Applying complex adaptive systems theory helps businesses and economies
My work applies complex adaptive systems theory to strategy and finance.
The results include a number of unique concepts that help create high-growth
Adaptive Organizations and finance their
continuing growth and diffusion.
Original results include:
"Kauffman's Law" applied -- technology grows
combinatorially, and population grows exponentially. Since technology
creates economic niches, superimposing its explosive chain reaction on
humanity's slower-but-still-impressive growth means the global economy
will soon have more niches than humanity has people to fill them. Web
pages and the Internet will let each specialist find all their potential clients
"Adaptation Curves" -- are to learning curves as
fitness landscapes are to local fitness peaks. Adaptive organizations climb
adaptation curves by constantly seeking better practices in accord with
"Holland's Law:" Improvements are always possible and, indeed, occur regularly.
"Innovator Stock Ownership Programs" -- better practices are the true source
of economic growth and wealth, so corporations should compensate innovations
with stock and efforts with salaries. Improvements occur regularly, and proper
incentives increase their frequency and scope.
"Common Practice" -- permits what it doesn't prohibit; Roman Practice prohibits
what it doesn't permit. Since innovation creates wealth, the governmental
practice that permits new private practices speeds up economic and technological
development dramatically -- good news for Common Law nations and organizations, bad
news for Roman Law nations and organizations.
"A Finance Research Agenda" -- for earning superior returns on substantial capital investments in trading, and for reforming the markets so those superior returns -- and their associated excess volatility -- become a thing of the past.
My various publications and working papers provide details and describe
applications. Look for occasional major additions.
Fixed practices, fixed size. Like static equations, these organizations
have no variables -- time doesn't change them significantly. They persist until
some new organization occupies their niche.
Fixed practices, variable size. Like dynamic equations, these organizations
vary in size over time, even though their underlying practices don't change much.
They go through a single life cycle, each growing rapidly as it occupies its niche, then
declining as its competitors implement better practices that steal away its clients.
Variable practices, variable size. Like complex adaptive systems, these
organizations vary their practices, seeking the constant improvement that launches
life cycle after life cycle, creating new products, services, and processes that hold on
to clients generation after generation.
Adaptive organizations will soon motivate employees to climb
adaptation curves by using ISOPs to fairly share the wealth that each
innovation creates. ISOPs ensure that the innovator, the predecessors,
and each shareholder in the corporation benefits.
Adaptive organizations will displace dynamic and static organizations
in economic competition, so that within a generation, most people will have
learned to expect continual improvement in their life experience. The fact
that their ancestors once worked at the same job in the same way for an
entire lifetime will seem almost as incredible as the fact that people used
to stay at jobs they didn't thoroughly enjoy.