Fractal organizations part ii – object based complexity management

FRACTAL ORGANIZATIONS
Part II – OBJECT BASED COMPLEXITY MANAGEMENT
FATMA ÇINAR MBA, CAPITAL MARKETS BOARD OF TURKEY
Assoc. Prof. Dr. KUTLU MERİH

Systems as Complex Beings
Complex Systems characteristics
Complex Adaptation of Systems : CAS
Organizations as Complex Adaptive Systems
Edge of Chaos
Self Orgnization & Emergence
Part I : Fundamental Concepts of Complexity
Theory
Presentation Outline
FRACTAL ORGANIZATIONS PART II - OBJECT BASED COMPLEXITY MANAGEMENTThursday, February 12, 2015

The Reasons of Object Oriented Approach
Description of the Objects
Organization as a Complex of Objects
Object Oriented Business Modelling
Organizational Agents
Sycamore Tree Diagram of Organizations
Organizational Sycamore Tree Agents
The CORTEX
(CBBC) – Complexity Business Balance Card”
Presentation Outline
Part II : Object Based Complexity Management

Business Modelling of Problem Areas
Performance optimization for companies has now become more
important than ever.
Therefore, companies need to measure their performance in more
realistic terms to make the best decisions.
Despite improvements made based on scientific models, current
techniques fail to reflect the dynamics of current business environment.
Unfortunately, these techniques are stationary and in a structure that
produces lagged outputs.
Thursday, February 12, 2015 FRACTAL ORGANIZATIONS PART II - OBJECT BASED COMPLEXITY MANAGEMENT

Models Should Also Be Compatible With The
Current Dynamic Environment
These models created for
performance monitoring should
also be compatible with the
current dynamic environment in
which the company operates.
They should also be compatible
with factors which are important
for competition, such as
innovation and flexibility.
Thursday, February 12, 2015
Since the assessment criteria differ
according to the sector's structure, sector-
based sensitivities should be taken into
account when formulating models.
In this context, we can say that these
models have the advantage of providing
cost and operational gains of various
alternative policies that can be tested
without forcing the active processes of the
company.
FRACTAL ORGANIZATIONS PART II - OBJECT BASED COMPLEXITY MANAGEMENT

Models Help To Save Time And Resources
In this way, the user-friendly business
model considerably simplifies processes
and also creates its own market.
Therefore, the success of modelling is
embedded in the properties of modelling
techniques.
Costly real life experiences can be
reduced significantly.
Development of new techniques and changing
insights based on data management
(informatics) has become a necessity for
organizational success rather than simply an
option.
This approach is also suitable for users who are
accustomed to utilizing object-based office
programs.

The Reasons of Object Oriented Approach
In this study, we propose an Object-Based
Modelling based on information and
Informatics as the most suitable model to
realize subject approach.
Business concepts and techniques, and
company processes are re-interpreted using
a dynamic-cybernetics cognizance.
This approach is based on
ComplexityTheory (PART I),
Informatics-software development and
Chaos Theory.
This topic has been studied in detail by
Kauffman Santa Fe Institute and many
respective scholars (Holland, 1992).
Object Based Complexity Approach evaluates companies as Object Oriented organic and
complex structures with informatics backbone, and not simply as mechanical and bureaucratic
structures.

How Complexity Management Is Different Than
Systems Thinking
Less emphasis on leverage points (and other
mechanical metaphors) and more on emergence
from patterns of interaction among people and groups
in the system
Less emphasis on the leader’s influence and more on
creating the conditions for self-organization,
emergence, and generative relationships
Less emphasis on articulating a clear, shared vision
and more on multiple actions inspired by a good-
enough vision
Less emphasis on individual knowledge and logical
thinking and more on creative adaptability among
people and work processes
Less emphasis on changing the formal structure of
organizations and more on informal communities of
practice (and other rhythms that operate among
people and work processes)
Less emphasis on knowing-in-advance and more
on “tuning” to the environment, sense-making and
building on “what works”
Less emphasis on competency-building or gap-
closing and more on noticing attractor patterns,
increasing information flow, working with
serendipity, and shifting organizational boundaries
Less emphasis on budgeted resources and more
on making what is needed out of the materials-at-
hand
Less emphasis on a system outside of yourself
and more on your participation in “co-evolving”
both what you want and what you should
creatively destroy

New Types of Organizational Structure
VİRTUAL ORGANIZATION
LATTİCE ORGANIZATION
SPIDERS WEB ORGANIZATION
HOLONIC ORGANIZATION
KINETICS ORGANIZATION
LEAN ORGANIZATION
COMPLEX ORGANIZATION

Object-Based Business Modelling
Business Objects constitute the foundation of
Object-Based Complexity Management.
Every organization is a complex consisting of
people.
Even an organization which is run by a single
person is considered as a complex structured
organization.
This is because complexity is not related with the
number of the people, but the number of the
necessary business processes.
The complex structure of the organization is
composed of vertically and horizontally linked
relationships of Business Objects.

Company As A Complex Of Objects
Our basic model of interest will be the
Company Complex.
This is the intelligent modelling of complex
and dynamic presence of main problem
areas within the so-called company universe.
These problem areas, which make up the
organic structure of the company, will be
modelled as Objects.
In other words, entity and complexity have
become synonymously identical in our model
space.

A sector that compromises several entities and the whole economy
within the global system are also Mega Objects composed of units.
An organization object can neither be detected nor interpreted
irrespective of the objects independently (Habitat Effect).
In other words, each object in the space of objects is the object of, or
composed of their extension.
Complexity Management perceives each individual of the organization
as a self-governing administrator who governs, functions, time and
relationships, as well as itself.
In other words, a CEO and a warehouse keeper are similar objects, but
whose roles and functions are different.
Industrİal Sectors Are Mega Objects

Architecture of
Object:
Properties and
Methods
In conformity with the principles of Object-Based
software; there must be parametric structure
properties that define each object and a set of
methods to determine their behaviour.
Thus, all business units of the organization and the
people as well as their identity and roles in each
position are clearly identified in advance.
Their level of success will be the Performance of
Objects of the organization.
Accordingly, a business object should be considered as
an active organizational unit whose job/duty
definitions are well-defined and equipped with
impulse and response capacity against specific
reactions.
Each object is a dynamic and live organic-informatics
structure, capable of receiving and recognizing
impulses, and giving appropriate reactions.

Attractors (not resistance)
An attractor is a pattern of behavior that emerges from the complex interactions of
the parts of a system.
After the pattern has emerged, it constrains the future behaviors of the system's
parts.
Corporate culture is a good example of an organizational attractor.
It emerges from day-to-day interactions and ultimately determines day-to-day
actions.
Complexity managers recognize that people do not resist change.
They are attracted to other patterns of behavior.
To help an organization change, you must understand the active attractors and
work within them to move to different and more constructive patterns.

Accordingly, software objects both host data and
command against external stimuli (such as mouse
clicks or using touch sensitive screens) and are
interactive modules that can react.
These units, as in software, may be observed in
organizations or in natural habitat.
Especially, the nature exhibits the perfect examples of
object origin structuring.
All living things exhibit a structure originated from the
basic object.
Naturally, the most complex structured basic object is
the human himself.
Objects Can
Be Seen in
Natural Habitat

Complex
Structure in the
Active Object:
Agent
The active object of objects of an
organization are Agents.
Basic objects are the first to be determined
by the sector the company operates and
their business lines.
Following this process, new objects are
created and hence active / professional
agent objects are formed upon this
expansion. I
In conventional management science these
are sections and departments.

Control and Coordination Object of Business
Objects: CORTEX
The function and dynamics of organizations are executed by Cortex which indeed is an Object of
Control Coordination and Balance.
It is Cortex Object that employs all objects of the organization and information systems as a backbone.
Conventional management science calls this as management. In complexity management, Cortex
executes the functions beyond the management.
We can observe an organization formed solely of a Cortex, but we cannot observe an organization
without its Cortex.
Cortex is the most basic Object of Object based modelling. Modelling in our study will take place around
the Cortex.

BasicOrganizational
Objects
Object Based Organization Modelling starts with
four basic organizational problem areas
1. Administration
2. Procurement
3. Production
4. Marketing
These problem areas make up the organik
structure of organization as basic objects
We model this structure as a Fractal Structured
Fishbone diagram named as SYCAMORE TREE
DIAGRAM

CORTEX
ENTRENEURSHIP
MANAGEMENT
PLANNING
CONTROL
CORDINATION
ADMINISTRATION
HUMAN
RESORCES
FINANCE
ACCOUNTING
SUCURITY
TECHNOLOGY
PRODUCTION
PROCUREMENT
INVENTORY
MANUFACTURING
LOGISTICS
PRODUCT
Organization as Object of Objects
MARKETING
MARKET
RESEARCH
PRODUCT
SALES
CUSTOMERS
COMPETITORS
LOGISTICS
PROCUREMENT
WAREHOUSING
SALES
CUSTOMERS
OUTSORCING

CORTEX Coordinated Relations Management
Model: Sycamore Tree
Strategic business unit of the model is composed of Agents.
Two types of nested structure of business units are Agent-Objects.
All Agent-Objects are associated with Cortex and under its control.
Object relations with other agents, functional and strategic integration of operational
responsibilities, delegating integral business responsibilities (performance-project groups)
have a weighted impact on management processes of network units.
Agent-Objects integrated with informatics backbone of autonomous work groups constitute the
backbone of the system by jointly operating their own leadership to work in cooperation with
other operating business units from various levels.

It has also become more important for companies to
optimize their financial performance and to make the
necessary decisions via measurements in order to
maximize benefits to the business.
To serve this purpose, companies need to utilize
Integrated Theoretical Application to transform their
approach to Object-Based Integrated Enterprise
Performance Management Model with real-time risk
analysis.
This makes measuring the real value of the company
possible within the framework of integrated theoretical
applications and integrated reporting systems.
Enterprise Performance Management Requires
Integrated Reporting System

Sycamore Tree (Complexity Business Balance
Card - CBBC)
Accurate perception and interpretation of Object-Based Business Modelling in a complex
business universe will constitute the base for successful management.
The parts of the body in self-similar objects or components resemble the whole body.
The fishbone illustrates the unlimited coordination of objects before and after and the control and
their internal balance.
Three-dimensional Sierpinsky pyramids are typical of this structure.
Each fishbone on Sycamore Tree diagram is the object of the objects.
In other words, the organic structure of the objectsis displayed as a fractal hierarchy among objects
both vertically and horizontally within the matrix.
Our proposed Sycamore Tree diagram augmented with communication technologies, will give in-
depth perspectives to the management through our operating business units approach (Merih and
Çınar, 2013).
We propose Sycamore Tree (Complexity Business Balance Card
- CBBC)

CBBC Diyagram Model
Backbone of Sycamore Tree is Information Infrastructure
CORTEX
Stakeholder Relations Competitions Relations
State Relations
LAN
WAN
Customer Relations
Information&Communications
Technologies
Product Relations
Innovation Relations Marketing Relations
Global Environment Relations Financial Environment Relations

CBBC For Balanced Dynamical Performance
We need some certain criteria to refer to corporate balance.
Criteria should be parallel with the strategies determined by the strategic
management.
To ensure that the strategy is well received, perception of change, studies
conducted under the leadership of management, the definition of concepts,
harmonizing the organization with the strategy, motivating people and all sub-
factors related should be harmonized as a whole
This can be achieved with the Complexity of Business Balance Card model and
the Financial Performance Assessment Methods.

CBBCDiyagram
Model

“21.th CENTURY WILL BE
COMPLEX SCIENCE
CENTURY”
Stephen HAWKING

kutlu@merih.net
kutmerih@gmail.com
fatma.cinar@spk.gov.tr
http://www.spk.gov.tr/
http://www.riskonomi.com
@fatma_cinar_ftm
@fractalorg
@Riskonometri
@Riskonomi
@CORTEXIEN
tr.linkedin.com/pub/kutlu-merih/9b/921/25a
tr.linkedin.com/in/fatmacinar/
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