Complex Adaptive Systems
A Complex Adaptive System (CAS) is an “entity consisting of
many diverse and autonomous components or parts (called agents) which are
interrelated, interdependent, linked through many (dense) interconnections, and
behave as a unified whole in learning from experience and in adjusting (not
just reacting) to changes in the environment” (BusinessDictionary.com, 2017). Obolensky (2014) teaches us that complex
systems have four common features: self-organization, inter-relatedness,
adaptive nature, and emergence. These common
features interact, adapt, and adjust continuously and over time evolve into a system
is able to adapt itself to a changing environment (Obolensky 2014).
The Morning Star Company was founded in 1970 as a flat
organization. When I read about the
Morning Star Company, my initial reaction was disbelief. It goes against everything I thought I
knew. My research for this assignment
led me to the Valve Corporation. Its
organizational structure and philosophy is almost identical to that of Morning
Star. Valve calls its organizational
structure flat. In their Handbook for
New Employees, Valve (2012) explains that “a flat structure removes every
organizational barrier between your work and the customer enjoying that work”
(p. 6). There is no management and employees
do not report to anyone. Employees run
the company. They approve projects, they
decide what and when to ship products to the customer. Employees choose what they work on; they are
expected to find the most valuable work they can do and then do it.
Both Morning Star and Valve are good examples of a CAS
organization. Obolensky (2014) describes
a CAS organization as a “dynamic organization where teams are formed, perform,
and then disappear as the need arises.
What forms the foundation (or cornerstones) of this dynamic are clear
people processes and policies, sound and flexible information and communication
technology systems, and transparent, inclusive and flexible strategy
development processes. People are very
flexible and systems are open so information is shared and total transparency is
gained” (p. 26). According to Obolensky
(2014) not many of these organizations exist yet. However, Morning Star and Valve are both clearly
CAS organizations. And, both are
extremely successful. They share almost
identical operational characteristics. Compared
side by side, one might mistake one for the other. However, what these organizations do is
radically different. Morning Star
processes tomatoes and Valve builds video games. Their organizational structure enables them
to arguably be the best in their respective industries.
The implications for almost any organization should be
clear. The CAS organization could be the
solution to the uncertain and unpredictable environment that leadership has to
operate in today. For many industries
hierarchical structures and leadership styles are no longer effective. For these industries, Obolensky (2014) bluntly
suggests “evolve or die” (p. 21). However,
this evolution will not be easy or quick.
The flat organization is the polar opposite of hierarchy. Everything from the way decisions are made to
the way every employee thinks has to change.
In some organizations, this challenge will be insurmountable.
I believe that changing from traditional hierarchical structures
and leadership styles is not only the right thing to do, it is a must thing to
do. After giving the issue more consideration,
I must contradict myself on a point I made in another discussion. The transition or evolution from hierarchy to
CAS should not be rushed. Obolensky (2014)
describes how the evolution might flow in typical organizations quite
well. It must evolve, it cannot be
forced. It is not a mechanical
transition, it is a mental evolution that must be reached by every member of
the organization. Even then, I am not
positive transitioning an organization to a CAS is possible. My concern is based on a few observations I
made while looking at Morning Star and Valve.
Both organizations were organized with a flat structure and
the operational culture from the beginning.
They know no other culture. Both
consider hiring employees from traditional structures a risky proposition and
report up to 50% of those employees that are hired from traditional
organizations fail to adjust and leave within a couple of years (Hamel, 2011)
Valve, (2012).
Both agree that hiring the right person is very difficult, but
absolutely critical for the organization to work. In its Handbook for New Employees, Valve
(2012) prioritizes the hiring process in this manner. “Hiring well is the most important thing in
the universe. Nothing else comes close. It’s more important than breathing. So when you’re working on hiring—participating
in an interview loop or innovating in the general area of recruiting—everything
else you could be doing is stupid and should be ignored”(p. 44)! The wrong mix of people added to the
organization Valve claims will cause significant damage, even failure. This leads me to conclude that the CAS
organization is as fragile as an ecosystem that suddenly dies or a species that
goes extinct.
It is important to note that Morning Star and Valve are privately
owned, self-funded companies. In fact, I
think this could prove to be a prerequisite to successfully operate a flat
business. Some of the practices and
decisions are unconventional. Many are
not intuitive or well understood, and would likely raise concerns from
investors. Those concerns would,
minimally, interrupt operations or worse change the direction of the
company. If you do not employ hierarchical
practices internally, why would you be controlled by one externally?
In business, the ability to make smart decisions quickly, operate
more efficiently while reducing costs, and having the ability to predict
changes sooner and with more accuracy, is a very attractive proposition. For many organizations, it is also quickly
becoming the requirement for continued success.
The implication is that flattening out the organization, reducing the
layers of management and pushing decision making down to the expertise level is
the right thing to do. However, it is
not an easy thing to do. Moving forward
should be done with diligence and caution.
The Martin Reeves (2014) video on strategy, to me, was a bit
underwhelming, but it did contain some valid points for organizations to consider
as they define strategy. Primarily
strategy is not a one size fits all concept.
If we have to conduct business differently as a result of changes in the
environment, then it follows that the way we develop strategy should similarly change. Reeves identified five environments that businesses
operate in that require different approaches to strategy. The environments he described are: classical,
adaptive, visionary, shaping, and renewal (Reeves, 2014). Classical includes companies appropriately
operating in traditional hierarchies.
They are predictable so the traditional approach to strategy is
appropriate…planning. CAS organizations
operate in an adaptive environment. They
are not predictable so the approach is experimentation. Visionary environments are entrepreneurial. They can be predicted and influenced because
the environment is being created.
Shaping environments occur when business ecosystems work together to
change the environment. They can be
influenced but not predicted. Finally,
the renewal environment occurs when strategy is out of sync with its
environment. Transitioning organizations
fall into this category and their strategy objective is survival. Transition into an environment that fits your
business objectives and resume operations (Reeves, 2014).
According to Obolensky (2014), as an organization transitions
from traditional hierarchy to CAS, so does its strategy. It will evolve from a top-down imposed type
that is clear, fixed and not owned by the people to one that is a bottom-up and
top-down dynamic that is clear, fluid, and owned by the entire organization.
My take away is that rapid changes in information and technology
made some business environments unpredictable and uncertain. Those business are having to adapt their
operations to remain successful. Businesses
conduct operations according to established strategy. Therefore if the environment changes,
strategy must change to continue operating.
Strategy is not a plan nor is it a buzzword. It is the means by which companies
operate. I believe it is more important
now than ever before for an organization to define its strategy and get it
right, then make adjustments as often as necessary in order to achieve their
goals.
~Pete
References:
complex adaptive system (CAS). BusinessDictionary.com.
Retrieved November 03, 2017, from BusinessDictionary.com website: http://www.businessdictionary.com/definition/complex-adaptive-system-CAS.html
Hamel, G. (2011). First,
Let's Fire all the Managers (Links to an external site.)Links to an
external site. (cover story). Harvard Business Review, 89(12),
48-60.
Obolenski, N.,(2014). Complex adaptive leadership:
Embracing paradox and uncertainty, (2nd ed). Farnham Surrey, England. Gowan PublishingLimited.
Reeves, M. (2014). Martin Reeves: Your strategy needs a
strategy. Ted Institute, (December 2014). Retrieved from: https://www.youtube.com/watch?v=YE_ETgaFVo8
Valve Corporation (2012). Handbook for new employees. Accessed
November 4, 2017. Retrieved from: http://media.steampowered.com/apps/valve/Valve_NewEmployeeHandbook.pdf
No comments:
Post a Comment