1 Introduction to Complex Systems: How to think like nature  The Aerospace Corporation. All Rights Reserved. Innovation: evolution generalized and environmentally based resource allocation. Russ Abbott Sr. Engr. Spec

2 Innovative environments The Internet The inspiration for net-centricity and the GIG Goal: to bring the creativity of the internet to the DoD What do innovative environments have in common? What do innovative environments have in common? Other innovative environments The scientific and technological research process The market economy Biological evolution

3 The innovative process: exploratory behavior Innovation, including human creativity, is always the result of an evolutionary process. “If I were to give an award for the single best idea anyone has ever had, I'd give it to Darwin, ahead of Newton and Einstein and everyone else. In a single stroke, the idea of evolution by natural selection unifies the realm of life, meaning, and purpose with the realm of space and time, cause and effect, mechanism and physical law.” Daniel Dennett, Darwin's Dangerous Idea Generate new variants (e.g., ideas)—typically by combining and modifying existing ones. –This is a random process in nature. –Random or not isn’t the point. –The point is to generate lots of possibilities: explore the landscape. (Select and) exploit the good ones –Allow/enable the good ones to flourish. The hard part

4 Exploratory behavior in nature Evolution. Ant and bee foraging. The immune system. Building out the circulatory and nervous systems.

5 Ruth Garrett Millikan “Styles of Rationality” Not long ago I watched [a grey squirrel] eyeing the [bird] feeder... It studied the situation long and hard from one side of the deck, then from the other. It climbed up on the railing to study the situation from there, first from one side, then from the other side, and then from underneath. It eyed the screen on the door that goes out to the deck. Finally it made a try. Starting from a run along the railing, it leap and ricocheted off the screen toward the feeder but missed. Once again it surveyed the situation from various angles, and finally succeeded by hitting the screen a little higher up, then hanging on tight … I hadn't the heart to shoo it away! What was going on in that squirrel's head as it sat up on its haunches, studying and studying from this angle and that? What was going on, I suspect, was a sort of trial and error in perception. It was trying to see a way up, trying to see an affordance. Similarly … before crossing a stream on scattered rocks, it may take you a while to see a good way to cross without wetting your feet. … This form of rationality seems to be common to humans and, I imagine, many other animals as well.

6 Exploratory behavior in humans and other animals Trial and error exploration in the mind. Running through ideas in one’s mind: mental simulation. Generating and evaluating possibilities; thinking and planning before acting. Modeling. Evolution conducts trial and error explorations over generations … A capacity to conduct trials and errors in the head goes one better … Karl Popper noted the benefits of letting one’s hypotheses die in one’s stead.... This is a form of simulation: predict the results of possible actions and select the [best]. M. Nudds and S. Hurley eds. (2006) Rationality in Animals, (Oxford: Oxford University Press)

7 How groups benefit from individual autonomy Exploratory behavior typically requires autonomous individuals. But much exploratory behavior is wasted effort. Success generally depends on more than a single lone inventor. –Successful exploratory behavior typically requires multiple, loosely coordinated, i.e., autonomous, individuals. One may hit the jackpot while the others drill dry holes. For a group to benefit from the discoveries of individuals, there must be mechanisms that bring those discoveries back into the group and allow them to take root. –Establishment is often built into a group’s process. –At the evolutionary level—including our hyper-evolutionary global society—this frequently requires “creative destruction,” which is often far more difficult to accept. Exploratory behavior typically requires autonomous individuals. But much exploratory behavior is wasted effort. Success generally depends on more than a single lone inventor. –Successful exploratory behavior typically requires multiple, loosely coordinated, i.e., autonomous, individuals. One may hit the jackpot while the others drill dry holes. For a group to benefit from the discoveries of individuals, there must be mechanisms that bring those discoveries back into the group and allow them to take root. –Establishment is often built into a group’s process. –At the evolutionary level—including our hyper-evolutionary global society—this frequently requires “creative destruction,” which is often far more difficult to accept. Markets are how we integrate creative destruction into society. Ant foraging; building out the circulatory system. Schumpeter

8 How does this apply to organizations? To ensure innovation: Sounds simple doesn’t it? Creation and trial Encourage the prolific generation and trial of new ideas. Establishing successful variants Allow new ideas to flourish or wither based on how well they do—rather than political reasons.

9 Initial funding Prospect of failure ApprovalsEstablishment Biological evolution Capitalism in the small. Nature always experiments. Most are failures, which means death. (But no choice given.) None. Bottom-up resource allocation defines success. Entrepreneur Little needed for an Internet experiment. Perhaps some embarrassment, time, money; not much more. Few. Entrepreneur wants rewards. Bottom-up resource allocation. Bureaucracy Proposals, competition, forms, etc. When 100% Mission Success is the group goal who wants a failure in his/her personnel file? Far too many. Managers have other priorities. Top-down resource allocation. New ideas aren’t the problem. Trying them out Innovation in various environments Getting good ideas established We save ourselves by spin-doctoring and benign neglect

10 “Garages and laboratories, workbenches, and scribbled napkins are filled with brilliant ideas unmatched with determination, resources, and market sensibilities.” Jack Russo, Silicon Valley intellectual-property lawyer. In 1999, when Nathan Myhrvold left Microsoft he set himself an unusual goal. He wanted to see whether the kind of insight that leads to invention could be engineered. He formed a company called Intellectual Ventures. He raised hundreds of millions of dollars. He hired the smartest people he knew. It was not a venture-capital firm. –Venture capitalists fund insights. They let the magical process that generates new ideas take its course, and then they jump in. Myhrvold wanted to make insights—to come up with ideas, patent them, and then license them to interested companies. Malcolm Gladwell (May 12, 2008) “In the Air,” The New Yorker, Matt Richtel (March 30, 2008) “Edison...Wasn’t He the Guy Who Invented Everything?,” New York Times,

11 Planned invention? Malcolm Gladwell (May 12, 2008) “In the Air,” The New Yorker, When Myhrvold started out, his expectations were modest. Although he wanted insights like Alexander Graham Bell’s, Bell was clearly one in a million, a genius who went on to have ideas in an extraordinary number of areas—sound recording, flight, lasers, tetrahedral construction, and hydrofoil boats, to name a few. Invention has its own algorithm—some combination of genius, obsession, serendipity, and epiphany. How can you plan for that? The original expectation was that I.V. would file a hundred patents a year. It’s filing five hundred a year and has a backlog of three thousand ideas. It just licensed off a cluster of patents for $80,000,000. Its ideas are not trivial. –New techniques for making microchips –Improved jet engines –A way to custom-tailor the mesh “sleeve” used to repair aneurysms –Automatic, battery-powered glasses, with a tiny video camera that reads the image off the retina and adjusts the fluid-filled lenses accordingly, up to ten times a second.

12 Newton and Leibniz: calculus. No less than nine claimants: the telescope. At least six different inventors: the thermometer. Three mathematicians: invention of decimal fractions. Charles Darwin and Alfred Russel Wallace: evolution. Elisha Gray and Alexander Graham Bell: the telephone. John Napier, Henry Briggs, and Joost Bürgi: logarithms. Charles Cros and Louis Ducos du Hauron: color photography. Galileo, Scheiner, Fabricius, and Harriott: discovery of sunspots. Joseph Priestley and Carl Wilhelm Scheele: discovery of oxygen. Several individuals in England and in America: typewriting machines. Fulton, Jouffroy, Rumsey, Stevens, and Symmington: the steamboat. Édouard-Léon Scott de Martinville and Thomas Edison: the phonograph. Mayer, Joule, Thomson, Colding, and Helmholz: formulation of the conservation of energy. The history of science is full of ideas that several people had at the same time W. F. Ogburn & D. S. Thomas (March 1922) “Are inventions inevitable?” Political Science Quartly, 37, Malcolm Gladwell (May 12, 2008) “In the Air,” The New Yorker, Matt Richtel (March 30, 2008) “Edison...Wasn’t He the Guy Who Invented Everything?,” New York Times,

13 The genius is not a unique source of insight. He is merely an efficient source of insight. A scientific genius is not a person who does what no one else can do; he or she is someone who does what it takes many others to do. Malcolm Gladwell (May 12, 2008) “In the Air,” The New Yorker, Robert K. Merton (1961) “Singletons and Multiples in Scientific Discovery: A Chapter in the Sociology of Science,” Proceedings of the American Philosophical Society 105: 470–86 At least 32 “multiple” discoveries, involving 30 other scientists. Some, like Stokes, Green, Helmholtz, Cavendish, Clausius, Poincaré, Rayleigh, themselves men of undeniable genius. Others, like Hankel, Pfaff, Homer Lane, Varley, and Lamé, men of talent but not of the highest order. Each of these discoveries was destined to find expression without Kelvin. Kelvin’s stature as a genius remains undiminished. It required many others to duplicate these 32 discoveries. William Thomson, 1st Baron Kelvin Consider Kelvin:

14 Practical innovation Although Innovation has become a management buzzword, a significant amount of practical progress has been made in understanding how to make organizations innovative. –Hamel, Gary and Bill Breen (October, 2007) The Future of Management, Harvard Business School Press. –Skarzynski, Peter and Rowan Gibson (March 2008) Innovation to the Core: a blueprint for transforming how your company innovates, Harvard Business School Press. Hamel and Skarzynski, are founders of Stratgos ( a consulting company that specializes in innovation.

15 Hamel: ask employees How have you been equipped to be a business innovator? What training have you received? What tools have you been supplied with? Do you have access to an innovation coach or mentor? Is there an innovation expert who will help you develop your breakout idea? How easy is it for you to get access to experimental funding? How long would it take you to get a few thousand dollars in seed money? How many levels of bureaucracy would you have to go through? Is innovation a formal part of your job description? Does your compensation depend in part on your innovation performance? Do your company’s management processes—budgeting, planning, staffing, etc.—support your work as an innovator or hinder it?

16 A corporate innovation architecture An innovation pipeline for managing and opportunities A core set of people trained in the processes of innovation A systematic process for generating and managing strategic insights The right evaluative criteria at every stage of the development process to prevent potentially valuable ideas from being killed off prematurely Ideas that are sufficiently radical to deliver breakthrough performance Mechanisms for rapidly reallocating resources behind new opportunities Manage growth opportunities with different timescales and risk profiles Metrics to measure innovation performance Link innovation to management compensation A self-sustaining enterprise capability and a tangible core value

17 Implications for C2 There is no “commander’s intent” in nature or in the market. But there is something like (commander’s) intent in organisms. How do successful organisms work? A simplified model. –Lower levels discover opportunities through exploratory behavior. Constrained by “rules of engagement,” which protect them from harm. Initiatives often grow from the “edges,” where perception occurs. –Higher levels provide perspective and impose constraints. They do not primarily issue commands. Additional resources recruited as success builds—if it does. But lots of opportunities to withhold support or shape direction. This is a bottom-up model of resource allocation. Decisions about increasingly significant commitments made at increasingly higher levels. If entire organism commits, becomes “commanders intent.” To implement this model one should stay healthy and build skills and capabilities, which can be recruited/applied/committed when relevant. Allow/encourage initiate to originate at all levels—and let it attract resources as it proves itself (if it does). Different from starting with limited and narrowly focused top-level missions, goals, and objectives. Top-level mission is to survive, to build skills, and to ensure an environment within which this process can proceed and the organism can thrive. There is no “commander’s intent” in nature or in the market. But there is something like (commander’s) intent in organisms. How do successful organisms work? A simplified model. –Lower levels discover opportunities through exploratory behavior. Constrained by “rules of engagement,” which protect them from harm. Initiatives often grow from the “edges,” where perception occurs. –Higher levels provide perspective and impose constraints. They do not primarily issue commands. Additional resources recruited as success builds—if it does. But lots of opportunities to withhold support or shape direction. This is a bottom-up model of resource allocation. Decisions about increasingly significant commitments made at increasingly higher levels. If entire organism commits, becomes “commanders intent.” To implement this model one should stay healthy and build skills and capabilities, which can be recruited/applied/committed when relevant. Allow/encourage initiate to originate at all levels—and let it attract resources as it proves itself (if it does). Different from starting with limited and narrowly focused top-level missions, goals, and objectives. Top-level mission is to survive, to build skills, and to ensure an environment within which this process can proceed and the organism can thrive.

18 Ensuring quality: markets vs. centralized control Markets ensure a reasonably high level of quality by letting many variants appear and selecting the good ones. –To do this requires the ability to recognize quality when one sees it means to generate lots of variants the luxury of allowing low quality items to come into being and then be rejected. (Doesn’t work if low quality kills.) –If these pertain, quality is (relatively) easy. Centralized control ensures quality by rigid oversight. –To do this requires that one know in advance how to produce quality and the means to ensure that the knowledge is applied. –This is much harder.

19 Evolution and Markets All the mechanism we have seen are controlled evolution. –Markets are evolution with initiative. (How would you define initiative?) The ability to act on one’s own. I.e., control over a source of energy that is devoted to generating and apply variants. –Nature has neither money or trading in goods or liquidity. Markets enable creative destruction without violence. –For the most part, competition is for resources and not head-to-head conflict. Competitors are rivals rather than adversaries. Cannot attack the other directly. The bottom line is competition for resources, not conquest. But advertising and other forms of marketing and mass influence attempts to influence how resources are allocated. So do attempts by entrenched interests to shape the environment, e.g., by regulations.

20 Backups

21 Designs in various environments Recorded asCreated by How instantiated Established InternetSoftwareProgrammersSelf-instantiatingBy users Scientific knowledge PublicationsScientists The publication is the instantiation By peer review Market economy Trade secrets Product developers Entrepreneurial manufacturing By consumers Biological evolution DNA Combination and mutation Reproduction Whether it finds a niche Entities: nature’s memes Implicit designs Construction, combination and mutation Implementation of a level of abstraction Whether it finds a niche All bottom-up