Complexity and the credit crunch II

Another view of the credit crunch is set out by Ralph Stacey in his most recent book Complexity and Organizational Reality: Uncertainty and the Need to Rethink Management After the Collapse of Investment Capitalism.

As usual Stacey challenges some of the main assumptions in management theory which are based on predictability and control, and that strategy arises from managerial choosing. Instead, Stacey argues the following:

Organisations are not things but patterns of interactions between people. In these interactions, and among other things, people develop imaginative constructs of ‘wholes’ such as ‘the market’ or ‘Lehman Brothers’. In telling the story of what is happening using these abstractions reality is covered over and people and what they are doing disappear from the tale. The constraints that we exercise over each other, or the power relationships, also largely disappear from the stories we tell about what is going on.

People do of course form intentions, make choices and implement strategies, but do so into a web of other people’s intentions and actions making the exact outcome unpredictable.

Contrary to the dominant view of management, no one, no matter how powerful, can control the interplay of intentions in an organisation, or between organisations. The patterning of intentions will often bring about outcomes which nobody intended or wanted. It can also escalate small local changes across entire national and international populations generating widespread patterns of change of an uncertain kind which we might call ‘globalization’, ‘credit crunch’ and technical innovation.

The interplay of intentions takes the form of local interactions of communication and power-relating which are the daily politics of organizational life.

Leaders and executives do play influential roles in the interplay of intentions and their visibility leaves them open to both idealization and denigration – they are neither simple heroes nor villains in the patterning which is unfolding, and are capable of acting both in their own interests and ethically on behalf of others at the same time.

What happens arises from the intentions and actions of all the actors, most of whom are not participating with malign intentions. The recession was not just caused by bankers and politicians, but by all of us who took out loans we could not afford to repay.

Activities in organizations are characterised by many paradoxes: novelty and continuity, knowing and not knowing, forming patterns of interaction while being formed by them at the same time.

In sum, Stacey argues that uncertainty is a fundamental and unignorable organizational and social reality which means that no-one can know what will happen with any confidence, or even what is really going on now. We can  make sense of what is happening mostly with the benefit of hindsight, but even then it will be open to many different interpretations. This is not to argue that we can only expect the unexpected, however. Stacey does not argue that the future is completely unknowable since there is repetition in human affairs, which continues to evolve. We can recognise and to a certain extent anticipate the repetitive patterns of human interaction but need to be aware that they can be radically destabilised.

Taking Stacey’s observations together with Tett’s book, which we discussed in the last post, we might conclude that investment bankers who thought that they had banished risk by inventing what seemed to them to be very clever schemes for parceling it up and distributing it through a variety of complex deals were certainly guilty of hubris. But no more so than many proponents of the dominant discourse on management that assumes that leaders and managers can set the course of their organisations and guarantee success.

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5 Responses to Complexity and the credit crunch II

  1. Rotkapchen says:

    Gosh, sounds a lot like the fundamentals of design thinking “We can make sense of what is happening mostly with the benefit of hindsight, but even then it will be open to many different interpretations.” That we can only ‘prove’ in the present by testing possibilities — and doing so continuously.

  2. Chris Mowles says:

    Not sure what you mena by design thinking.
    Chris

  3. Rotkapchen says:

    Gosh. Asking about design thinking would be like me asking about complexity 15 years ago. There’s no simple answer, but a lot more buzz: http://delicious.com/iknovate/DesignThinking

    Two quick hits:

    http://twurl.nl/lvlrry

    http://twurl.nl/7feipw

    • Chris Mowles says:

      Well, from what I’ve read, and it has only been brief, there are things to sympathise with design thinking and things to be critical of. Starting with the former, I have every sympathy with bringing together induction, deduction and abduction, with empathy and with imagination. Moving on to the critique, with the limited understanding I have of what design thinking proposes, it seems to be very much within the systemic model: so managers are to be designers of ‘solutions’ to ‘problems’, albeit ‘wicked’ ones and they do this with a reliance on holism, ie imagining the whole system. This rationalist causality does not, it seems to me, challenge the dominant idea of manager as rational designer who chooses outcomes, nor does it allow for the radical implications of emergence and unpredictability. Still, it may have much to recommend it. Chris

  4. Rotkapchen says:

    You may have me there. Because I already subscribe to emergence — particularly in practice, embodied in Enterprise 2.0 — I tend to merge them all together in my mind because they all live together in there anyway.

    While I’ve not dealt with these distinctions head on, they’re threaded throughout my works: http://www.fastforwardblog.com/2009/09/16/e2-0-unleashing-the-potential/

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