EXYSTENCE NoE
Seminar on 12 Nov 2004, Helsinki

Prof.Eve Mitleton Kelly, Director of the Complexity Research Programme at the LSE and Visiting Professor at the Open University.

I think the matter you raise is very important to appreciate and thank you for bringing to our attention. The interrelatedness of our world is of great concern to us and the issues you have just pointed out give us a very good context for the rest of the day. We need to appreciate that we live within a social and natural ecosystem and it is the relationships between our actions and the rest of the natural world that we need to grapple with in this seminar. My job is to try to make complexity accessible to the general public, business and government and since EXYSTENCE is a European centre of excellence we try to have the seminars in Europe. I am one of the coordinators of the EXYSTENCE program ( John Casti is the other) and I am also the director of the research program at the London School of Economics. I set up the research program in 1995 when I realized that there wasn't enough work being done in a social context, though there was a tremendous amount being done in the natural sciences. We have since done a lot of research working collaboratively with organizations and what I would like to present in the next half hour is some of that work. I'm going to do two things: give an exceedingly brief outline of complex systems and in particular complex social systems and to give you one example of the work we have been doing recently so that you can see the application of the theory, because theory without application in practice is only half useful.
What are complex systems? I think that's a question we all need to think about and discuss. I'm not sure how many of you have a background in complexity so I will give a brief outline. Complex systems are multidimensional and they are non-linear and within a social context we can talk about them having social, cultural, technical, political, and economic and various other attributes. The key question here is how do they interrelate and how do they influence each other? The kind of thinking that we are imbued with is that we take one aspect of a system, such as the technical and we focus on that to the exclusion of the others. What complexity theory tells us is that we cannot do that. We need to bring the different elements together to see the whole, not only to see how they interrelate, but also how those elements influence each other and co-evolve. I also want to introduce some of the characteristics that complex systems have.
People ask what distinguishes a complex system from systems that are non-complex but complicated. I will give some of the characteristics in a list which is not exhaustive, but lists some which are key. In other words, if a system has them then it is likely to be complex. The key feature is that a complex system can create new order whereas a 'machine' type system may be complicated, but does not have that capacity. So I'm going to use the term 'complex evolving system' and I will explain why in a moment. The other point that I think we need to be aware of is that complexity shifts our emphasis from objects to relationships. It is not so much how a particular object or item behaves, but how it behaves with other objects or items. These are characteristics that a complex system may have. Complex behavior arises from connectivity and through that there is intricate interdependence. When, for example, you change something in one part of a system it may produce totally unexpected consequences in another part. This interdependence has arisen because of the intricate interrelationships within the system. The other characteristic that we are very familiar with is emergence. Properties emerge which are very often surprising and unpredictable from a study of the individual elements.
The reason why I pick these four characteristics is that I am very often asked the difference between 'systems theory' and 'complexity'. A very superficial answer is that although these characteristics are familiar, systems theory does not articulate or deal with all the other characteristics of complexity such as self-organization, co-evolution, far-from-equilibrium and so on and I think that this is part of the major contribution that complexity theory brings to our thinking. Understanding these characteristics is very important when we are looking at organizations and I would suggest that every single human organization is complex. If we understand these characteristics we can work with them.
We work with a lot of organizations both large and small, in the private and public sector. What we find is that very good managers often intuitively use these principles of complexity, but what they don't have is the language to articulate them and they will often describe what they are doing as groping in the dark. The moment that they realize that what they are doing is underpinned by a profound and rigorous theory they are given a great deal of power and confidence. Once they see their organisms as complex evolving systems they can then work with those characteristics instead of inadvertently blocking them. What I will describe when I talk about Rolls Royce Marine is very much about how those characteristics were blocked without intention. One other point that I should make is that because complexity science is a new discipline there are a lot of views of what complexity is so what I give here is the view of the complexity research group at the LSE. The other thing is that we do not use the concept only as a metaphor or an analogy; we look at organizations as complex evolving systems and we constantly ask what is relevant and what is appropriate to this particular system? We look at a system such as an organization in its own right as a complex system and we try to understand its underlying characteristics. We ask how we can see these characteristics in a human context. It is important to understand a human organization from your own experience. You have to constantly say: 'does this make sense to me?' 'Is it a good description of the organization I am part of?' 'Can I pick out examples of self organization?' 'Do I see people spontaneously coming together because they need to do something'? That is self organization. However if a manager were to say: 'you, you and you, get together in order to do the job', that is not self organization. Co-evolution is taking place when there is not an influence in one direction. We usually think of the environment as something which causes change and is at the same time changed itself. So there is reciprocal influence leading to change in both directions. That is why I have shifted from using the term 'complex adaptive system' to 'complex evolving system' or more accurately 'complex co-evolving system'. Language is important here. When we talk about adaptation we tend to think of 'adapting to something else'. This kind of one way process is very rarely the case. We are of course very good at creating very intricate networks of relationships and it is these which lead to complex behavior because they are sustained through communication and other forms of feedback.
The thing I would like to stress here is that there are different degrees of connectivity and interdependence. Connectivity is not a singular relationship. My relationship with you is going to vary over time in perhaps its density, frequency and quality. This is something we tend to forget. We are also good at creating something new and when it is through interaction it is often surprising and unexpected. The other thing we tend to forget is history and culture. We are located within the context of our history and our culture. We cannot transcend them totally and to some extent they will influence our action. When I hear people in organizations say: 'we are going to create a new culture tomorrow and forget our history' I find it rather surprising and naïve.
When we meet a constraint we are able to explore the state of possibilities. If we think of our own experiences of having something in mind as a goal or aim and we suddenly find there are a lot of problems placed in the way, what do we do? We may give up but very often we find there are a number of different alternatives and we can explore other ways of achieving the goal. You may of course change your goal and very often you will find that the new way you have created is even better than the old one. We are complex systems, able to explore various alternatives before we take action. So I hope you are now beginning to get a sense of what a complex system might be like and why I use the term 'complex evolving system'. If you want more information you can find it on the LSE website.
So it is the logic of complexity which shifts the emphasis from one of control to what we call 'enabling environments'. It warns us not to try to design an organization top down. If you provide an environment that enables and facilitates things like self organization, co-evolution and exploration of the space of possibilities you will get an organization that is much more robust, much more capable of co-evolving with a changing environment and that answers the key question here. How do we create the capacity within our organization and I'm not just talking about large organizations because all the characteristics are scale invariant: they apply to everything from a small team to an entire country. We have to ask how we can create that capacity in every individual so that the whole can actually co-evolve with a changing environment instead of going through a very painful process of constant restructuring.
Some of the organizations we have worked with and tested the theory with you can see on our website but I would like to talk about the case of Rolls Royce Marine. Rolls Royce no longer makes cars but they do make engines for the aerospace industry and for submarines. So they are in the defence industry and they decided that they wanted to expand into a brand new market of commercial marine engines. They wanted to make engines and, in fact, whole systems for commercial shipping, ferries etc and to do this they acquired a set of companies which in themselves had gone through a long series of mergers and were distributed throughout the Nordic countries. They were here in Helsinki and in Norway and Sweden. Two years after that acquisition there were still a lot of problems, but the main problem they thought they had was one of different national cultures. Every difficulty tended to be based on this as an excuse and people did not look very much further, with the consequence that there was a severe lack of integration. However I want to show you that this was not the real issue.
Two years after the acquisition they had a conference at which two things were identified as needing attention; one was to clarify roles and responsibilities and the other was to increase cultural awareness. It was at that point that the human resources director asked us for help, but he said something that was very important in our initial discussions that engaged the very heart of the organization in a co-evolutionary process. He said: 'We have this accelerated leadership team who are the high flyers and the future leaders of Rolls Royce, and would you like to work with them?' This was absolutely wonderful for us because we then had sixteen volunteers who made up three teams plus the team from the LSE. So we suddenly jumped from a couple of researchers to a very large research team and we did 44 interviews throughout the northern countries, in the US and in the UK. We then brought everyone together in a two day workshop and worked together to co-create a set of recommendations that went to the Board. In this particular project we used several tools.
What I always wish to do is to bring together qualitative and quantitative tools and methods. This is important because organizations have both characteristics but because Rolls Royce is populated with a lot of engineers they wanted very robust findings. They wanted facts and figures and not just qualitative findings. One of the things we did was something called 'landscape of the mind" (LOM). It is based on a psychological test which identifies the preferences of the managers. It was carried out by e-mail and 70 of the top managers took it which meant that the data came directly from those individuals involved in the decision-making process. Interviews which had been previously carried out indicated the same results as the LOM findings. They showed that there were no significant differences between the Nordic and the UK managers in terms of the preferences in the way that they made decisions or in the way that they learned etc. That was quite an astounding finding and because we had the quantitative and qualitative tools supporting each other it was a very firm result and we then had to ask what was creating the problems. What was causing the lack of integration?
I cannot give you a full list of the findings because many are confidential but there are two I can pick out which made a significant difference. One was that Rolls Royce imposed a matrix structure. The firms that they acquired in the Nordic countries were comparatively very small and all knew each other on a face to face basis. The matrix structure that Rolls Royce imposed on them was simply inappropriate. They were also given no means of understanding how they could work with it. Procedures were also imposed which are necessary and essential in an aerospace context, but again quite inappropriate in this marine context. In the aerospace industry you may be working with a 20 year design horizon. In the commercial marine industry you may have a week. This difference is quite significant. On Monday, say, your customer rings to say 'I want a modification to the product, can you do it?' By Friday you could be signing the contract. If you have to go back to Rolls Royce Derby every time before you can make a decision you can see how that will delay the process. The small companies were acquired because they were the best in the world. They were very flexible and very innovative and without meaning to, Rolls Royce were beginning to erode the very characteristics they bought the companies for. It was because they did not understand what they were doing. In fact they were blocking self organization; they were blocking innovation and their co-evolution.
There were three issues; the main one was lack of integration and that was partly because co-evolution was not encouraged. Each individual firm was simply going along its own evolutionary path without communicating with the others. Instead of creating a coherent whole that could build on its strength, they were pulling it apart and making it weaker.
The second finding was the effect on new product development. They blocked innovation and reduced the ability to explore the space of possibilities. This is of course just a summary and the issues went much deeper and were much more complex than I can give you here. The imposition of the matrix structure assumed that a single culture was possible and desirable. If you think of your own organization, how often do you assume that such a thing is feasible? Any organization is made up of multiple interactive cultures so the question of integration is always of great importance. Rolls Royce Marine in fact created twelve action streams to facilitate integration.
I would like to leave you with a few thoughts of what a complex evolving organization would look like. It is a bit like the 'holy grail' in that it is not easy to achieve but I think if you manage it then I think you will get organizations which are very flexible, adaptable and which co-evolve with the environment

Questioner1. I work with the environment and combine it with psychology in that I try to do collaborative networking with groups which want to mobilize themselves. Now if we have a community such as the town in which we are living, which has a very centralized organization, everything is against this kind of process so although I see all these beautiful concepts and what you have succeeded in doing, how much is it an ideal?

Eve: It is an ideal but it is not impossible. We have worked with organizations that have achieved it but it takes time. One organization called the Training and Enterprise Council took five years to get to the point where they had a lot of these characteristics and it does mean that the whole organization has to work together. You cannot impose it from the top. You have to work collaboratively and you have to want to change. And I think the key question is, 'How do you engage people?' because all of us have skills to contribute.

Questioner 2. I am from Slovakia. I was thinking of my organization because I come from a university and that is a very important part of society because of its impact on young people. So it would be very interesting to do a case study on the way universities operate. If this would help to improve the quality of the university, especially in my society as a newcomer to the E.U., I think it's very important. Did you make a case study of a university?

Eve: No I haven't. I wish I could and I would very much like to discuss it with you later. I think that if we don't do it in our universities we are missing a great opportunity because it will be up to our young people to go out there and make it possible.