Chaos Business Article from WSJ
The Wall Street Journal Interactive Edition --
 October 18, 1996

How Creativity Can Take Off
When Poised at Edge of Chaos

By THOMAS PETZINGER JR.

SAN FRANCISCO -- Three brain-teasers to start your day:

Each of Northern Telecom's 40 business units performs best when it operates autonomously, but the actions of one may help or hinder others in unpredictable ways. How can the company ensure the net effect is positive?

The U.S. Marine Corps uses computers to simulate battles. But the computers work logically, while the battlefield is inherently illogical. How can the generals create more realistic simulations?

Unilever wants to foster innovation, but the company is structured to bring to market products it already knows it wants. How can Unilever nurture breakthrough thinking?

Maybe Stuart Kauffman can help.

Dr. Kauffman is a molecular biologist who has devoted his career to the science of "complex adaptive systems." A cell is a complex adaptive system. So is an immune system, or a rainforest -- any system that interacts and evolves with its surroundings.

Is a corporation a complex adaptive system? An economy? If you read this column regularly, you know what I think. From the shop floor to the design lab to the supply chain, we've seen smart companies profiting from some of the same methods by which nature organizes itself. (But don't confuse this with the faddish use of biology jargon in management. We're talking about models here, not metaphors.)

Now, Dr. Kauffman is moving to establish a consortium to use Nortel, Unilever and the Marine Corps as laboratories. "We are looking for real tools," he says. "We're going to do real science about living in a creative world."

HOW THE 57-year-old medical doctor evolved into a would-be business guru is a complex tale in its own right.

As a medical student in the early 1960s, Dr. Kauffman was vexed by the mystery of how the 256 cell types in a newborn human could emerge from a single cell. He marveled that genes, while switching each other on and off like so many tiny toggle switches, always remained within a boundary of workable combinations. From where, he wondered, did this order spring?

Meanwhile, researchers were deploying powerful computers to unravel complexity elsewhere in the sciences -- the turbulent flow of fluids, for instance, and the population dynamics of insects and fishes. When sampled sufficiently, many seemingly random movements in nature exhibited stunningly structured patterns.

Dr. Kauffman tapped into these investigations in his search for the origins of biological order. He began to see that living systems operated at their most robust and efficient level in the narrow space between stability and disorder -- poised at "the edge of chaos." It was here, it appeared, that the agents within a system conducted the fullest range of productive interactions and exchanged the greatest amount of useful information. People recognize this in everyday life: A slightly messy office is a productive one; rollicking families are happy; economies flourish under scant regulation. The edge of chaos, but not quite chaos itself.

Dr. Kauffman discerned mathematics that described these dynamics. Systems seemed to ignite, to take wing suddenly, when the density of the connections between agents in the systems reached a critical value. He published articles about the dynamics of "webs" and "networks" long before these terms had entered the vernacular. He also joined the Santa Fe Institute, a think tank for complexity studies, where he crossed into new disciplines with physicists, economists, mathematicians and computer scientists.

Finally, last year, he published a book for laymen called "At Home in the Universe," speculating (among other things) that the natural world and the economy might share some of the same deep laws.

AMONG THOSE struck by the book was Christopher Meyer, director of Ernst & Young's Center for Business Innovation in Boston. Mr. Meyer mailed 15,000 copies of "At Home in the Universe" to clients and drew dozens of companies to a three-day symposium here called "Embracing Complexity."

It was at the conference that officials of Nortel, Unilever and the Marines discussed establishing a research consortium with Dr. Kauffman and Ernst & Young. Negotiations are still under way. (Another possible member, the Electric Power Research Institute, wants help studying the complexity of the power grid.)

If a group does form, the open flow of information, just as in any complex adaptive system, will be key. "We'll learn from them and they'll learn from us," says Lt. Gen. Paul Van Riper, the top combat strategist at Quantico. "The real power is in the sharing." (Yes, this is the Marine Corps talking.)

Dr. Kauffman is the first to allow that his ideas may not bear up in business. But already, the futility of prediction in a complex world is proving the virtue of adapting from within. Managers couch this concept in safe terms -- "change management," "continuous improvement," pick your buzzword. But if Dr. Kauffman and his partners succeed with the science, business leaders may come to realize that the safest place of all lies at the edge of chaos.

Interested in reading more on complexity? Send a few words about the nature of your interest by e-mail to TPetzinger@aol.com and I'll send back a bibliography of recommended reading.


I did e-mail Mr.Petzinger and his return message 
follows.


From TPetzinger@aol.com Fri Oct 25 16:45:17 1996
Date: Tue, 22 Oct 1996 17:10:59 -0400
From: TPetzinger@aol.com
To: polsong@best.com
Subject: Re: Chaos

Dear Mr. Polson:

Many thanks for responding to the "Front Lines" column on complexity theory in business. As promised, here is a bibliography of recommended reading on the subject with a brief comment on each book. I've taken the liberty of including a few Web addresses at the bottom.

This list is hardly exhaustive, but you will find most of the major popular published works here. These books vary a lot in scope, tone and approachability, despite their sharing a narrow subject. I have arranged them with the uninitiated in mind, ranking them by breadth and overall accessibility.

You ought to find most of these books at any big bookstore. Read around the edges before you buy; some may suit you more than others. Most are available in paperback.

Please feel free to duplicate or circulate this list. And I hope you won't hesitate to share your reactions--on this or any other subject. As always, you can reach me at Tpetzinger@aol.com.

Cheers,
Tom Petzinger

------------------------------------------------------
Thomas Petzinger Jr.
TPetzinger@aol.com
"The Front Lines"
Every Friday in The Wall Street Journal
"The Front Lines Forum"
Every weekend at http://wsj.com
-------------------------------------------------------

"Chaos: Making a New Science," by James Gleick. Viking Press, 1987. Still the classic work in the field, it introduced the lay audience to the complexities of complexity. A tad imponderable in a few spots--all these books are, at least to me, I confess--but mostly accessible. The writing is sometimes downright elegant. (You'll find Gleick's Web page at http://www.around.com.)

"At Home in the Universe: The Search for the Laws of Self-Organization and Complexity," by Stuart Kauffman. Oxford University Press, 1995. The subject of the Oct. 18, 1996, Front Lines column. A bit daunting in spots, it goes further than other books in exploring what complexity theory might mean for the future of economics and organizations. And Kauffman's speculations on the origins of life are thrilling. (Kauffman makes his professional home at the Santa Fe Institute, whose home page is at http://www.santafe.edu.)

"Leadership and the New Science: Learning about Organization from an Orderly Universe," by Margaret J. Wheatley. Berrett-Koehler Publishers Inc. Though this book provides only a broad overview survey of the so-called new science (quantum mechanics as well as complexity theory) its speculations on the relevance to leadership and organization are thoroughly stimulating. This is not a how-to book, but you can't read it without changing your sense of how organizations really do--and ought to--work.

"Out of Control: The New Biology of Machines, Social Systems and the Economic World," by Kevin Kelly. Addison-Wesley Publishing, 1994. This is a fun book by a fun writer, who is the executive editor of Wired magazine. It lacks the scientific precision of other books on this list but is broad and free-wheeling in its explorations. Wired magazine itself, by the way, is essential for anyone following the advent of the digital economy.

"Hidden Order: How Adaptation Builds Complexity," by John Holland. Helix Books, 1995. This book is pure science--no history, no flag-waving--but it is startlingly clear and thoughtfully concise at 172 pages. John Holland is the father of genetic algorithms, which I wrote about in a 1995 Front Lines column on complex shop scheduling at Deere & Co. But you'll find much more here that explains how systems adapt in both the nature and the man-made world.

*****************
Note! we have a link to the Deere article discussed above on our Genetic Algorithms Page. I have placed an order for "Hidden Order" and will report on it later. *****************
"Complexity: The Emerging Science at the Edge of Order and Chaos," by M. Mitchell Waldrop. Touchstone, 1992. A clear, cogent and well written overview of the origins of complexity theory through the eyes of the explorers. Features among others Brian Arthur, whose breakthrough thinking in economics foretold the strategy by which Netscape and others are now marketing on-line products. Stuart Kauffman is extensively discussed as well.

"The Third Culture," by John Brockman. Touchstone, 1996. An oral history featuring the "scientific intellectuals" of the age in their own words--a few of the obvious people (Stephen Jay Gould, Steven Pinker, Richard Dawkins) but also some less trendy figures whose ideas may be more relevant to business and economics, such as Stuart Kauffman, Christopher Langdon and Doyne Farmer on complex adaptive systems.

"Does God Play Dice? The Mathematics of Chaos" by Ian Stewart. Blackwell Publishers, 1989. It helps to bring some math to this book--I didn^t, unfortunately--but it is a worthy overview mostly suitable for the layman. This recitations on the history of mathematics are especially enjoyable, particularly in the credit accorded the earliest explorers of chaos.

"Exploring Chaos: A Guide to the New Science of Disorder," Nina Hall., editor. W.W. Norton, 1991. A collection of essays originally appearing in New Scientist magazine, each investigation a specific application--chaos in engineering, chaos on the trading floor, etc.

"Complexity and Creativity in Organizations," by Ralph D. Stacey. Berrett-Koehler, 1996. A book that seems to take great pains in describing the obvious--until you realize that most organizations fail to pursue the obvious. Highly academic, but thoughtful throughout.

"The Turning Point: Science, Society and the Rising Culture," by Fritjo Capra. Bantam Books, 1982. New Age before anyone said "new age," this book deserves attention for its seminal role in the application of new science to society and for the clarity of its exposition. The ruminations about medicine and psychology are provocative. Unfortunately the book carries some political baggage from the anti-industrial era of 15 years ago.

Nothing on the Web, I find, equals any of these books in introducing the rudiments of complexity theory. But you may want to bookmark some of these sites for papers on areas of specific interest.

One of the very best sites is maintained by the U.S. Marine Corps, with an extremely well-done glossary of complexity jargon and many links to other sites. Check it out at http://138.156.204.100/WWW/MCRC/LIBRARY/BEYOND.HTM

You may want to poke around the site maintained by the citadel of complexity studies, the Santa Fe Institute, at http://www.santafe.edu. This is where Stuart Kauffman hangs his hat.

A great many potential business applications are treated at length in a University of Pittsburgh site at http://www.pitt.edu/~malhotra/Systems.htm

A British researcher has posted some fascinating papers on complexity as applied to knowledge and management at http://www.lissack.com/writings/.

The Chaos Metalink is at http://www.industrialstreet.com/chaos/metalink.htm.

Thanks again for your interest.

-v-


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