics”. Great inspiration for further exploration.

The complexity and chained dependencies are of great value (and highly efficient) if everything keeps working, but it can be disastrous when a problem in the chain occurs. The earlier the problem, the more disastrous the outcome.

By: Noah Raford

Noah Raford — Fri, 19 Feb 2010 20:39:31 +0000

Nice post, particularly your articulation that crisis is the new normal. Wholeheartedly agree.

You are aware of Charles Perrow’s “Normal Accident Theory”, right? Basically one of the best theoretical frameworks of what you outlined here. Very well argued with excellent examples.

You might also enjoy a recent lecture I gave at the LSE Complexity Programme on collapse in complex adaptive systems. It draws on NAT and various other empircal examples. Check out my blog for the video (http://news.noahraford.com) or just google “Collapse Dynamics”.

Good post!

By: Richard S Lalleman

Richard S Lalleman — Fri, 19 Feb 2010 14:04:15 +0000

I recently wrote about the intertwined relationships between complexity and crises. It is being argued that when working in complexity, you should encourage diversity, because businesses should anticipate on complex situations which cannot be done by one single person; traditionally the leader. Therefore it is believed that leaders should create spaces for staff members so that staff members can become more innovative and, as a result, businesses can make sense of and decide over challenges in fast-moving and complex environments. One of the elements in these spaces is that staff members need to become more self-organized. Therefore, we can ask ourselves the question:

What is the role of the leader in an environment where people are encouraged to be self-organized?

This question is as current as the recent crisis in society: the credit crunch. Many guilty parties have already been found for the crisis of today, with the financial system as main suspect. However, who had the leadership’s role in this system? Were those the bankers or the governments? One thing is for sure and that is that governments rushed with billion of Euros to avoid the financial system’s collapse.

Certainly, the crisis started in the financial market itself. Governments did not construct the bonuses or the complex financial products which pulled the wool over everybody’s eyes. However, it is the task of governments to lead and interfere if the free market is getting out of hand, by setting out rules which, consequently, should influence behavior. The bankers were taking too much risk which was being made possible by the flexible rules of governments. Innovations within the financial markets resulted in obscure products and services which governments could not keep up abreast. As a result, governments failed as leaders because they did not have the ability to anticipate, identify, and respond to unpredictable occasions.

This example outlines the importance of leadership in fast-changing, highly competitive and complex environments. Drucker argues that many organizations are taking a far too simplistic view of their structure and culture. Organizations underestimate the size and scale of the “challenge of change” of especially the culture. He stresses that leadership is a key element in such a successful change. Additionally, Umemoto stresses that knowledge-creating processes, which are required to generate new knowledge to make sense and decide over new opportunities and problems in a fast and creative way, cannot be managed in a traditional sense of management that centers on controlling the flow of information.

With a move to self-organized environments, the leader’s role is crucial to balance the organization between predictability and unpredictability. The credit-crunch example makes it clear that leadership is crucial, but also a complex discipline.