Complex Systems Theory
2009-09-16 09:57
Complexity is risk
Have you noticed how people that are neck deep in complexity almost always ask for a standardized solution? And they supposedly do this to regain oversight.And in reverse; have you noticed how people that have everything neatly packed in small modular boxes almost always ask for some highly customized guerilla tactic – which inherently adds complexity?
Well, no matter how you answer both of these questions, you might know that they are really part of another phenomenon, namely they are about risk.
Like particles and waves is a duality in elementary particle physics, so is complexity and risk a duality in corporate management. On the surface there hardly seems to be any overlap in complexity theory and the mathematical formulas of contemporary risk management. For example, think about how risk can be bought and sold like regular merchandise. On the other hand, complexity isn’t perceived as something belonging to the free market in the same sense. Instead, it is more often perceived to be a quality description on the free market itself. This is not incorrect (since the free market is indeed chaotic), but neither is it the entire truth.
Most evidently today is the fact that complexity theory is used in the field of strategic management and organizational studies, and is sometimes called complexity strategy. And ascending even further towards the philosophical foundation of each phenomenon, clearly reveal the same underlying mechanisms for managing both.
Which side are you on?
The amazing, almost perplexing thing about complexity and risk is that for over half a century two completely separate communities of practice (at least that’s how we’re trained to perceive them) have a lot in common. Both communities can be found in every “modern” company today and even though they have co-existed for so long, they haven’t shared notes with each other yet! They themselves speak about a huge and famous gap that lies between them and requires extra-ordinary talent to cross (and like most of everything else that’s also attributed famous, it’s most likely because there are massive amounts of money involved).
In case you’re wondering, I’m talking about the business and technology side of every company in Sweden and around the World.
And what were you taught?
While the curriculum of all renowned business schools naturally includes risk analysis, risk configuration, and risk management, the technologists educations are all almost totally void of such topics.
Clarifying the qualifying last statement, I purposefully ignored the probabilistic fault-tree analysis technique, mainly because almost all engineering students seem to think it’s utterly boring – or at least irrelevant compared to … well… every other course. And, as a consequence they forget about it almost immediately after exam, and as such, fault-tree analysis has not enjoyed any success in mainstream companies today.
I’m also ignoring nuclear scientists, who actually are the only branch of technologists that have a sound risk based approach to building complex systems. In fact (and according to Massachusetts Institute of Technology, USA), they actually teach their students about “probability and its applications to reliability, quality control, and risk assessment”!! (I’m restraining myself to two explanation marks, since three exclamation marks in succession, at least according to British classical scholars, means that the author is most likely insane). Further to this, it should come as no surprise that they, the nuclear scientists, also use this acquired knowledge at their workplace all the time (except for disastrous lapses in quality control now and then, most notably in Chernobyl 1986).
A workforce, with such a high understanding of risk, would be very beneficial for mainstream companies. But alas, when have you ever seen a nuclear scientist in the position as your company’s CEO, CTO, CDO, Enterprise Architect or anything similar? They simply seem unwilling to take that particular risk (well, except if you’re an employee at the pan-European research facility CERN, then even the janitor is believed to be a nuclear scientist.)
The future is risky
There is risk in every decision we make and as the Managing Director of Avega Öresund in Sweden, Fredrik Hellström also points out; “There is also a risk in doing nothing”. What he means is that every unary decision in reality is a binary risk assessment, and that every binary decision in reality is a tertiary risk assessment, and so forth.
While there are already many different ways to manage risk in companies today – from CEO to CFO and PM’s – it’s a matter of fact that the entire technology side has no concept of risk. And since risk management is the raison d’être of every other office throughout the company, why not let it span the entire company? Why not let risk management be the cornerstone of every decision made in the office of the CIO, the CTO, the CDO, and the Enterprise Architect?
The best thing about this proposition is that the current CIO and his fellow companions don’t have to begin everything from scratch, since they are actually (or at least should be) schooled in something quite similar, namely the complexity phenomenon we addressed in the beginning. They already have a complexity mind-set and culture; it’s just not used for business, yet.
Steps to better complexity management
Technologists that understand their complexities can more easily identify those for which they have a natural competitive advantage and those they should seek to transfer or mitigate. With that clarity, a technological landscape's capacity and appetite for complexity are easier to assess, such that it can deliver the promised returns. Those assessments should inform decision making at all levels. At the same time it should be clearly understood how business changes affect the technological landscape’s complexity profile, and if it is still consistent with their approach to complexity. Lastly, every technologist should think about which systems and infrastructure, that most effectively can monitor and manage their complexities.
And when it comes to cutting costs, there is nothing better than having complexity under control.
Notes
For unknown reasons, people from Denmark have a proverb describing what not to do when faced with too much complexity. Loosely translated it says; “If you're up to your neck in s***, don't hang your head" (From Danish; “Hvis du star i lort til halsen, skal du ikke hænge med hovedet”)
The image is of Thaddeus Beal, an artist resident in USA, and is called Spring Convergence (2005). Thaddeus Beal explores graph theory, complexity theory, and chaos theory to determine the fundamental order in his compositions. Hopefully he doesn’t mind me promoting his artwork.
References (in alphabetical order)
- Kevin Buehler, Andrew Freeman & Ron Hulme, The New Arsenal of Risk Management, Harvard Business Review, September 2008.
- Kevin Buehler, Andrew Freeman & Ron Hulme, Owning the Right Risks, Harvard Business Review, September 2008.
- René M. Stulz, 6 Ways Companies Mismanage Risk, Harvard business Review, March 2009.
- Richard P. Feynman, Robert B. Leighton & Matthew Sands, The Feynman Lectures on Physics, Volume 3: Quantum Mechanics, Addison-Wesley, 1964.
- Yaneer Bar-Yam, Making Things Work: Solving Complex Problems in a Complex World, Knowledge Press, 2005.
Postad av Martin Kaarup
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Kategorier:
Complex Systems Theory
Complexity Theory
Risk Management
2009-09-07 00:55
I like ants
Since this is my first blog post I thought it should be memorable and so I will share a secret passion of mine.
I like ants, I really do. Compared to Avega I might even like ants a little bit more. Compared to my wife, well, she’ll always win big, but only because I know my priorities in life – not because of the ants.
Fastest path
Even though I’ve first read about ants five, ten, fifteen years ago, I still enthusiastically teach others about the beautiful fastest path algorithm that ants use to optimize their harvest – and sometimes I also do this against people's will (like when they get stuck with me in front of a white board). I think it’s the emergent behavior that arises from doing simple things tens of thousand times or more that still amazes me.
And so, true to my heart, I will tell you about this beautiful simple algorithm; suppose you have to travel back and forth from A to B, then when you come to a cross road, just be slightly more likely to pick the road that is traveled by most of the people that came before you. That’s it – that’s the essence of the algorithm.
Well, I’ve hidden some minor details, such as how to find out about the people before you. In my human analogy above, we can just add to the requirements that everyone wears the same perfume, which means you can use your nose to decide where the strongest odor is coming from and then go that way – much like how discotheques or school yards function (which in turn could explain why children intuitively understand the phenomena and drunk adults don’t).
Anyway – given enough people, the crowd will eventually diverge onto the fastest path (because people that choose correct will travel the path much faster and in turn leave more odors for the next person to make a slightly easier decision and so on…). In other words, it’s basically a positive feed-back mechanism (and if you're control theory inclined, you can extrapolate its benefits and liabilities).
If you aren’t convinced I’ll bet you the next drink at the discotheque that if you were to spray a woman’s perfume onto one side of the entrance and observed the men’s choice entering (deciding whether to go right or left), you’ll find that more men would autonomously choose to follow the perfume – and vice versa by the way; it’s not the case that men are the only lemmings in this nocturnal game. (And if you’re a child reading this, don’t expect me to let you into any discotheque before you turn 30 or so. And since you’re reading about ants, you’re obviously clever already, so stay home, read some more, get rich, and buy your own discotheque!).
In any case, my only regret is that I haven’t found any justified reasons for using the fastest path algorithm during my programming career and therefore should probably have forgotten about it years ago, but apparently it’s a permanent resident in my long term memory.
Sorting
Well, I wasn’t quite honest. There are several reasons why I don’t forget about ants, namely because they do a whole lot more than just finding the fastest way home from a discotheque. For instance, they can also pile stuff of equal sized objects, which is what they do when moving eggs of different maturity around the nest (and perhaps also when they do midden work outside, I’m not sure…)
I won’t bother you with the details surrounding this algorithm, but only say that it involves moving smaller piles of eggs to the approximate vicinity of nearby equal sized but bigger piles of eggs. The emergent behavior of being sorted arises from doing the task iteratively, starting with a pile of one egg, then a pile of two eggs, then three eggs and so on (much like divide and conquer algorithms such as Quick sort).
In computer science such algorithmic qualities (i.e. being distributed, iterative, map-reducible, and easy to implement) is highly sought after today – for instance, when sorting huge amount of data in a cloud-based mesh of computers (and each computer having multiple cores, just to add some locality to the example).
Recruitment
As I mentioned, there are several reasons why I don’t forget ants and here comes another one; seemingly, a clever recruitment scheme is partly the reason that ants are grand masters at exploiting new unforeseen business opportunities without managerial control. Such agile recruitment techniques should rightly be a study of its own right in every business school in Scandinavia (An MBA in Ants so to speak).
For instance, several R&D intensive trans-Atlantic companies have adopted ant-based recruiting mechanisms to harvest the ideas that flow around the corridors and hallways of their domiciles. These ideas are often cross-departmental and therefore almost always span several communities of practice. Such extreme plasticity surely means that ideas thrown in the air have a greater tendency not to be caught by anyone. And lost ideas might be lost revenue – a quality that investors dislike.
Since the mechanism involves recruitment (which is needed to evolve the sustainable ideas from infancy and into a business case), it requires some notion of agile workforce deployment and might at first scare of smaller companies from adopting such a mechanism. This is a fallacy of thought, in that the natural selection quality of the mechanism also takes care of size differences, release cycles, etc. (much the same way that smaller ant-hills can harvest smaller resource, while big ant-hills can harvest bigger resource – both using the same recruitment scheme).
Resource allocation
Recently, I’ve just finished a book by the biologist Deborah Gordon in which she presents her collected research of the red harvester ant in Arizona, USA. She argues, among other thing, about how ant hills resource allocates their workforce in a distributed manner. Apparently, she has found a single algorithm for all sizes of ant-hills (one size fits all) that can explain how ants allocate their workforce – again without managerial control. One of the algorithm’s most interesting attribute is its use of temporal effects.
Admittedly, I haven’t digested it all yet and can’t really say anything else meaningful about it, other than just point out, that such algorithm would prove interestingly for any industry that are resource planning or logistics intensive (like the shipping industry).
Besides delving into the resource allocation algorithm and hopefully be able to comprehend it in greater depths, I’m already looking forward to next marvelous reason why I like ants.
Footnotes
Firstly, I purposefully used the term fastest path algorithm instead of shortest path algorithm, because while it’s often the case that the shortest path is also the fastest, it’s not necessarily always the case.
Secondly, I don’t know where the pictures originated from, so if they infringe on anybody’s claim of ownership, please let me know and I’ll remove them right away.
Thirdly, my oldest child doens't like ants very much. This summer, at Trollhättan in Sweden, she ignorantly climbed the biggest ant hill she could find and proclaimed to be it's queen. Being pissed on by a million angry ants, literally, cured her dreams of feudal overlordship.
References (in no particular order)
- Deborah M. Gordon, Ants at Work: How An Insect Society Is Organized, W. W. Norton & Company Inc., October 2000.
- Deborah Gordon, Deborah Gordon digs ants, TED Talks 2003, http://www.ted.com/talks/deborah_gordon_digs_ants.html.
- Eric Bonabeau & Christopher Meyer, Swarm Intelligence: A whole New Way to Think About Business, Harvard Business Review, May 2001.
- Eric Bonabeau, Marco Dorigo & Guy Theraulaz, Swarm Intelligence: From Natural to Artificial Systems (Santa Fe Institute Studies on the Sciences of Complexity), OUP USA, October 21 th October 1999.
- Marco Dorigo, Ant Colony Optimization, MIT Press, July 6th 2004.
- David Gordon, Collective Intelligence in Social Insects, http://ai-depot.com/Essay/SocialInsects.html.
- Susan Leigh Star & Geoffrey C. Bowker, Sorting Things Out - Classifications and its consequences, MIT Press, 1999.
- Susan Leigh Star, Got Infrastructure? How Standards, Categories and Other Aspects of Infrastructure Influence Communication, University of California, April 2002.
- Kurt Mehlhorn & Peter Sanders, Algorithms and Data Structures: The Basic Toolbox, Springer-verlag, August 6th 2008.
Postad av Martin Kaarup
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Kategorier:
Inspired by Nature
Complex Systems Theory
Self-organization