Play the Game of Life
Ryan Petersen's Blog

By Ryan Petersen
Columbia Business School, MBA '08

The Business Environment as a Complex Adaptive System

The landscape that managers must navigate is unfathomably complex. With an infinite number of interconnections and contingencies, the business environment is subject to waves of upheaval that render the most accurate snapshots irrelevant. Furthermore, this landscape appears to be made of rubber, where each step we take sends ripples of repercussion throughout the system, ultimately shaking the very ground on which we stand. Faced by the impossibility of making even one truly optimal decision in this complex adaptive system, how can managers avoid paralysis?

First, we must understand just how complex this environment is. To illustrate, let’s look at the game of chess, a highly constrained system that generates a seemingly infinite amount of uncertainty. According to Brian Arthur of the Santa Fe Institute, even if every atom in the universe were a supercomputer that had been crunching away since the Big Bang, it would still be impossible to identify the optimal move at the outset of a chess match . Given that any business system is many orders of magnitude more complex than a chess game, it is clear that we must abandon the very notion of optimal decision making.

The economy is a complex adaptive system, whose aggregate behavior emerges from a vanishingly large number of interactions taking place everyday between its component agents and artifacts. In fact, what is true for the economy as a whole is also true for the sub-components themselves; markets, corporations, divisions, business units and individuals themselves are all complex adaptive systems.

In recent years the science of complexity has provided astounding new insights on the behavior of these types of systems. Complexity theory tells us that in any complex adaptive system, the most interesting patterns will unfold at the edge of order and chaos . For managers making decisions in groups, this translates into finding the balance between everybody following the party line (order) and everybody contributing anything that comes to mind (chaos). By keeping our groups poised on this razor sharp edge, we create the greatest probability of generating novelty.

So our job is not to make optimal decisions. Rather, we must facilitate processes that allow for the invention of alternatives, welcoming of challenges, and continual learning. Each of these essential elements of successful decision-making are performed better by well-managed groups than by individuals.

Inventing Alternatives

Given that we can never be certain that our course of action is ideal, we must always be willing to explore alternatives. By their very nature, groups are better at inventing options than individuals. Each member brings a distinct set of experiences and provides unique approaches to any problem. At the same time, the very act of sharing ideas often stimulates further ideation within the group, resulting in solutions that no single member of the group could develop in isolation.

The challenge for management, however, is to create a decision-making process that balances the need for safety in exploring new ideas with the need to reach a conclusion so the group can take action. In his work on building learning organizations, Peter Senge characterizes this as a balance between dialogue and discussion. “In dialogue,” he writes,” “there is a the free and creative exploration of complex and subtle issues, a deep ‘listening’ to one another and suspending of one’s own views. By contrast, in discussion different views are presented and defended and there is a search for the best view to support decisions that must be made at this time.”

More often managers err on the side of discussion, focusing on concrete action at the expense of exploring new directions. To address this problem, managers must be willing to make changes to the very process of decision-making. We should assemble diverse teams and encourage cognitive conflict between the members. We should reward people who propose ideas, even when the idea is not adopted. If we are seen as too close to a problem, we should consider removing ourselves from the idea generation process. If a decision is important enough, we should consult with experts from diverse backgrounds who are further from the problem than our group. And if we remain frustrated by a lack of promising alternatives, we should consider introducing outside facilitators to lead formal ideation sessions.

Inviting Challenge

Challenging our assumptions, ideas and perspectives is crucial to improving our decision-making abilities. Indeed, the generation of actionable feedback is the very essence of learning from experience. We must create atmospheres where dissenting opinions and challenges to our perspectives can be safely introduced. To do this we must open ourselves up to personal challenge.

Unfortunately, by our very nature such challenges generate uncomfortable emotions that millions of years of evolution have programmed us to avoid. This opposition to challenge, known as homeostasis, characterizes all self-regulating systems. We owe our very existence to this built-in resistance to change, as it creates the stability needed to survive in an ever-changing world. Unfortunately, homeostasis does not discriminate between changes that are good for us and those that are not. It just opposes all forms of change indiscriminately!

Developing emotional self-awareness is the key to overcoming this natural tendency to feel threatened by opposition. Managers must foster the ability to disconnectedly observe their own emotions, understand the root causes of the feelings, and then make a conscious decision about whether these are justified or not given the circumstances. Achieving this degree of awareness (enlightenment?) is perhaps the most daunting task we face. Yet if we are to create a process that generates the actionable feedback necessary for learning, we have no choice.

Learning as Feedback in an Evolutionary Business System

The complexities of the business world are such that we will never have all the information we need to make truly optimal decisions. What we can do, however, is to improve our ability to interpret the limited data we do have through continual learning.

The business environment is an evolutionary system: a vast, self-organizing web of agents and business modules coevolving through time. The most successful business modules become widely replicated, while less profitable ones disappear. Fundamentally, the manager’s job is to develop business modules that are able to adapt quickly to the constantly shifting landscape beneath our feet. The “fossil” record provides ample evidence of overly rigid companies that failed to coevolve with their environment.

Recognizing that the business world is subject to the forces of natural selection, managers would do well to take lessons from the evolution of ecological systems. The driving force behind natural selection is feedback from the environment. Mutations in DNA generate alternatives and the environment provides brutal feedback about their fitness. In a sense, over time the species “learns” what characteristics the environment values most.

Fortunately for us, our business units are powered by human brains with the power to receive feedback from the environment far faster than the DNA within us. We have the ability to synthesize a lifetime of diverse experiences to develop near instantaneous decision-making. Most important for the manager, we have the ability to connect our minds in a vast network.

To encourage development of a learning organization, the manager must adopt processes that facilitate a true linking of the minds on his team. A first step is to lay out a vision with the power to motivate team members and align their efforts toward a common goal. He must create safety, reward innovation, encourage dissent and welcome challenge. Meanwhile he must work to maintain a balance between dialogue and discussion. And throughout the process he must be constantly vigilant of his own emotions.

If the leader’s job really is to keep his team forever balanced on this tightrope between order and chaos, then it becomes clear why so many promising young managers plateau just a few years after graduation. They may have unknowingly accepted the hardest task known to man.

Labels: business, Columbia Business School, complex adaptive systems, complexity, evolution

As regular readers of this blog know, I enjoy traveling more than just about anything. But more than just the urge to visit new places, I am infected with notion that sitting still in one place--any place--is boring. So I've long been struck by the fact that so many of my friends and members of my extended family are completely content staying in the same place year after year.

Upon further reflection, however, it's clear that I am the exception to what is entirely normal behavior conditioned by millions of years of human evolution. The "towny" instinct to stay at home is the natural result of an evolutionary process in which those who wandered were exposed to more danger than those who stayed at home. Until the last few centuries, our ancestors never wandered two or three miles from their place of birth. It's myself and other travelers who have caught the idea virus; it's us who have been infected by the travel meme which runs counter to all the genetic conditioning that served us so well.

Yet today's world is shaped far more by ideas--themselves the result of non-genetic evolutionary processes--than by genetics. Those with the ability to adapt more quickly to the changing world will be those who achieve the most success in this ever-changing fitness landscape. Its these intellectual explorers--not necessarily their geographic counterparts--who will unlock the gates of success in this new world.

Labels: evolution, evolutionary biology, psychology, Strange Questions

Biologist Richard Dawkins makes a case for "thinking the improbable" by looking at how our human frame of reference -- the things we can perceive with our five senses, and understand with our eight-pound brain -- limits our understanding of the universe. Think of it: We can't see atoms, we can't see infrared light, we can't hear ultrasonic frequencies, but we know without a doubt that they exist. What else is out there that we can't yet perceive -- what dimensions of space, what aspects of time, what forms of life? Dawkins calls the human-size frame of reference "Middle World": between the microcosmos of atoms and the macrocosmos of the universe. Middle World thinking limits our ability to see the universe in terms of the improbable, whereas "in the vastness of astronomical space and geological time, that which seems impossible in Middle World might turn out to be inevitable."

This talk will blow your mind!!

Labels: evolution, evolutionary biology, mystery, physics, science

Nobel laureate James Watson opens TED2005 with the frank and funny story of how he and his partner, Francis Crick, discovered the structure of DNA. The tale is full of colorful details: How Watson had planned to be an ornithologist until Schroedinger's book What Is Life? transformed him into a geneticist. The painful rejections he suffered along the way, first from Caltech and then from a certain girl. And finally, how the basic DNA model ultimately came together in just a few hours. Watson finishes with one of the topics currently making him tick: the search for genetic bases for major illnesses.

Thanks Ted.com!!

Labels: evolution, evolutionary biology, science

Labels: economics, evolution, evolutionary biology, prospect theory

By Bobby Henderson

I am writing you with much concern after having read of your hearing to decide whether the alternative theory of Intelligent Design should be taught along with the theory of Evolution. I think we can all agree that it is important for students to hear multiple viewpoints so they can choose for themselves the theory that makes the most sense to them. I am concerned, however, that students will only hear one theory of Intelligent Design.

Let us remember that there are multiple theories of Intelligent Design. I and many others around the world are of the strong belief that the universe was created by a Flying Spaghetti Monster. It was He who created all that we see and all that we feel. We feel strongly that the overwhelming scientific evidence pointing towards evolutionary processes is nothing but a coincidence, put in place by Him.

It is for this reason that I’m writing you today, to formally request that this alternative theory be taught in your schools, along with the other two theories. In fact, I will go so far as to say, if you do not agree to do this, we will be forced to proceed with legal action. I’m sure you see where we are coming from. If the Intelligent Design theory is not based on faith, but instead another scientific theory, as is claimed, then you must also allow our theory to be taught, as it is also based on science, not on faith.

Some find that hard to believe, so it may be helpful to tell you a little more about our beliefs. We have evidence that a Flying Spaghetti Monster created the universe. None of us, of course, were around to see it, but we have written accounts of it. We have several lengthy volumes explaining all details of His power. Also, you may be surprised to hear that there are over 10 million of us, and growing. We tend to be very secretive, as many people claim our beliefs are not substantiated by observable evidence. What these people don’t understand is that He built the world to make us think the earth is older than it really is. For example, a scientist may perform a carbon-dating process on an artifact. He finds that approximately 75% of the Carbon-14 has decayed by electron emission to Nitrogen-14, and infers that this artifact is approximately 10,000 years old, as the half-life of Carbon-14 appears to be 5,730 years. But what our scientist does not realize is that every time he makes a measurement, the Flying Spaghetti Monster is there changing the results with His Noodly Appendage. We have numerous texts that describe in detail how this can be possible and the reasons why He does this. He is of course invisible and can pass through normal matter with ease.

I’m sure you now realize how important it is that your students are taught this alternate theory. It is absolutely imperative that they realize that observable evidence is at the discretion of a Flying Spaghetti Monster. Furthermore, it is disrespectful to teach our beliefs without wearing His chosen outfit, which of course is full pirate regalia. I cannot stress the importance of this enough, and unfortunately cannot describe in detail why this must be done as I fear this letter is already becoming too long. The concise explanation is that He becomes angry if we don’t.

You may be interested to know that global warming, earthquakes, hurricanes, and other natural disasters are a direct effect of the shrinking numbers of Pirates since the 1800s. For your interest, I have included a graph of the approximate number of pirates versus the average global temperature over the last 200 years. As you can see, there is a statistically significant inverse relationship between pirates and global temperature.



In conclusion, thank you for taking the time to hear our views and beliefs. I hope I was able to convey the importance of teaching this theory to your students. We will of course be able to train the teachers in this alternate theory. I am eagerly awaiting your response, and hope dearly that no legal action will need to be taken. I think we can all look forward to the time when these three theories are given equal time in our science classrooms across the country, and eventually the world; One third time for Intelligent Design, one third time for Flying Spaghetti Monsterism, and one third time for logical conjecture based on overwhelming observable evidence.

Sincerely Yours,

Bobby Henderson, concerned citizen.

P.S. I have included an artistic drawing of Him creating a mountain, trees, and a midget. Remember, we are all His creatures.

Labels: evolution, religion, science