Doctor of Business Administration August 22 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 2/28/2019 robindcmatthews.com

STATES The system state S(t) Change in system state S(t1), S(t2),.......,S(T) Speed of change in system state/speed of transition from one system state to another; criticality, singularity, phase transition,

(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

GRAMMAR

COMPLEX ADAPTIVE SYSTEMS Interdependence and interaction Feedbacks Emergence of novelty Non linearity (increasing returns) Uncertainty and limited information Anticipation and expectations Learning and adaptation

The globalisation story FINANCIAL REVOLUTION Flexible exchange rates Deregulation New asset pricing models TECHNOLOGICAL Investment funds Shorter product cycles Pressure to reduce costs Outsourcing GLOBAL DEMAND FDI Consumption Investment Asset prices Sovereign wealth funds Securitization GLOBAL POSITIVE FEEDBACKS 1980 – 2006 (circa)

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

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 CDIC 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 2/28/2019

META MODEL PAYOFFS INNER DYNAMICS DYNAMICS GRAMMAR OUTER DYNAMICSOUTER

Global macro conditions Payoffs to stakeholder groups Tangible and intangible Assets (including Reputation) payoffs Competitors and co-operators Outer dynamics Inner dynamics Global macro conditions grammar MARCS Rules, laws, regulations, structures, architectures, routines. Mindsets, culture, memes, norms, values, habits, moods. Intelligence rational and emotional. Formal and Informal, Inner and Outer. 2/28/2019 robindcmatthews.com

Summary of SSM The problem: gathering information; Rich picture; brain storming, lateral/creative thinking; antenarrative Root definitions; the essence of a situation/problem. meta model, system state; CATWOE; C costs and benefits to whom? A actors who will implement? T Transformation into output? W world view, beliefs/values assumptions? O who is ultimately responsible for talking the problem? E Environmental constraints? Conceptual model: designing a model that fits the situation; meta model; system state Assess the models correspondence with the real world situation Feasible solutions/changes Action implementation Return to 1