An overview of complexity theory and how it applies to organizations.

1. Complex Adaptive Systems Theory An Introduction to the Basic Theory and Concepts John Cleveland Innovation Network for Communities First Produced in March 1994; Revised November, 2005

2. A Two-Page Intro To Complex Adaptive Systems Theory

5. A Slightly Longer Introduction To Complex Adaptive Systems Theory

8. HOW DO YOU INCREASE THE ODDS… That you’ll catch the updraft rather than the downdraft?

9. But Why Seek Disequilibrium? Systems that survive… that stay in the evolutionary game… that prove to be “sustainable”… that have the lively, surprising, interesting quality we intuitively associate with lifelikeness… systems that succeed in shaping their environment at the same time they are shaped by it… such systems turn out to have an insatiable hunger for novelty, for disturbance, for new and puzzling information… yes, they gravitate toward disequilibrium periodically. Such systems are highly sensitive to disruptive, anomalous information; they notice variations from established patters quickly. They respond to new information by experimenting profusely ; they throw whole repertoires of possible responses at new phenomena, and save the ones that work. The new information leads to adaptive changes …often is startling and unpredictable leaps to whole different frameworks capable of re-integrating a better relationship with their environment. “ The balance point – often called the edge of chaos – is where the components of a system never quite lock into place, and yet never quite dissolve into turbulence either… The edge of chaos is where life has enough stability to sustain itself and enough creativity to deserve the name of life. The edge of chaos is where new ideas and innovative genotypes are forever nibbling away at the edges of the status quo, and where even the most entrenched old guard will eventually be overthrown. The edge of chaos is where centuries of slavery and segregation suddenly give way to the civil rights movement of the 1950s and 1960s; where seventy years of Soviet Communism suddenly give way to political turmoil and ferment; where eons of evolutionary stability suddenly give way to wholesale species transformation. The edge is the constantly shifting battle zone between stagnation and anarchy, the one place where a complex system can be spontaneous, adaptive and alive.” (Mitchell Waldrop, Complexity)

10. Evolution Happens At The Edge of Chaos Systems use the dynamics of “punctuated equilibrium” to transcend themselves and self-organize into something more compatible with their environment. This is true at all levels of complexity. Scientific disciplines focus on a particular level of the evolutionary chain. So when we say that these new ideas about systems staying “on the edge” are cross-disciplinary, we mean that physicists can see that subatomic particles work this way…chemists can see that atoms and molecules work this way… meteorologists can see that weather systems composed of air molecules work this way…biologists can see that cell populations work this way… anatomists can see that organisms work this way… neurologists can see that neuron networks work this way… ecologists see species working this way… economists see markets working this way… and sociologists see crowds working this way. The exciting possibility is that when we describe these conditions that keep systems “on the edge” we are beginning to understand how systems since the universe began have demonstrated adaptive capacity – the ability to self-organize into new forms that “stay in the game” of evolution. And that understanding those conditions can help us know how to act in order to accelerate our own learning, evolution and adaptation. When we try this idea on for size we notice that: If this is true, the universe has a direction – it is moving toward more order by itself. We don’t have to resist entropy… or push the river. We just need to learn how to get out of the way and cooperate with the direction. If this is true, all the messiness and disorder and unpredictability isn’t evidence of an equilibrium system gone awry. Instead, it’s part of the inevitable movement toward more order. This feels different; we can relax into it a bit.

11. The Edge Needs Both Structure & Freedom As we noted earlier, systems “on the edge” are notable for the “hunger” for novelty and disequilibrium. This distinguishes them from rigidly ordered systems. At the same time, they also possess a deep underlying coherence that provides structure and continuity, and distinguishes them from chaotic systems. Theorists use words like “integrity”, “identity”, “persistent structure” and “self-reference” to describe the opposite characteristic. Systems that evolve along the edge of chaos periodically re-integrate into structures with temporary stability… which bear recognizable resemblance to the string of predecessor structures. They are free enough to change, but stable enough to stay recognizable. They’re mad up of autonomous agents : Think of a “swarm” of bees… or a crowd leaving a football stadium… or a flock of birds. All can be made up of hundreds of actors with the freedom to make any number of choices about where to go next at a given moment. You can also think of non-animated systems such as weather systems full of air molecules in this way. They all make simultaneous “choices” simultaneously, influencing and limiting each other’s actions. But the agents don’t exist in pure chaos – they’re networked together . They don’t go just anywhere from one moment to the next. They share common purposes, are subject to common laws (gravity, aerodynamics) and take in information from a common environment using common perception systems (vision, scents). So they are effectively connected and an observer who “zooms out” to look at the teeming activity from far enough away sees a coherent whole/pattern over time. The swarm or the crowd has velocity, shape, direction and density that do not reside in any individual agent. Autonomous agents networked together create non-linear dynamics. The system can react to small changes in the big and surprising ways (rumors fly like lightning; a mob forms; the hive “swarms”). Such systems can communicate almost instantaneously, experiment with dozens of possible responses if they encounter a roadblock and rapidly exploit solutions when one is found. The capacity of such a system to learn, grow, adapt and invent novel new patterns, when presented with a disequilibrium-inducing obstacle, is MUCH higher than that of a marching band, for example, or a machine-robot or a top-down command/control bureaucracy. Associated in this way, the agents have both autonomy/freedom to choose and also a structure/connectedness that flexibly constrains their options.

12. It’s A Spiral Dance, Not A Sharp Line Notice, however, that it would be a mistake to let the term “edge” imply that adaptive systems find magical “right” balance of structure and freedom and then walk that fine line consistently. “Punctuated equilibrium” means, instead, that such systems alternate between order and chaos during the course of their profuse experimentation. The growth/learning/adaptation looks more like a spiral that enters each state, but stays close enough to the other that crossing back over into the other state is likely. Science speaks of the dynamics of “phase transitions” like the ones from ice water or from water to stream. In this condition, small changes (in heat energy) push the system over to the other state. The same changes would make no difference at all if applies at other temperatures. A system on the “ edge of chaos” is sensitively dependent on initial conditions . Some people call this the butterfly effect; a butterfly flapping its wings in Brazil can set in motion a chain of effects that results in a tornado in Texas hours or days later because the weather systems are poised on the “edge of chaos”. A few air molecules moving in different direction can have snowballing effects on their surrounding molecules, with whole different weather patterns resulting. In stable systems small changes in inputs have small effects, while large shifts have large effects. In systems “on the edge”, tiny shifts result in huge, rippling phase changes and the same shift in different places products wildly different results. In other words, at the Edge of Chaos, not all “twitching” leads to turbulence. In truly chaotic systems, every little change sets the system on a new path, and the result is a “boiling” mixture, with no stable patterns. Systems on the “edge” of chaos are not actually chaotic – most of the small fluctuations are “dampened” by negative feedback and don’t lead to nonlinear behaviors. To “upset the apple cart”, a disturbance needs to be strategically positioned in a niche where it can set off a chain reaction of events linked by positive feedback. Systems on the edge of chaos have just enough of these niches to stay alive and vibrant, but not enough to disintegrate into chaos. The point in time when a small disturbance leads to a large change in a system’s behavior is referred to as a “bifurcation point”. At the point of bifurcation, a system has almost infinite “degrees of freedom” – choices to make about its future. Biological systems maintain their capacity for creativity by evolving what Briggs and Peat call “bifurcation sensitivity” – some areas of behavior which are sensitive to small changes. Other areas may dampen change in order to stay stable. The system’s history teaches it where it’s important to be poised on the Edge and where it matters less.

13. Not Everybody Makes It… When we look back across the chain of progressively more complex systems we see the trail of survivors. Nobody charts or remembers the millions of experiments which have fallen by the wayside because they weren’t adaptive. But when we set out to emulate the conditions of systems on the edge of chaos (because of their liveliness and adaptability) it behooves us to remember that these systems are not careful, efficient or controlled. On the contrary, these systems are profligate experiments, most of whose experiments fail. They spin off huge repertoires of options and try them all out simultaneously. It takes them many “no’s” to find the “yeses”. Most of us (who have matured during a period of relative stability) are more use to the careful accountability for resources, the predictability and control more characteristic of equilibrium systems. The idea of losing swarms of agents to experiment, knowing that some of them will fail, while others will stumble onto brilliant breakthroughs, feels irresponsible. Nature’s lesson from these lifelike systems is to remind us that – while the danger of many failures is real and acute – still, in the long run, the results of NOT staying on the edge of chaos are equally deadly. Systems, which lock into order, stagnate, repress information and possibilities and converge to monopolistic, rigid solutions. And ultimately – because the spiral dance is inevitable – they will nevertheless plunge into disintegrating chaos, perhaps more catastrophic because the rigidly structured order has held off gradual incorporation of new ideas. The other end of the spectrum is equally fatal: systems which opt for too much unstructured chaos diverge so that eventually their agents simply don’t influence each other – they cease to be a system and their resources and agents are available to be attracted into other systems. “ We live in a universe that is alive, creative, and experimenting all the time to discover what’s possible. This is my favorite realization. We see this at all levels of scale, whether we’re looking at the smallest microbes or looking out into the galaxies. We live in a world which in constantly exploring what’s possible, finding new combinations – not struggling to survive, but playing, tinkering, to find what’s possible.” Margaret Wheatley “Three Images” Noetic Science Review (Spring 96)

16. Human Rules Are Complex Since we are NOT cellular automata, our human rules rarely get formulated as simply as “If you’re and X and you encounter Y, do Z”. Instead, our ability to detect, interpret and act on information is managed by our brains. Brains themselves, of course, are also complex systems of neural cells and clusters functioning “on the edge” – in swarm-like fashion each cluster detects and interprets information (electrical signals) from neighboring cells and acts to send (or not send) signals itself. The totality of all this parallel-processed neuronal activity results in a global “whole” which governs our senses, our motor control and our consciousness. The human brain is triune : it developed over eons of evolutionary time in three stages. Physical evidence of those stages still exists: present day brains still have three parts which are layered over each other, or “nested”, as many systems which developed through Edge of Chaos dynamics. We share a part of our brain called the brain stem with reptiles – it controls autonomic functions, instincts, and adrenalin. It is the source of taboos and territoriality, flocking behavior, mating rituals, and the “fight or flight” instinct. Some of our “rules” generate from this part of our heritage. Understandably, they are difficult to change; one of our colleagues says they require a conversion experience. Enclosing the brain stem is the limbic system, which we share with mammals. Caine and Caine, in their excellent book, Making Connections ; Teaching and the Human Brain , note that both the amygdala and the hippocampus are located here, and that they influence the association of events with emotion and the storage of experiences in context -rich “locale” memory that enable us to map connections, understand narrative lines, be social and manage relationships. Because they have limbic systems, for instance, mammals care for their young, as reptiles don’t. The “rules” that come from this part of our mental equipment are somewhat easier to change, although anyone who’s ever tried to change his/her culture or nutritional habits will agree that these, too, require some sort of shock, deep shift in motivation or “significant emotional experience” if they are to re-organize. The third section of our brain, the cerebral cortex , surrounds both the brain stem and the limbic brain and is the seat of conceptual , logical and formal operational thinking. It permits language, including speech and writing, and makes up 5/6 of our brain’s mass. “Rules” formulated here do not seem easy to change to any of us who have attempted to change a mental model, a theory or a law. But these rules are relatively flexible: what is required here is simple information. It’s hard because limbic emotions and feelings are deeply intwined with cerebral concepts and thoughts.

17. Some Rules For Getting To The Edge Indisputably, it’s no small challenge to find the human equivalents of the “few simple rules” which keep cellular automata, turbulent hydrodynamics, virus populations or neuron cluster “on the edge”. But our reading of scientists’ observations of turbulent-yet-coherent phenomena like these suggests some common themes that we DO believe have human analogs. We’ve reproduced some of the most fascination science “stories” in the next booklet in this series and listed books where we read about them in the bibliography. You’re heartily encouraged to dig in and see what patterns stand out for YOU. But here is OUR mental model: BREAK IT UP: Let Autonomous Agents Follow Simple Rules Systems on the edge always look like swarms. Lots of actors are buzzing around taking autonomous, but interdependent actions at the same time. They have the “authority” to direct themselves and notable freedom to wander in any direction. At the same time, they share a few common “rules” or a governing sense of themselves as a “part” that keeps their buzzing activity close to the “whole”. The operating unit – the “agent” capable of autonomous action – is very small, much smaller than we’re used to in command and control organizations. The sense of control is much more light-handed… or perhaps it’s deeper-seated, allowing much more “chaos” into the mix. WIRE IT TOGETHER: Create Moderately Dense Connections Systems on the edge always look like jungles. The agents buzzing around are in constant, sometimes invisible communication with each other. Their choices influence each other; they depend on each other’s success. Their connections are messy, overlapping, webbed, redundant, and fluid. The connections are chosen rather than designed: connections that prove useful are deepened, while ones that have become inactive are shed. There are often nested levels to the resulting structure – it’s not true that there is no hierarchy in this jungle. Some agents “work” on the system itself (or system-wide aspects) while others “work” on sub-tasks and the connections cross such level-boundaries freely. Information is passed freely to agents who find it useful, but there is no requirement to communicate with “everybody”, choking the system with unrequested information. EXPERIMENT PROFUSELY: Feed The Fringe and Nurture Innovation Systems on the edge look like mad scientist’s laboratory. Agents try hundreds of potential solutions appropriate to local conditions. As information about options that work is passed through the network, less promising possibilities are discarded left and right. Feedback is rigorous, and instantaneous so the experimenter knows what to refine further. Experiments are the source of life-giving novelty and new information.

18. Leading on The Edge of Chaos Little of this thinking matches traditional notions of leadership. We know how to be (and expect OUT leaders to be) good at defining and assigning tasks, designing and ensuring coordination for the whole, making course corrections, ensuring that there are “no surprises on THIS watch” and incidentally, assuming responsibility for the success and the stability of the whole. Peter Block’s books The Empowered Manager and Stewardship expose this old-paradigm model of leadership, which he calls the “Patriarchal Contract” as a fantasy. He offers an alternative “Entrepreneurial Contract” which we think probably forms the internal mental model of most humans “on the edge”. But what does the leader “on the edge” do? The leadership design injunctions which we began sketching on the previous page are (in a sense) instructions to each agent in a swarm about how to step up to leadership. This takes “personal work” deep in the interior of each person, because it is about unilaterally abdicating what Block calls the Patriarchal Contract and assuming swarm-like autonomy (and responsibility) for developing a new contract with oneself and with one’s whole. So what the leader of a swarm does (mostly) is to create conditions under which a critical mass of the agents in the (potential) swarm can and do make that internal shift to thinking of themselves as autonomous, but networked experimenting agents. We’ve found the image of the fern extremely helpful: In James Gleick’s book Chaos , he describes the development of fractal algorithms which allow a computer to use a “few simple rules” to iterate over and over the placement of a dot (or other shape). At first, the dots appear at random, and there is no way of knowing (short or following each computer calculation) where the next dot will appear. But as more and more dots appear, an outline takes place and as dots continue to be added (by autonomous agents, each following locally appropriate rules) the shape becomes more and more distinct. This has come to be our image for what the leader of a system “on the edge” owes the agents who are buzzing around placing dots: a clear outline of the shape intended to emerge (probably accompanied by some “few simple rules” about dot placement). We no longer help build strategic plans that enumerate actions; rather we help identify for agents the crucial sorting mechanisms that would tell any individual agent whether a particular dot (s)he’s considering falls inside or outside the “fern” being constructed. Then the leader can genuinely let go of control and encourage agents to opportunistically seize possibilities as they occur locally. Without such a “fern” inside the organization’s DNA, we find most organizations are incapable of giving up their control-based patriarchal contracts. Such organizations gravitate back to rigid order regardless of a leader’s intent.

19. Leaders Balance Agency & Communion One way our practice with human systems and organizations has changed is that our first diagnostic cut at any situation is to ask ourselves whether it calls for more agency or more communion , that is, more autonomy for the agents? Or more belongingness? In other words, where on the spiral are we? To get to the Edge, do we have to move from order to more chaos? (If so, introduce more autonomy) Or is it time to organize some of the experimental novelty into a new pattern/structure? (If so, work on belongingness: identify, share rules) If conditions are right, learning and growth will EMERGE: cycles of freedom and structure... chaos and order… disequilibrium. The leader’s task is tending to the CONDITIONS and the helping people navigate the resulting turbulence. HOW exactly do you adjust the mixture? HOW does a leader (or an entrepreneurial agent) tilt a system in one direction or the other? Our experience suggests that these decisions are very opportunistic and situational. There seems to be a repertoire of possible strategies, from which different leaders at different times in different situations pull different options. So to explore further what these new ideas mean in any particular arena involves getting specific about that particular arena: how close to the Edge is it currently? What forces are pushing toward order? Toward Chaos? What would “reintegrating at a higher level of fitness with its environment” mean for this system? Who has how much autonomy here? Who MIGHT be loosed to be autonomous? What holds autonomous agents together? Is there a “fern” in people’s minds?

20. People We Learned From John Briggs and David Peat These two writers have co-authored a number of books, including The Looking Glass Universe and Turbulent Mirror. We found Turbulent Mirror to be a highly understandable introduction to the mathematics of nonlinear systems, intelligible even to those of us who are “math – challenged”. Briggs book, Fractals , is a deliciously visual exploration of the theory of fractal geometry that made many of the difficult concepts understandable. Murray Gell-Mann The Quark and the Jaquar is the Nobel Prize-winning physicist’s framework for thinking about these new ideas. He prefers the images of simplicity (symbolized by the quark he helped discover) and complexity (the jaguar and its jungle ecology) to “edge of chaos” language, but the ideas with which he unifies the two will reflect the ideas we’ve been talking about here. He’s also a player in Waldrop’s book. Stuart Kauffman One of the seminal thinkers about complexity, Kauffman is an evolutionary biologist and one of the pillars of the Santa Fe Institute. His dauntingly technical tome, The Origins of Order , was thankfully transformed into a reader-friendly form in his more recent book, At Home in the Universe . Kauffman is purported to have been the originator of the concepts of self-organization with traditional ideas about natural selection. He works to forge a new synthesis of evolutionary theory that takes into account unlikely sudden leaps into new order, as well as incremental change. At Home in the Universe should be on the short reading list of any serious edge of chaos explorer. Kevin Kelly Kelly’s book, Out of Control , is the source for the powerful metaphor of a “swarm” which we use often. Kelly, the executive editor of Wired magazine, is also clear convincing about the fact that swarm-like systems have disadvantages as well as the powerful advantages which are pulling our machine-culture to re-discover them. Uri Merry We got introduced to Uri Merry through the Internet, and have been enamored of his work ever since. His book, Coping with Uncertainty , is one of the best introductory works to the ideas of self-organization, chaos and complexity we have encountered. It is easy to read, and helps integrate some of the practical implications of these often esoteric-sounding theories. We continue to correspond with Uri and have joined with him and several others in an on-line exploration of the links between complexity theory and organizational management. William Roetzheim For people who learn best by playing around with their hands and minds, Enter the Complexity Lab is a must. It names several of the key new ideas being uncovered by complexity science in clear language. It also gives you examples on a disk you can play with on a computer to get your own feel for non-linear dynamics. Mitchell Waldrop His Complexity makes the scientific ideas accessible through people’s stories. He follows the Nobel-caliber scientists in many disconnected specialists who discovered in the 1980s that there were common threads running through their disciplines. These pioneers of Chaos/Complexity science came together at the beginning of the Santa Fe Institute. You’ll come to the new science ideas through the eyes and hearts of their discoverers.

21. More People We Learned From Margaret Wheatley Leadership and the New Science was the first book which opened up to us the possibility of thinking in these new ways. She has a wonderful appreciation of the mystery and awe embedded in these ideas, and the joy of exploring them. Her experience is with organizations and their frustrations and stuck places. She continues the search for a better way to work together in her new book, A Simpler Way . Erich Jantsch Along with Ervin Lasio, Jantsch is one of the patron saints of self-organizing systems theory. His work, The Self-Organizing Universe , is a brilliant synthesis of systems theory, cybernetics, self-organization and evolutionary theory in a broad framework that provides some of the key foundational concepts for Ken Wilber’s theories on the evolution of the planet. It’s sometimes a bit heavy slogging, but always worth the effort. John Brockman Brockman is a long-time commentator on trends in scientific thought. He edited The Third Culture, a collection of essays by most of the great thinkers in this field, including Stuart Kauffman, Brian Goodman, Roger Schank, Francisco Varela, Paul Davis, Murray Gell-Mann, Chris Langton, and Doyne Farmer. Each of the twenty-three essays is followed by commentary and critique by two or three of the other essayists. This provides a unique insight into the way these thinkers disagree with each other and differ in their approaches. It at least made us feel good that we weren’t the only ones who were confused! Ken Wilber In Sex, Ecology and Spirituality , this author firmly grabbed us by the scruff of the neck and forced us to recognize that as long as we only think of all these new ideas through the admittedly exciting lens of science, we are what he calls “flatlanders”. We miss the 3-dimensional picture that emerges when one realizes that these principles of self-organization (he calls them “transcendence” and “inclusion”) operate not only in science’s exterior objective world, but also as interior phenomena in individual and collective consciousness. He expanded our horizons to show us an elegant and literally awesome framework for how everything works. Don’t miss his work. The shorter version is A Brief History of Everything , but we think you’d really like the longer Sex, Ecology and Spirituality , which documents sources for his extraordinary claims. To encourage you to tackle the real thing, we’ll send our “Cartoon Guide” to anyone who writes to tell us you’ve made it though!!