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Jean-Alain Héraud, Fiona Kerr, Thierry Burger-Helmchen (2019), Creative Management of Complex Systems, London and Hoboken, Wiley & Sons, 175 p.

1 Complex systems are composed of a large number of parts or agents. The behaviour of the system as a whole emerges from the actions and interactions of its parts, albeit in a way that cannot be extrapolated from the observation of the typical behaviour of the single parts (see Gell-Mann 1995). The distinctive feature of complex adaptive systems – a subclass of complex systems that consists of living systems – is that the individual agents create, and operate in, an evolving environment to which both the agents’ and the system’s behaviour must adapt (Wilson 2016). This environment is typically a more or less competitive one. Failure to adapt or insufficient adaptation runs the risk of losing out in the competition and threatens survival both at the level of the individual as well as at the level of the system as a whole. Since the adaptation of the system is the collective outcome of the adaptive efforts of all of its agents, viability and performance of the system depends on whether the individual efforts facilitate or impede the system’s adaptability. While some forms of individual adaptive behaviour do contribute to a highly successful collective adaption other do not. In fact, seeking an individual adaptation advantage may even undermine a successful adaptation of the system as a whole. Eventually, the unintended collective outcome may then be a deteriorating adaptive success of all agents in the system.

2 In their book Héraud, Kerr and Burger-Helmchen identify firm organizations with complex adaptive systems and explore the implications from a management science point of view. Quite obviously, firm organizations fit the abstract characterization of complex adaptive systems. The organization’s behaviour emerges from the (inter-) actions of its more or less numerous members, and failure to adapt to a changing, competitive environment runs the risk of losing out in the competition within the organization as well as between organizations rivalling in the markets. The authors rightly argue in their first chapter in a broad discussion of the theory of complex adaptive systems that, in the case of firm organizations, a good deal of the changing environment with which firm members as well as firms are confronted is caused by their own creative behaviour.

3 Thus, firm organizations as complex adaptive systems are nested in an overarching complex adaptive system – the industries or the entire economy. The performance of industries and entire economies is affected by the innovative efforts of its member firms which, by the same token, necessitate continuing adaptation efforts at the level of the individual firms. These abstract features are elaborated on in a more concrete and entertaining fashion in the second chapter on the evolution of complex systems.

4 From a management science point of view the main implications of the authors’ complex adaptive systems approach are laid out in chapter three. The reflections in this chapter revolve around the questions of whether, to what extent, and how management can steer the complex adaptive system of a firm organization. In their argumentation the authors attribute a central role to the concept of “weak signals” defined as forms of knowledge that diffuse in informal processes inside the organization. More generally speaking, these signals are assumed to emanate from the periphery of complex systems, pointing to upcoming adaptation needs. It is discussed at length what skills managers should develop to become aware of these signals, of interpreting them, and of responding to them by initiating suitable adaptation efforts. Managerial behaviour steering the firm organization by paying due attention to weak signals is contrasted with managerial behaviour focusing on hierarchical top-down organizational planning.

5 The discussion in the chapter of when and where leverage points occur for taking advantage of the knowledge conveyed by the weak signals for an improved managerial performance is a stimulating source of ideas. The reader may wonder, however, what role is played in this context by the adaptation efforts of the individual firm members. From a transaction cost economics perspective it may be argued that firm members transmit weak signals in a strategic way that reflects their individual adaptation interests. If so, there would be a systematic bias in the transmission of the weak signals that may make some of them rather toxic for managerial use. Héraud, Kerr and Burger-Helmchen seem to presume that an opportunistic manipulation of weak signals within the firm organization is prevented, if the management is able to create a commonly shared, motivating mental frame. This would thus be a necessary part of an effective managerial steering of a firm as a complex adaptive system. It is, however, likely to be a highly problematic part in a context that is strongly shaped by organizational routines (for the problems see, e.g., Witt, 2011).

6 The point is addressed, inter alia, in chapter four which elaborates on the entrepreneurial dimension of managing a firm as complex adaptive system. The argumentation is extended here to include a short survey of entrepreneurial theories. Attention is directed, in particular, to the entrepreneurial efforts and skills in accomplishing internal coordination efforts through shared mental frames and to imaginative powers required for successfully shaping the firm’s market environment. Finally, the fifth chapter briefly reviews the potential benefits a complex adaptive systems approach may yield for strategic marketing and human resource management.

7 In sum, the book by Héraud, Kerr and Burger-Helmchen is a useful introduction into a complex adaptive systems approach to management science. It is written in a non-rigorous, entertaining style using metaphors and examples to stimulate the reader’s interest and imagination.

References

  • Online GELL-MANN, M. (1995), What is Complexity?, Complexity, 1, 16-19.
  • WILSON, D. S. (2016), Two Meanings of Complex Adaptive Systems, in Wilson, D. S., Kirman, A. (eds), Complexity and Evolution:Toward a New Synthesis for Economics, Cambridge, MA, MIT Press, 31-46.
  • Online WITT, U. (2011), Emergence and Functionality of Organizational Routines: An Individualistic Approach, Journal of Institutional Economics, 7, 157-174.
Ulrich Witt
Max Planck Institute of Economics (Germany)
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Uploaded on Cairn-int.info on 30/01/2020
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