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Has anyone applied complexity theory to business in a practical way?

Written by: Jon Hansen

Article Overview: Member Question: Has anyone applied complexity theory to business in a practical way? David, Instructional Designer, Performance Technologist and Project Manager

Has anyone applied complexity theory to business in a practical way?

Chaos Theory and the Butterfly Effect are interesting concepts in terms of the "complexity" of business.

Over a number of years and through funding from the Government of Canada's Scientific Research and Experimental Development (SR&ED) Program I developed a theory called strand commonality.

In the area of supply chain practice for example (although the term "chain" is a misnomer in that it implies a sequential architecture instead of the sycnchronized architecture that represents the dynamic characteristics of different stakeholders in the real-world), one seeks to understand the unique operating attributes of individual stakeholders using an agent-based model.

This approach enables you to define the seemingly disparate attributes of individual stakeholder streams. The strand commonality theory then looks to identify the points of convergence between the varied attributes of different transactional streams to achieve a collective, optimal outcome (re the best source, for the best product at the best price etc. at that point in time).

Conversely, traditional business models employ an equation-based methodology, in that they seek to establish a set of "static" operational standards such as SCOR in the supply chain world or Six Sigma, and then enforce a change management strategy to drive adoption to what the model classifies as best practice.

The trouble is that these or for that matter any operational standards and the attributes upon which they are based, are rarely static in nature, which means that the standards by which best practice has been defined in one instance is unlikely to be the same in another, even when the stakeholders remain somewhat constant. (Note: refer to the definition of the butterfly effect here.)

Strand commonality recognizes and adapts to the dynamic and at times volatile attributes of an individual stakeholder stream and therefore seeks the point of convergence between different streams that reflects the optimal collective outcome at that specific point in time.

I have included links to a number of articles I have written on this subject that will provide context in terms of real-world examples. Suffice to say, there is a reason why 85% of all e-procurement initiatives world wide fail to achieve the expected results.

Links:

To obtain corresponding reference materials, please contact the author.

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Article Tags: attributes, butterfly effect, change management strategy, chaos theory, collective outcome, commonality, dynamic characteristics, ed program, experimental development, government of canada, misnomer, operational standards, optimal outcome, point in time, points of convergence, scor, six sigma, stakeholders, streams, traditional business models



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