Doctor of Business Administration STC August 29 2017 PROFESSOR ROBIN MATTHEWS KINGSTON UNIVERSITY BUSINESS SCHOOL LONDON RANEPA MOSCOW MOSI YOSHKAR-OLA ECONOMIC STRATEGIES PRESIDENT OF THE LEAGUE OF CORPORATE STRATEGY AND ACCOUNTING http/www.robindcmatthews.com http://www.tcib.org.uk/about.html http://kpp-russia.ru 1/16/2019 robindcmatthews.com

Complex adaptive systems can self organise spontaneously 1. continuous and dynamic interaction within and between levels of hierarchy 2. Non-linear interactions that are unpredictable; the scale of effects can’t be predicted for example. 3. Positive and negative feedbacks. Unpredictable time lags 4. Large numbers of elements 5 open and closed systems 6. Co-evolution. 7. Unpredictable patterns emerge which become attractors influence future directions. 8. Attractors may be orderly or chaotic. 9. Far from equilibrium. 10. No single entity has complete knowledge of the system. 11. Path dependence. 12. adaptation through learning and imagination. 13. Complexity catastrophe

The global economy as a complex adaptive system   The direction of the economy emerges from the interaction of many dispersed and interdependent units (firms, institutions, people, demographics, urbanization, cultures, religions, ethnicities personalities and so on) in parallel. The action of any one unit depends on the state and action of others units. The global economy has many levels of interaction; coalitions at many levels ranging from teams to business units and mergers. Tangled interactions (associations, communications) occur within and between levels. Coalitions are building blocks. They are recombined and revised continually as the system accumulates experience and adapts. There are many niches created by new technologies that can be exploited by adaptation. Thus large and small local and global firms coexist and coevolve on the global economy; glocalisation. There is no universal super-competitor, such as the USA or China or massive corporation or institution that can fill all niches; often they are helpless, global terrorism for example. There are so many niches serving many purposes and needs the system operates far from equilibrium or optimum. Despite the talk about progress and world growth recent developments have seen a resurgence of real politique; struggle for resources, struggle for dominance

(current system state) T Past Future upside System state possible futures possible causes probable futures Probable causes possible causes possible futures Now (current system state) T downside robindcmatthews.com

META MODEL PAYOFFS INNER DYNAMICS DYNAMICS GRAMMAR OUTER DYNAMICSOUTER Mandala robindcmatthews.com

Complex systems Defined by the length of the string required to describe them

Evolution and change TYPES OF SYSTEM CHANGE TTYPES OF ypest Random no pattern Normal distribution Bell shaped or approximately so Fat tailed distributions change on all scales possible; Black Swans Deterministic predictable iff imformation perfect Chaotic Deterministic but SDIC Catastrophic Singularity and great extinctions Self ordered criticality Attraction to tipping points; major (phase) transitions. TYPES OF SYSTEM CHANGE Change refers to the transition between one system state and another. Evolution is change directed by processes of natural selection and random mutation change Evolution 1/16/2019

Hard problems Problems well defined Assumption of definite goals & solutions Can pre-define success criteria Technically/operationally oriented Soft problems Difficult to define - they are problem situations High social, political & human activity component Wicked

Systems Thinking Necessary and sufficient conditions guide development of the conceptual model in particular human systems require A Measure Of Performance A Decision Making Process Components Which Interact Actions That Are Transmitted Through The System And Interacts With Wider Systems It To Be Bounded From The Wider System Resources At The Disposal For Process Adaptability Sub Systems/Component Systems Satisfy The Same Criteria

organization grammar conceptual Action 1/16/2019 robindcmatthews.com

Soft Systems Methodology (SSM) Some problems are fuzzy; lack clear definitions, are unstructured, are socially constructed, have multiple solutions or no solutions, or no solutions that will satisfy everyone, require compromises, negotiation. Soft Systems Methodology is an attempt to apply science to human activity systems It is an iterative 7 stage approach to understanding a problem situation and deciding a potential solution if one exists SSM gives structure to fuzzy problem situations

Checkland’s Soft Systems Methodology Premise reality is socially constructed, therefore requirements are not objective systems thinking is not reductionist Rationale Problem/issues are fuzzy, unstructured often without solutions defining the objective is part of the problem Example Integrated computerisation in the NHS largely failed. Why?

Stage 1: Problem situation unstructured Checkland’s Soft Systems Methodology Stage 1: Problem situation unstructured Stage 2: Problem situation expressed (rich pictures) Stage 3: Naming of relevant systems (root definitions; CATWOE) Stage 4: Conceptual models Stage 5: Comparing conceptual models with reality Stage 6: Debating feasible & desirable changes Stage 7: Implementing changes

RISK GRAMMAR SSM AND THE ENNEAGRAM METHOD SSM AND THE ENNEAGRAM METHOD OUTER DYNAMICS 9 GRAMMAR Evaluation, 8 reflection 1 vision, intention SSM AND THE ENNEAGRAM METHOD Stage 5: Comparing conceptual models with reality Stage 6: Debating feasible & desirable changes Stage 7: Implementing changes SSM AND THE ENNEAGRAM METHOD Stage 1: Problem situation unstructured Stage 2: Problem situation expressed (rich pictures) Stage 3: Naming of relevant systems (root definitions; CATWOE) Stage 4: Conceptual models ADAPTATION implementation 7 2 values REALISATION SEARCH PAYOFFS 6 3 CAPABILITIES choice commitment 5 4 alternative scenarios GRAMMAR RISK GRAMMAR robindcmatthews.com

SSM AND THE ENNEAGRAM METHOD Stage 1: Problem situation unstructured Stage 2: Problem situation expressed (rich pictures) Stage 3: Naming of relevant systems (root definitions; CATWOE) Stage 4: Conceptual models robindcmatthews.com

SSM AND THE ENNEAGRAM METHOD Stage 5: Comparing conceptual models with reality Stage 6: Debating feasible & desirable changes Stage 7: Implementing changes robindcmatthews.com

NECESSARY AND SUFFICIENT CONDITIONS Measures of Performance, Decision Making Process, Adaptability, Components Interact, Actions transmitted through system and subsystems, Bounded, Resources available. robindcmatthews.com

1. Problem situation is unstructured Identify a problem/issue and a review/improvement and preparing for decision(s) about change. Find out about the problem situation; problems/issues are perceptual tand perhaps there are many potential problems Need for research into the problem area. Who are the key players? How does the process currently work?

2. Problem situation not the problem itself Collect and sort information about the problem situation Organisational structure, processes transformations, path dependence. human factors gripes, perceptions, moods Specify echniques to be used employed assist (e.g. work observation, interviews, workshops) Express the problem/issue/situation with a rich picture - visual representation/communication The perhaps the meta model of the problem not the problem itself

Rich pictures Represent structures, processes & organisational issues relevant to the problem/issue Provide a way of thinking creatively; using emotion instinct and intuition and the intellect. representation of how to look/think link key issues appreciate of the problem represent and communicate artistic individual many right ways 2. Problem situation not the problem itself

2. Problem situation Is not the problem itself

3. Naming of relevant systems Look at problem/issue from many perspectives Decide from what perspective to view the problem/issue definition for different viewpoints Choose an issue or task from the rich picture Define a system to address the issue or to carry out the task A root definition should be written as a sentence and expressed as a transformation process defines the input that transforms it into a new entity/output) CATWOE analysis of each root definition

CATWOE C: customer; (who will be affected by the transformation/new system?) A: actor (who would do these activities & what special skills are needed?) T: transformation process; what input is transformed in to what output? W: weltanschauung; the world view that makes the system/transformation meaningful? O: Who is the owner? Who is responsible? E: What are the outer dynamics/environmental constraints

process Input S(t) Output S(t+1) 3. Naming relevant systems Pedestrians high risk Pedestrians low risk Customer:                Pedestrians Actor(s):                   Parking Enforcement Officers Transformation:      Penalize parking that puts pedestrians at risk Weltanschauung:     Pedestrian safety should have priority over driver convenience and drivers will not consider pedestrian safety unless they fear punishment. Owner:                      Local Government Administration Environment:           Unlimited road-use is considered a right by most drivers and drivers have powerful political lobby groups. Any system to administer road-use must be self-financing. Most local Government administrations regard road safety as low priority.

4. Conceptual models (SSM) Construction of a conceptual model for each root definition of a system (i.e. what the system must do for each one) A conceptual model in SSM is a human activity model that Strictly Conforms To The Root Definition Using The Minimum Set Of Activities Expresses The Core Purpose; Teleoplogical Can Be Drawn As A Directed Graph With Activities As Nodes And Edges Linking Them. Requires Systems Thinking!

5. Comparing models with reality Compare the conceptual models of stage 4 with the REAL world – social construction of reality; nothing is perceived except through an instrument and the instrument determines the problem. Comparisions, differences, similarities Use conceptual models as a basis for formulating hypotheses Compare history with model prediction General overall comparison Assumptions/norms/construction of the problem/issue

6. Debating changes Discuss whether there are ways of improving the situation, taking a goal-driven approach Identify feasible & desirable changes Types of change to consider in Grammar Structures, Procedures, Attitudes, Perceptions, Assumptions, Norms, Cultures, Mindsets, Traditions, Rituals Artefacts Recommendations for taking action to improve the problem situation

7. Implementing changes Determine how to implement the changes identified during stage 6 Implement changes & put them into action