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Of Colonies and Companies

Rapid rates of change, an explosion of new insights from the life sciences, and the insufficiency of the machine model have created a critical mass for a revolution in management thinking. The fallout of the scientific renaissance has fostered uncertainty and soul-searching. Executives ask: How do we make practical sense of all this? How do we get the change and performance we need? Clues, it turns out, are to be found in the world of the termite.

Come with us to a remarkable structure: the twelve-foot-high mound of the African termite, home to millions of inhabitants.

The mound is an architectural marvel. Naturalist Richard Conniff has described its perfect arches, spiral staircases, nurseries, storage facilities, and living quarters that vary with the status of individual termites. Tunnels radiate out from the mound more than 160 feet in any direction. These structures enable the termites to forage for grass, wood, and water within an 80,000-square-foot area without being exposed to predators.

Within the mound, a ventilation system—operated by opening and closing vents—creates a motion similar to respiration. Oxygen is "inhaled" into the twelve-foot tower of mud, and carbon dioxide is "exhaled." The system also holds the internal temperature steady (plus or minus one degree Fahrenheit) even though the external climate ranges from freezing winters to 100-degree-plus summers. Humidity is constant at 90 percent.

This organizational wonder—which evolved over 100 million years or so—is a tribute to an elaborate social structure. Every inhabitant obeys a series of genetically programmed rules, such as: "Position yourself between the termite in front and the one behind, and pass on whatever comes your way." As a whole, members of the mound constitute a sophisticated society that makes it possible to meet the ever changing needs of the colony.

Entomologists have known about the workings of the termite for centuries. In the past two decades, though, a group of leading scientists has offered a different, intriguing perspective. They see the mound as a stunning example of a complex adaptive system.

A complex adaptive system is formally defined as a system of independent agents that can act in parallel, develop "models" as to how things work in their environment, and, most importantly, refine those models through learning and adaptation. The human immune system is a complex adaptive system. So is a rain forest, a termite colony, and a business.

Over the past several years, substantial literature has introduced the new science of complexity. This is a broad-based inquiry into the common properties of all living things—beehives and bond traders, ant colonies and enterprises, ecologies and economies, you and me. In aggregate, the coverage on this topic to date has achieved two significant things:

1. It has evoked wonder and excitement about the living world around us—how life surges and declines; how nature competes, cooperates, and thrives on change.

2. It has whetted some managerial appetites for a new approach that might help to unshackle the potential of people and organizations and has begun to challenge the machine model as a suitable management platform for the information age.

We aim to take a step beyond. This book describes a new management model based on the nature of nature, but it also does what no other book has done before. It distills, from the science of complexity, four bedrock principles that are inherently and powerfully applicable to the living system called a business.

In brief, these principles are:

1. Equilibrium is a precursor to death. When a living system is in a state of equilibrium, it is less responsive to changes occurring around it. This places it at maximum risk.

2. In the face of threat, or when galvanized by a compelling opportunity, living things move toward the edge of chaos. This condition evokes higher levels of mutation and experimentation, and fresh new solutions are more likely to be found.

3. When this excitation takes place, the components of living systems self-organize and new forms and repertoires emerge from the turmoil.

4. Living systems cannot be directed along a linear path. Unforeseen consequences are inevitable. The challenge is to disturb them in a manner that approximates the desired outcome.

If properly employed, these principles allow enterprises to thrive and revitalize themselves. In contrast, the machine-age principles, although familiar and enduring, often quietly facilitate the stagnation and decline of traditional enterprises that are faced with discontinuous change.

The choice is that simple and that stark.

Complexity and chaos are frequently used interchangeably, even though they have almost nothing in common. The world is not chaotic; it is complex.

Humans tend to regard as chaotic that which they cannot control. This creates confusion over what is meant by the term chaos. From a scientific point of view, chaos is that unlikely occurrence in which patterns cannot be found nor interrelationships understood. A swarm of bees or the ants that overrun a picnic blanket may seem chaotic but they are actually only behaving as a complex adaptive systems. E-commerce and the upending of traditional business platforms may feel "chaotic," but, technically, these innovations are complex.