Creative Management of Complex Systems

Jean-Alain Heraud, Fiona Kerr, Thierry Burger-Helmchen

• Publisher: Wiley-ISTE
• Year: 2018
• Print ISBN: 9781848219571
• eBook ISBN: 9781119575115
• Edition: 1
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

This book is a general presentation of complex systems, examined from the point of view of management. There is no standard formula to govern such systems, nor to effectively understand and respond to them. The interdisciplinary theory of self-organization is teeming with examples of living systems that can reorganize at a higher level of complexity when confronted with an external challenge of a certain magnitude. Modern businesses, considered as complex systems, ideally know how to flexibly and resiliently adapt to their environment, and also how to prepare for change via self-organization. Understanding sources of potential crisis is essential for leaders, though not all crises are necessarily bad news, as creative firms know how to respond to challenges through innovation: new products and markets, organizational learning for collective intelligence, and more.

1
Introduction: Why Do We Talk About Complexity in Management?

The subject of this work is the management of organizations in contexts that are characterized by strong systemic complexity. We wish to show that this type of management can nevertheless be creative in the sense that it necessarily evades linear thought. This way of thinking can be adapted for complicated problems, but not for complex ones. In the former, the application of causal reasoning and optimization methods enables us to arrive at the correct response for a properly asked question (even though this requires a great deal of calculations). In the latter case, it is an illusory wish to establish a precise and exhaustive model of reality and risks as we would be dealing with an emergent process, and we must be content with initiating the processes and performing experiments on both means and ends. The essence of life is in complexity, as shown by philosopher Edgar Morin – particularly in dialogue with economist and systemic specialist Jean-Louis Le Moigne (Le Moigne and Morin 1999). If an organization is to be considered living – i.e. evolving, dialectic, partially unpredictable and thus difficult to manage according to strategic planning formulas – then it requires exploring alternative management styles and thinking outside the box, hence the introduction of the concept of creativity. The subject of management is living, thus creative, which obligates management to perform in a different way.

Complexity and creativity are part of the research subjects that draw most of the attention towards economics and management fields. These two fields of research share numerous conceptual and methodological aspects. In both economics and management, complexity and creativity are also transdisciplinary vectors that require researchers and practitioners to revisit certain basic hypotheses and concepts.

Be it in economics and creativity management or in the application of the science of complexity, the number of academic publications, books, even special editions of entire journals in these fields, summer schools, or research centers has seen considerable growth in the last two decades.

Today, not only practitioners but also the political sphere and organizations (governmental and NGOs) often use the terms economics of creativity or complexity management. Recent developments in these fields of research as well as the synergies in their evolution within economics and management were the main motivating factors for writing this book, which presents recent issues in economics and management.

To tackle the issue of complex system management, we will draw our attention towards recent manifestations in the field of economics and creativity management. However, the present work does not warrant its contribution to the subject of creativity. The focus here is placed on the notion of the complex system. The aim is, in general, to cover a wide range of fields – as diverse as private or public organization set-up, formal or informal organizations, spanning from enterprises to urban systems. Our perspective towards this system will be similar to that of the organization’s manager, attempting to provide decision-makers with theoretical representations and useful, concrete examples.

1.1. Examples of complex and/or innovative projects

Launching a start-up and managing an innovative project in an existing enterprise are tricky jobs that elude typical strategic planning models. The description of the complex system in question is obviously not the same: managing an innovative project implies a detailed understanding of the company’s system (the stakeholders in a very broad sense, namely the internal actors and regular partners) as well as its environment, whereas the creation of a start-up implies knowing how to anticipate what may be the future multi-actor system where it will establish its competence.

Another example is that of a megaproject such as designing and building a new nuclear center model or redeveloping an urban zone in a state of decline. In the former situation, there is a strong technological innovation dimension even though this is not the only uncertainty that must be managed and the only field of creativity to be involved. In the latter case, it is not a matter of technological innovation – or only marginally – but rather of an operation requiring a great deal of creativity in the most diverse domains, often an innovative way of thinking about how to articulate the collective project, and then its governance.

In the above-mentioned examples, the common feature concerning creativity is that it is not simply a matter of implementing a new idea with a certain functionality in mind (by rationally constructing the optimal response to the question asked), but rather steering a complex system towards a goal which is not completely defined at the onset. To do this, management organizes a multitude of competences and the organization uncovers a large part of the pertinent data along the way.

The literature on management science provides solutions on such issues in several ways. The most promising solution is the entrepreneurship theory developed by Saras Sarasvathy, who popularized the effectuation approach as opposed to ordinary causal reasoning in project management (Sarasvathy 2001). Matters pertaining to general (interdisciplinary) theories describing dynamic systems and self-organized processes are also taken into account. Jean-Louis Le Moigne, complex systems theoretician, is also one of the thinkers concerned with self-organization in management (Le Moigne 1994). In fact, following the works of I. Prigogine in chemistry, H. Atlan in biology, F. Varela in cognitive science, etc., Le Moigne has applied this concept to management. Stating a system is complex implies it is self-organizing. With this attribute, it redefines itself over time and this creative faculty renders it unpredictable. This is the profound reason that connects complexity, uncertainty and creativity, and this is why the manager of such a system has difficulties steering with tools articulating causes and consequences in a linear way. We must break away from scientistic thought, at least as much in management as in other fields.

The management of innovative projects and that of complex projects are altogether different subjects, but they correspond to similar processes. One of the goals of this work is to comment on this similarity by highlighting two reciprocal logical chains:

• – all innovations, in order to be steered, imply the mastery of a complex system (it does not suffice to have a new idea to innovate);
• – the management of complex projects is an innovative act by definition, as complexity never leads to repetitive situations (complexity compels us to be inventive).

In every situation, success depends on the ability to articulate multiple forms of creativity. The creativity of the scientist (science) or the engineer (technology problem solving) does not suffice to ensure the success of the resulting innovation: entrepreneurial know-how is also a must. Inversely, managing a project in a conventional sector though regulated by a complex system of actors and artifacts compels us to proceed by trial and error and to create as an inventor.

Muller et al. (2017) pose the question of knowing the manner innovation systems are considered complex systems. Evolutionary economics, of which innovation is the central subject, has, curiously enough, done little until now in regard to the characterization of innovation systems as complex systems – being classically described as networks of actors. A network is better understood as a complex system triggered when feedback loops are produced in connection to the relationship between actors and learning processes. Recognizing the attributes of complexity poses implications concerning governance. For these macroeconomic systems, this means coming up with innovation policies. Correspondingly, we will explore the consequences of complexity on enterprise governance in this work. As for public policy, the design of European programs in the last decade based on the idea of smart specialization in regional strategy is an interesting example, leading to recommendations analogous to those that we will see at the microeconomic level: such as experimentation, the attention given to decentralized initiatives and the detection of weak signals (Héraud 2016).

1.2. Complex systems, rationality and knowledge

Although it is difficult to provide a precise and universal definition of a complex system, we will attempt to target the notion in this initial chapter. The common feature in all complex systems is their level of interconnectedness – the encompassing of a large number of elements, generally organized into multiple interlinked hierarchical levels like Russian nesting dolls – and the direct interactions between these levels. These systems can be adaptive and improved over time. However, it is difficult to steer them, for their structural richness creates self-organization phenomena, with many of the interconnections not visible. Because these phenomena are inevitable, it is better to take advantage of them rather than opposing them. The linear thought of project management ab nihilo is not applicable in such a context given that reality follows this pattern and thus cannot be manipulated using these methods.

1.2.1. Outlines of complexity and complex systems

Complexity comes from complexus, a Latin expression meaning “interwoven”. Complex thought studies the aspect which connects the subject to its context, in addition to the system, process or organization.

Le Moigne and Morin (1999) reiterate the three principles of rejecting complexity through classical science:

• 1) the principle of universal determinism, which says that intelligence is capable of knowing and predicting everything;
• 2) the principle of reduction, which involves becoming familiar with a composite whole through knowledge of its constituent elements;
• 3) the principle of disjunction, which assumes that a proposition can only lead to one single consequence.

For Bréchet (2012, pp. 257–274), complexity is born of recognizing the irreversibility of phenomena. An initial complexity approach (McKelvey 2012) is based on the triptych order/disorder/organization. Complex systems are dynamic systems characterized by a very large number of interactions and feedback. This interactivity renders phenomena that is difficult to describe, analyze and even more difficult to predict.

Edgar Morin distinguishes restricted complex systems from generalized complex systems. The latter, just like the former, are complex in their organization and behavior, but they produce complexity through their function. Generalized complex systems respond to three principles:

• 1) The principle of universal determinism against the principle of a dialogical relationship between order, disorder and organization.
• 2) The principle of reduction against the principle that connects the parts and the whole in a reciprocal relationship.
• 3) The principle of disjunction against the principle of maintaining the relationship between objects, notions, disciplines and knowledge.

Bréchet (2012) revisits the characteristics of complexity in Edgar Morin’s sense with a reading key: the theory of organizations. Thus:

• – complex syste...

Table of contents

• Cover
• Table of Contents
• Preface
• 1 Introduction: Why Do We Talk About Complexity in Management?
• 2 The Evolution of Complex Systems
• 3 Steering Complex Adaptive Systems: Managing Weak Signals
• 4 Entrepreneurship, Market Creation and Imagination
• 5 Managerial Approaches and Theories of the Firm
• Conclusion
• References
• Index
• End User License Agreement