Dr.

Ali Mostashari
Associate Professor, School of Systems and Enterprises
Director, Center for Complex Adaptive Sociotechnological Systems (COMPASS)
http://www.socio-technical.org
 Overview

• Organizations as Adaptive Organisms

• Three Perspectives on Complex Adaptive
Organizations:
– Perspective I: Organizations as Holons
– Perspective II: Organizations as Social Networks
– Perspective III: Organizations as Dynamic Systems
 Organizations as Adaptive Organisms
Come Fail to
into Adapt
Adapt
existence

Resurrection
Deteri (Reincarnation)?
Grow Evolve
orate

Do organizations
Sub- Merge Die have a judgment
divide with (natural,
/Split others forceful) day?
Perspective I – Organizations as Holons
The Primacy of Architecture
 Open Question: Why do individuals
form/join/support/sustain social structures?

Family
Friends and Peers

Economy
Work Place
To Achieve Individual Needs…….
Caveat: The Social (Faustian) Bargain

Family
Friends and Peers

Work Place
Economy
 Individuals, Social Groupings, Societies and
Humanity
• Human beings are social
animals. Humanity

• Individuality is a rather a
recent phenomenon
Society
•Social grouping/ecosystem
can emerge starting from two
individuals Social
Grouping
• Every social grouping has its
own architecture consisting of
values, rules (protocols) and
structural configuration Individual
(power relations/hierarchy)
 Individuals, Social Groupings, Societies and
Humanity
• Social groupings develop Humanity
a life of their own, with
emergent goals and
Society
behaviors that are not the
sum of individual goals and
behaviors Social
Grouping
• Organizations/Enterprises
are one type of social
grouping with explicit (and
many implicit) values, Individual
protocols and structural
configurations
 Holons
• The concept “Holon" was
introduced by Arthur Koestler in
"The Ghost in the Machine" (1967)
• A Holon is a system that is a whole
in itself (consisting of parts) as well
as a part of a larger system
• A hierarchy of holons is called
“holarchy”
• Hierarchies are "dissectible" into
their constituent branches, on
which the holons form the nodes;
the branching lines represent the The number of levels which a hierarchy
channels of communication and comprises is a measure of its "depth", and the
control number of holons on any given level is called
its "span" (Herbert Simon)
 Holonic Principles (Koestler, 1967)

1. The organism in its structural aspect is not an

aggregation of elementary parts, and in its
functional/behavioral aspects not a chain of
elementary units of behavior
2. The organism is to be regarded as a multi-
level hierarchy of semi-autonomous sub-
wholes, branching into sub-wholes of a lower
order, and so on. Sub-wholes on any level of
the hierarchy are referred to as holons
 Some Holonic Principles (Continued)
3. Holons are self-regulating open systems
which display both the autonomous
properties of wholes and the dependent
properties of parts. This dichotomy is present
on every level of every type of hierarchic
organization, and is referred to as the "Janus
phenomenon"
4. Individuals, families, tribes, nations are social
holons
 Holonic Architecture vs. Strategy
• Social holons are governed by an architecture and
display more or less flexible strategies.
• The architecture determines the holon’s explicit (and
implicit) values, its explicit (and implicit) structural
configuration and explicit (and implicit) functional
protocols
• While the architecture defines the space of
permissible behavioral options in the holon's activity,
the strategic selection of the actual behavior among
permissible choices is guided by the contingencies of
the environment
 Holonic Architecture vs. Strategy
• The architecture determines the rules of the game,
and the strategy decides the course of the game
• However social holons are more complex than others,
because not all parts comply to the same extent with
the architectural protocols.
• When sufficient parts (individuals, groupings)
challenge/disobey/put stress on the protocols, there
are two options: the architecture adapts itself or it
collapses (revolutions, rebellions, systemic failures
etc.)
• Question: Can an organizational strategy be to change
the architecture of a holon? What are the challenges?
 Organizations as Social Holons
• Every level of the
Extended Enterprise
organization has the dual
tendency to preserve and Enterprise
assert its individuality as a
quasi-autonomous whole Organizational Divisions
and to function as an Departments
integrated part of an
(existing or evolving) Teams
larger whole.
Individuals
 Organizations as Social Holons
• This polarity between the
Self-Assertive (S-A) and Extended Enterprise:
Integrative (INT) tendencies is
inherent in the concept of Enterprise
hierarchic order.
Divisions
• The S-A tendencies are the
dynamic expression of the Departments
holon's wholeness, the INT
tendencies of its partness Teams

Individuals
 Holonic Stability
• The stability of holons and holarchies stems from
holons being self-reliant units, which have a degree of
independence and handle circumstances and problems
on their particular level of existence without asking
higher level holons for assistance
• Holons can also receive instruction from and, to a
certain extent, be controlled by higher level holons
• The self-reliant characteristic ensures that holons are
stable, able to survive disturbances
• The subordination to higher level holons ensures the
effective operation of the larger whole.
What is a good example of an organizational structure
with strong holonic stability?
 The Importance of Communication in
Maintaining the Architecture
• Since a holon is embedded in larger wholes, it is influenced by
and influences these larger wholes
• And since a holon also contains subsystems it is similarly
influenced by and influences these.
• Information flows bi-directionally between smaller and larger
systems
• When the bi-directionality of information flow and
understanding of role is compromised, for whatever reason,
the organizational architecture gradually begins to weaken
– wholes no longer recognize their dependence on their parts
– parts no longer recognize the organizing authority of the wholes
 Holonic Organization Summary

• Holons are an interesting way to look at

organizations
• Shed light on many interesting organizational
dynamics
• Currently no authoritative methodology to do
holonic modeling of organizations although
efforts under way (combination of social
network analysis, and agent-based modeling)
Perspective II – Organizations as Social Networks
The Primacy of Connections
 Organizations as Scale-free Networks
• Organizations can be
thought of as a scale-free
social networks in which
member individuals are
connected to each other
based on their social
status and interaction
capacity
• Scale-free networks show
a power law degree
distribution which is seen
in many real networks
 Organizations as Scale-free Networks
• Interest in scale-free networks
started in 1999 with work by
Albert-László Barabási and
colleagues at the University of
Notre Dame
• They mapped the topology of a
portion of the Web finding that
some nodes, which they called
"hubs", had many more
connections than others
• The network as a whole had a
power-law distribution of the
number of links connecting to a
node.
• One mechanism that can
explain this is preferential
attachment
 Preferential Attachment
• PA is a class of processes in which some quantity, typically
some form of wealth, credit or connection, is distributed
among a number of individuals or objects according to how
much they already have, so that those who are already
wealthy receive more than those who are not.
• Also called the Matthew effect (For unto every one that
hath shall be given, and he shall have abundance: but from
him that hath not shall be taken away even that which he
hath —Matthew 25:29, King James Version)
• Can be observed in financial systems, academic citations as
well as in social networks
• Makes growth dynamics of networks path dependent
• What does this say about equal opportunity and fairness?
 The Importance of Power Laws in Social
Networks
• Most social networks have power-law link
distributions, containing a few nodes which
have a very high degree and many with low
degree
• In many cases a good rule of thumb is the
80/20 pareto principle (20% of a network
comprising 80% of its degree/connectedness)
• This proves very critical in organizational
behavior and change efforts in organizations
 The Importance of Power Laws in Social
Networks
• The power law distribution highly influences the network
topology
• Major hubs are closely followed by smaller ones and so forth
• This hierarchy allows for a fault tolerant behavior
• Since failures occur at random and the vast majority of nodes are
those with small degree, the likelihood that a hub would be
affected is almost negligible.
• Even if such event occurs, the network will not lose its
connectedness, which is guaranteed by the remaining hubs.
• On the other hand, if we choose a few major hubs and take them
out of the network, it simply falls apart and is turned into a set of
rather isolated networks.
• Thus hubs are both the strength of scale-free networks and their
Achilles' heel.
• Think Terrorist Cells
Small World Networks: 6 Degrees of Separation

• The small world experiment comprised several

experiments conducted by Stanley Milgram
examining the average path length for social
networks of people in the United States.
• The research was groundbreaking in that it
suggested that human society is a small world
type network characterized by short path lengths.
• The experiments are often associated with the
phrase "six degrees of separation“
 Tipping Point for Change in Organizational
Networks
• The point of critical mass where change
becomes irreversible and everything changes
at once
• Things tip because of the dramatic efforts of a
select few
• In order to create one contagious movement
you might have to create several small ones
Source: The Tipping Point (Gladwell)
 Different Roles for in Complex
Organizational Networks
• Connectors
– People with a special gift for bringing the world together
• Know lots of people
• Instinctive and natural gift for making social connections
• “Weak ties” are always more important than strong ties
• The closer an idea or product comes to a connector, the more power and
opportunity it has as well
• Word of mouth epidemics are the work of connectors
• Mavens
– People with in-depth knowledge
• Are not passive collectors of information
• Want to share their information with as many people as possible
• Not persuaders
• Information and know-how go-to people
• Have an emotional need to solve problems
• Salesmen
– One with the skills to persuade us when we are unconvinced of
what we are hearing
 Social Networks Summary
• Understanding organizational networks and the
connectedness of individuals key to analyzing an
enterprise or an extended enterprise.
• Hubs, preferential attachment, small world
phenomenon and tipping point key to network
behavior
• Social network analysis is used to analyze the
relationships between different actors in a network
• Agent-based insights are being leveraged to better
understand the dynamics of networks
Perspective III – Organizations as Dynamic Systems
The Primacy of Feedback
 Causation, Feedback Loops, and Chaos
Theory
• It is not useful to understand human behavior
through searching for linear, one-directional cause-
effect relationships.
• It serves little purpose to ask “why” persons do what
they do.
• A more useful inquiry is “how” or in what way
something happened.
• “A interacts with B to produce AB, which changes
both A and B, and results in C, which is partly A, B,
and AB.”
 Laws of Complex Dynamic Systems
• Today’s problems come from yesterday’s solutions.
– Moving the problem around.
• The harder you push, the harder the system pushes back.
– Compensating feedback.
• Behavior grows better before it grows worse.
• The easy way out usually leads back in.
• The cure can be worse than the disease.
• Faster is many times slower.
• Cause and effect are not closely related in time and space.
• Small changes can produce big results—but the areas of highest leverage
are often the least obvious.
• You can have your cake and eat it too, but not at the same time.
• Dividing the elephant in half does not produce two small elephants.
• There is no blame.
Senge, Fifth Discipine, 1990
 Policy Resistance

• Complex systems and organizations show

Policy Resistance
• That means when you try to take them from
point A to point B they either go back to point
A or they end up in point C, which may be
even more undesirable than point A
Desired Path

Actual Path A B

C
 Summary of Dynamic Organizational Systems

• Feedback and Delay Key to understanding

counterintuitive organizational behavior
• “Side effects” do not exist, they are a results
of our poor definition of the system
boundaries and components
• System Dynamics modeling is used to model
complex non-linear behaviors in dynamic
organizational systems
 Conclusion
• There are many different perspectives in looking at
organizations, we presented three where architecture,
networks and dynamics were critical points of
departure
• When looking at a complex organization, we need to
understand that it is dynamic, with hidden
“architectural” aspects and with counter intuitive
behavior
• In other words it takes a life of its own
• As such we might be able to influence organizational
architecture, but we cannot “architect” and enterprise