Organizational Survival in the New World. The Intelligent Complex Adaptive System

390 Pages·2003·8.1 MB·English

by  Alex Bennet, David Bennet and A New Theory of the Firm (Auth.)

About KMCI Press
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Titles from KMCI Press
The Springboard: How Storytelling Ignites Action in Knowledge-Era Organizations Stephen Denning
Knowledge Management Foundations Steve Fuller
World Congress on Intellectual Capital Readings Nick Bontis
Enterprise Information Portals and Knowledge Management Joseph hi. Firestone, Ph.D.
The New Knowledge Management: Sustainable Innovation Through Second-Generation Knowledge Management
Mark W McElroy
Key Issues in the New Knowledge Management Joseph M. Firestone, Ph.D. &-Mark W McElroy
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FOREWORD
During the last decade it has become obvious to many managers that to succeed
they need more effective models of the firm and to implement better organiza-
tional principles and practices. Traditional methods and perspectives are not
good enough to ensure enduring success in today’s emerging business environ-
ments. Globalization and emergence of the “knowledge economy” have made
effective application and competitive quality of knowledge-intellectual capital
assets-decisive competitive factors. It is clear that the new world is more com-
plex and more difficult to manage than that to which we have been accustomed.
Work itself is becoming more complex as enterprises automate routine tasks
and ask employees to handle more difficult work requirements. At all levels of
the organization we are asked to deliver customized products and services that
will provide the greatest value to our external and internal customers. We are
asked to respond faster with better work products and fewer errors. We are
asked to develop relationships and improve customer loyalty and supplier team-
ing while looking out for the objectives of multiple stakeholders. We are asked
not only to learn faster than our competitors but also to innovate faster. We are
asked to participate knowingly in implementing our enterprise’s strategy and
deliver its intents. And we are asked to do all of this with minimal resources,
effort, and problems.
To respond to these demands we increasingly need to rely on
intellectual capital assets utilized by individuals who are positioned to deal
with the demanding situations. We need new organizational and management
paradigms, since conventional ones are limited in their capabilities to build and
marshal the intellectual capital assets that make it possible to excel in the new
environment. Part of the answer to these demands is to delegate decisions to
knowledgeable people who are close to the points of action where detailed
information is good and understanding of contexts and situations is clear.
Additional answers lie in implementing better organizational structures and
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xii FOREWORD
management philosophies and practices that reflect and support new directions
and strategies which facilitate new approaches.
However, for managers, it has been far from clear how to determine which
principles to adopt and how to implement them. It is in this void that Alex and
David Bennet present the intelligent complex adaptive systems (ICAS) model
for a powerful and comprehensive organizational and operational enterprise.
The Bennets, initially separately and now jointly, have pursued the quest for
better organizational principles and operations to achieve enterprise objectives
more effectively. As a result of this quest, the authors, with their deep respect for
building upon proven experiences and solid scientific findings, have been able
to integrate multidisciplinary theory and practice to conceptualize and describe
the ICAS. They provide a clear and comprehensive roadmap-a model for
managers who wish to pursue more powerful approaches to operate their enter-
prises more effectively-to match the needs of the new environment. They
provide a comprehensive expose of the principles and practices-an application
model-supported by underlying rationales that make it possible for readers to
obtain understanding, objectives, expectations, and knowledge of how to
approach implementation of practices within their organizations.
Managers who wish to pursue new directions need help. In particular, they
need understanding of what is possible and how to achieve it. Cognitive science
tells us that when at all possible, people make decisions and undertake actions by
imitating role models or replicating prior experiences and that it is difficult to
decide what to do and how to do it without a roadmap. By learning and internal-
izing descriptions and methodologies-particularly the ICAS model as presented
by the Bennets-people are able to build personal understandings and mental
models for “what it is possible to achieve,” “what to do,” “why do it,” and “how to
do it” that can motivate and guide them in implementing new approaches.
The path to better enterprise principles and practices is not simple. In this
book, the Bennets have addressed requirements that need to be satisfied to
create suitable paradigms and implement workable solutions that will improve
enterprise performance. Whereas the ICAS may not have been implemented in
full by any enterprise, it does not represent “a figment of the imagination” in the
minds of the authors. Alex Bennet, in her position at the U.S. Department of the
Navy, had extensive experience in implementing aspects of the ICAS. In his own
organization, David Bennet gained in-depth practical experience with ICAS
concepts. Other organizations have implemented aspects of the ICAS and
report it to be of significant importance. On June 17,2003, the Financial Times
reported that several Chief Executive Officers, among them Lord John Browne
of BP and Rich Fairbank of Capital One, consider their enterprises complex
adaptive systems that are heavily reliant on intellectual capital assets to provide
exceptional performance. Given such convictions, they attempt to manage their
organizations accordingly. This is similarly the case with the U.S. Marines.
FOREWORD xiii
One might ask: “Why is the ICAS so important? What makes it so different
that we should expend effort to pursue it?” One answer is that the ICAS ties
together and integrates wide-ranging capabilities to address the new challenges
in a comprehensive manner. The ICAS, as explained by the Bennets, focuses on
the need for the enterprise to act intelligently. It is designed to make the people
within the enterprise-and hence the enterprise itself-deal effectively with
complex environments consisting of tightly interconnected and frequently
changing systems where considerable adaptiveness is required to generate the
evolution needed to survive as the world changes and new insights are gained.
Many enterprises have started to consider their organizations to be complex
evolving systems-far from the Newtonian mechanisms or machines assumed
by Tayloristic scientific management theory. The increasing realization is
that the past models of predictable, controllable, and routine operations
constitute wishful thinking rather than what actually happens. The reality is
that most work operations are variable and require adaptation to be delivered
competently.
The ICAS builds upon the realization that overall enterprise performance
results from the myriad of individual decisions and actions of personnel,
groups, and operational units at every level of the organization. The behavior of
each party is shaped by individual attitudes, objectives, perspectives, and
resources-including intellectual capital assets. These vary and can never be
fully known. As a result, the individual behaviors are partly unpredictable and
the resulting overall behavior becomes complex. To address these complexities,
the design focus of the ICAS has been to provide a management system that will
foster, support, and generate durable enterprise performance and success in
spite of the challenges.
Successful management leads to a search for constant progress, progress that
results from finding the best and most effective fit to satisfy current and future
customers and survive in competitive environments (compete successfully).
Adaptation by the proactive enterprise to current and perceived future contexts
leads to improved and more effective actions and operations-to progress.
From this perspective, the gradual and at times stepwise or revolutionary
improvements become evolution. As the authors point out, this evolution
results from practical implementation of Argyris and Schon’s double-loop
learning.
The Bennets acknowledge that the principal actors in any enterprise are
people and that the main resources that make people effective are the intellec-
tual capital assets that they possess or otherwise have available to conduct work.
These intellectual capital assets must constantly be renewed through
collaboration, learning, and innovation to sustain the advantages that the
enterprise wishes to maintain to remain competitive. Hence, the ICAS
relies extensively on deliberate and systematic knowledge management (KM).
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KM, although at times equated with advanced information management, is
central to the people-focused perspectives of the ICAS model. Clearly, in today’s
technological environment the ICAS must rely extensively on technological
capabilities for facilitation and support provided by communication and
information processing infrastructures of information technology and intelli-
gent automatic processing and actions of cognitively simple tasks, and for
functions such as discovery of historic patterns by knowledge discovery in
databases (KDD).
In the new context of the global knowledge economy, many have suggested
that we need new perspectives for how to manage complex organizations. In this
book, the authors provide a systematized and integrated paradigm for a new
model of the firm that will be of great value for those who wish to conduct
business differently and successfully in the years to come.
This is a bold book that pulls together principles and considerations that for
many would be separate entities that are difficult to unite. Unfortunately, the
world is integrated and unless we treat it as such it is difficult to steer our enter-
prises to perform well. As a result of Alex and David Bennet’s willingness to
tackle the difficulties head on, the book is unique in providing a truly interdis-
ciplinary model that integrates practical management practices into a cohesive
and congruent whole. This book should be a valuable guide for all managers
who aim to compete successfully in the global knowledge economy.
Karl M. Wiig
Arlington, Texas
June 2003
PREFACE
This work is an accumulation of two lifetimes of study and experience, yet it
continues to change, and new ideas continue to emerge, even as we write, and
so we can only imagine the potential offered to organizations through the intel-
ligent complex adaptive system (ICAS) approach. This book is intended as an
idea-generator and resource for organizations, and their leaders and workers,
who choose to survive-and thrive-in the new world of complexity.
We have not attempted to duplicate the significant work that has been pub-
lished on complexity, emergence, learning and knowledge management, themes
running throughout this text. Where appropriate, we have provided references
to these works. What we have worked hard at doing is developing a cohesive,
consistent new theory of the firm built around the concept of intelligent com-
plex adaptive systems. To this end, we have included foundational information
on systems and complexity, learning and knowledge management, and have
offered new approaches to thinking and knowing in support of the ICAS.
At the pragmatic level, we have included both strategic and tactical informa-
tion aimed at developing a design for the new ICAS organization. Areas of
specific focus include structure, culture, and leadership, together with major
emergent characteristics. The new knowledge worker is discussed in terms of the
new skills and competencies needed for organizational survival.
In a very real sense, this book wrote itself. Just as optimum complexity is a
critical part of the ICAS, this book is written with a bent toward achieving opti-
mum length and depths of subject matter. For example, this means that the way
we address complexity, a relatively new field, is very different than the way we
address relationship network management, which builds on a long history of
social relationships. As another example, the length of discussion about the
eight emergent characteristics of the ICAS is very different than the length of the
discussion about emergent characteristics of the environment, which are
observable by every leader.
This book begins with a brief overview of the history of organizations, with
additional detail provided in the Appendix. The intent of this material is to
mi PREFACE
demonstrate the historic relationship of organizations and their environments
before presenting a model for organizational survival in the complex, uncertain,
and rapidly changing environment of today and tomorrow. To be effective, this
new organization must be integrated, cohesive, and meld theory and practice.
With this in mind, Part I1 discusses the theory of the organization and Part I11
focuses on application and implementation. These two parts present a number
of new concepts, some of which may be unfamiliar to readers and challenge the
status quo. For these reasons, Part IV provides introductory material on those
significant new concepts essential for organizational success such as complexity
thinking, knowing, and relationship network management.
While the book is necessarily organized in a linear fashion, a linear approach
to reading the text may not be the best for some learners. Rather, base the read-
ing approach on your personal and professional preferences, interests and
requirements. For example, if complexity is a fairly new concept to you, go
immediately to Chapter 19 and become familiar with the terminology before
tackling the theory behind the ICAS. Understanding complexity will also pro-
vide a tremendous benefit to the implementation approach in Part 111, as will
the understanding of systems (Chapter 18). You will note in the following
graphic that Part IV (on knowledge worker skills and competencies) supports
Part I11 (on structure, culture, and leadership), and Part 111, in turn, supports
Part I1 (the theory).
If you are already familiar with the history of organizations, and the rise of
knowledge organizations, you might want to skip the first chapter, give a cur-
sory review to Chapter 2, since it discusses the current and future environment,
and then dive directly into the theory of the ICAS. In like fashion, you may use
Part IV, The Knowledge Solution, as a resource as you move through Part 11, The
Theory, and Part 111, The ICAS in Practice. For those who are more interested in
application than theory, after reviewing complexity thinking, you may choose to
read the overview of the ICAS model provided in Chapter 3 and immediately
move into Part 111.
Because of the interconnection of thinking and acting throughout the book,
and the potential for spot reading and future referencing, we have included
enough repetitiveness throughout to provide context and clarity where
the material resides. We also provide references to other chapters that have
additional depth on specific or related topics.
We do not propose the ICAS organizational model as a panacea for all ailing
organizations. Nor do we believe it is necessarily worthwhile for organizations
and individuals who operate in a relatively stable environment to adopt this
approach. Our concern, however, is that as the environment and our society
becomes more complicated and complex, because complexity builds upon itself,
more and more organizations, particularly those who operate at the edge of the
state-of-the-art, will be faced with the huge challenge of operating effectively in
PREFACE xvii
Covers the history of organizations,
discusses the changing role of knowledge.
and describes the current and
future environment
Part II Presents a new model of the firm
The centered around knowledge and
Theory based on networking. complexity
theory and Darwinian fitness.
Part 111 Explores the structure, culture and
The ICAS leadership of the ICAS and offers
in Practice implementation change strategies
at the strategic and tactical levels.
Part IV Focuses on the knowledge worker
The and the new skills and competencies
Knowledge needed for organizational survival.
Solution
a turbulent environment. Toward this end, we provide a number of ideas,
considerations, relationships, and competencies that, when put together in the
right way for a given situation and environment, will provide considerable help
in responding to that environment.
ACKNOWLEDGMENTS
Our utmost respect to those thought leaders and the many professionals refer-
enced throughout this book and our colleagues and friends who have informed
our thinking and spurred us onward to this new theory of the firm.
Our deep thanks to Joe Firestone who encouraged us to write the early work
on the ICAS, and then published that work in Knowledge and Innovation:
Journal of the KMCI. How appropriate that this book is coming into existence
through the KMCI Press.
Our appreciation to the employees of the former Dynamic Systems, Inc. and
the Department of the Navy who have served as a testing ground for so many of
these ideas. Our particular thanks to Dan Porter and Jack Hawxhurst, with
whom continuous dialogues helped surface many early ideas, and to Rachael
Sedeen, who helped to graphically represent many of these early ideas. Also, our
thanks to Bob Turner for his insights on communities of practice. Our appreci-
ation to Charlie Seashore, our friend and mentor who had the good fortune to
be the first to read the material that makes up Part I. We are also appreciative of
Argosy Publishing for their professional design and editing of the final graphics
used in this book. Our editors included: Antonella Elisabetta Collaro, Jef Boys
and Jane Shaw.
Our heartfelt thanks to our editor, Karen Maloney, Academic Press/
Butterworth-HeinemandElsevier, who was ever willing to listen to-and
support-our needs, and to our publisher, Butterworth-Heinemann, who we
hope will continue publishing in this important area of study.
Our deep appreciation to our ten children and eight grandchildren who keep
us mentally acute and physically moving. A special thanks to our youngest son,
Andrew, who moved in and took over our day-to-day research and retreat center
and farm responsibilities, enabling us to focus on and complete the writing of
this book.
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