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Book Summary:

Strategic Management and Organizational Dynamics: The Challenge of Complexity

By Ralph D. Stacey

ABSTRACT - The five groundbreaking chapters reviewed here are from the newest revision of Ralph Stacey's insightful management text, Strategic Management and Organisational Dynamics: The Challenge of Complexity. Traditional conceptualizations of management and psychology are cogently challenged, but the greatest significance of this work lies in the theory of "relationship psychology" and in its implications for understanding the mind and healthy, creative organizational dynamics.

Key Points:

Chapter 13

How Organisational Theorists Are Using Chaos and Complexity Theory
Chapter 13 examines the pervasiveness of cognitivism (the inherently reductionist view that the brain is intrinsically a digital computer) and the detrimental impact that it has had on the interpretation of chaos and complexity theory in organizational theory.

Cognitivism's misconception of the external, objective observer…
"For me, the problem in adopting the position of the external, objective observer of a pre-existing organisational reality is this…It is the very essence of self-organisation that none of those individual agents is able to step outside the system and obtain an overview of how the whole is evolving, let alone how it will evolve. It is the very essence of self-organisation that none of the agents, as individuals, nor any small group of them on their own, can design, or even shape, the evolution of the system other than through their local interaction." p. 3

The methodological position of the external observer is a possibility if I want to study birds and ants because I am neither. However, if I want to study the behaviour of a group of people, it seems to me that I have to take account of the fact that I am one of them. As soon as one loses sight of this and talks about a complex system of human beings from an external position, it is easy to slip into the tendency of prescribing this external position as the management role." p. 3

"I think the insights about the nature of systems coming from complexity theory offer an opportunity to theorists and practitioners to explore a different way of thinking about life in organisations. However, this opportunity is rapidly lost if the insights are imported into organisation theorising from the methodological position of the external observer, implicitly based on the assumption of the powerful, autonomous individual so central to cognitivism." p. 3

For example
Levy (1994) uses nonlinear equations to simulate an industrial supply chain and concludes that his model both provides an explanation for the total understanding of complex systems and suggests how goals can be reached through alternative means. Stacey interprets Levy's work as using chaos theory "to model an operational system at the macro level in order to aid decision-making" and decides that Levy has adopted the view of the manager as an external observer or model builder/ programmer. Stacey writes, "I think that the radical potential of theories of chaos and dissipative structures for organisation theory tends to be obscured by simulations of this kind because the agents in the system are treated in an impersonal way." p. 6

Keeping radical perspectives of complexity free from orthodox assumptions
"I have argued that the result (of retaining a cybernetic and cognitivist approach) is the re-presentation of strategic choice and organisational learning theory in a different vocabulary. The emphasis on control and organisation-wide intention remains intact. For me, that means that the opportunity to explore what it means to operate as a participant in a setting in which the future is unknowable is lost. No further understanding of the process of how strategy might emerge from local interaction is obtained." p. 22

"A complex system can self organise into disintegration just as it can into a rigid, repetitive pattern. Furthermore, even when it operates at the edge of chaos there is the potential for the emergence of a new form, which no one can know the shape of in advance, and it may well not be one that leads to survival." p. 13

"So, organisations cannot survive by following some blue print. Instead, the potential for, but not the guarantee of, survival is created by the capacity to produce emergent new outcomes. This is controlled by the process of spontaneous self-organisation itself." p.19

"The edge of chaos" does not imply the edge of crisis…
"…The dynamics of the edge of chaos are not at all those of crisis, but rather, of paradox and ambiguity. For me, this connotes a mature ability to hold a difficult position, not a state of crisis. Equating the edge of chaos with crisis leads on to the prescription to inject crisis into an organisation. Surely, this is a misinterpretation of what mathematical chaos or complexity might mean in human terms." p. 16

Chapter 14

Complexity: The Problem with the Notion of the Autonomous Individual
This chapter replaces the assumption of the autonomous individual with that of the simultaneous social construction of group and individual and the position of participative inquiry. There is a move away from thinking of oneself as managing in terms of being an objective observer & designer, and towards thinking of oneself as an active participant in complex processes.

On the limitations of computer simulated analogies…
"There is a very important point to note about simulations such as the boids one, where each interacting symbol pattern is the same as all the others. This is interaction where there is no diversity amongst the symbol patterns, no non-average interaction between them, no noise, no fluctuations in Prigogine's terms. Because of this lack of diversity, the simulation cannot display spontaneous moves from one attractor to another, nor can it spontaneously generate a new attractor. The symbol patterns, or rules, always yield the same attractor and change can occur only when the programmer changes the individual symbol patterns." p. 3

On the limitations of models…
"Constructing a model of a whole system involves shearing away detail and focusing on what is judged to be important. The model can, therefore, never encompass the whole. In other words, the whole is always absent, not least because the whole is evolving." p. 8

On the mind…
"In relating to each other people create, and are created by, their social reality. Here the mind is not structured by a clash between an inherited, internal force and an external reality. Instead, the mind is seen as emerging in relationship and the notion of a mind inside someone disappears. An individual's mind arises between that individual and the others with whom he or she is in relationship. It is between them, not in one of
them." p. 10

"Mind means being conscious of the possible consequences of actions and exploring them, in advance of action, by means of a silently conducted conversation of gestures in the form of significant symbols." p. 11

"Mind is emerging in social relationships and it is the 'internalisation' of those social relationships. It needs to be stressed that this is a very different notion of mind to that in cognitivism, humanistic psychology, and psychoanalysis. The individual mind is not primary and prior to the group. Instead, the individual mind and the web of relationships that are a group are emerging simultaneously. Individuals are forming and being formed by the group at the same time." p. 12

"The main point I am trying to make is that mind is silent conversation, If this is so, mind must be organised in much the same way as ordinary everyday conversations between people are organised. Mental processes must, therefore, be equivalent to conversational processes…Understanding the nature of ordinary, everyday conversation then becomes crucial to an understanding of human behaviour, of group processes, and of organisations." p. 16

"Mind, as a mental process, always arises between people but, at the same time, is always experienced in an individual body. Mind is thus paradoxical in that it is at the same time between individuals but experienced in their individual bodies. Mind is also paradoxical in another sense: it is formed by the social/ the group at the same time as it is forming the social/ the group." p. 20-21

Considerations for the most powerful within an organization…
"…It is necessary to avoid equating the Chief Executive, or any other manager, with the programmer. Instead, all managers, no matter how powerful, need to be understood as agents participating in the system." p. 6

"The system and its agents are emerging together, simultaneously constraining and being constrained by each other…Far from there being no point in doing anything, everything one does, including nothing, has potential consequences. Far from the outcome being a matter of fate or destiny, it is the co-creation of all interacting agents. There is no reason at all why agents should be interacting in a democratic way. They might, but they might not. Furthermore, they are not all equal in a simulation such as Tierra. Some are pursuing more powerful strategies than others, in terms of survival. There is certainly no requirement for consensus but, rather, the tension between competition and cooperation. There is no anarchy because no agent can do whatever it pleases. There are a number of constraints, not least those provided by the actions taken by other agents. There is no connection whatever between empowerment of the lower echelons in an organisation and self-organisation, a matter I will explore next. There is also no connection whatever between disempowering the higher echelons and self organisation..." p. 7

"The powerful may identify what kind of responses they would like by making statements about values and required cultures and behaviours. They may try to motivate others to adopt all of this. However, people will still only be able to respond according to their own local capacities to respond and the most powerful will find that they have to respond to the responses that they have evoked and provoked." p. 9

Chapter 15

Complexity: Self-Organising Experience
This monumentally important chapter suggests complex responsive processes as the human analogue for complex adaptive systems. With the introduction of relationship psychology, Stacey delves into a theory of human nature that is simultaneously a theory of interaction. Chapter 15 explores the idea that human experience is organized by themes, by stories, and by conversations.

The nature of interacting themes…
"Relationships between people in a group can then be defined as continuous replicating patterns of intersubjective themes that organise the experience of being together. These themes emerge, in variant and invariant forms, out of the interaction between group members as they organise that very interaction. I want to stress, however, that I am not suggesting that these themes are disembodied interactions. Although these themes emerge between people, and therefore cannot be located 'inside' any individual, the experience is nevertheless always a bodily experience. I am suggesting, then, that both personal and group themes always arise between people but are always at the same time experienced in individual bodies as changes, marked or subtle, in the feeling tones of those bodies." p. 5

Conversation's significance…
"I have been arguing then that conversations are complex responsive processes of themes triggering themes through self-organising association and turn taking that both reflect and create power differentials in relationships. These conversational processes are organising the experience of the group of people conversing and from them, there is continually emerging the very minds of the individual participants at the same time as group phenomena of culture and ideology are emerging. Individual and group phenomena emerge together in the same process, co-creating each other. This is a very radical view of the nature of the relationship between the individual and the group. It is saying that change in the behaviour of a group and change in the behaviour of individual members is exactly the same phenomenon. Furthermore, it is saying that change can only occur when the pattern of conversation changes because it is this that organises their experience." p. 13

Stacey's alternatives…
An alternative definition of "self"… "From this perspective (of relational experience), then, self is a process of 'internalising' social relations into patterns of interacting themes, rather than some mental apparatus, such as a mental model." p. 3

An alternative definition of "mind"…
"Furthermore, if mental phenomena are simply social processes taken into the silent conversations of individuals, then mind can also be usefully thought of as having the same characteristics as social interaction. In other words, an individual's mind can also be usefully thought of as complex responsive processes of symbols, that is, language and feelings, self-organising into experience taken into a silent conversation." p. 15

An alternative view of "intention"…
"…When one comes to regard intention as a theme that organises the experience of being together it becomes clear that intentions emerge in the conversational life of a group of people. A single individual does not simply 'have' an intention. Rather the intention an individual expresses has emerged in the conversational interaction with others. Intention and choice are not lonely acts but themes organised by and organising relationships at the same time." p. 15

An alternative view of "free will"
"The response that any individual can make to a gesture is both enabled and constrained by the history of that person's relationships with others, as reflected in his or her current silent conversations with him or herself. I am not free to choose to do what I am not able to do. However, I am free to respond to a gesture in a number of different ways that do fall within the repertoire available to me. Thinking about human relationships as self organising complex responsive processes does not therefore mean that individuals have no free will. It simply means that people have the freedom to respond within the constraints of who they are and the relationships they are in." p. 16

Relationship Psychology-an alternative to Cognitive Psychology…
"This chapter explored how complexity theory might provide a framework for thinking about the process of mind and self-formation…(H)umans are not simply adapting to each other according to given mental models. I find it more useful to think of humans as continuously responding to each other." p. 17

Chapter 16

Understanding Organisations as Complex Responsive Processes
"I think that convincing analogues for the dynamics of complex adaptive systems and the factors that alter those dynamics are to be found in the complex responsive processes of human relating, that is, in patterns of conversation." p. 17 Stacey draws upon a number of strands of psychological thinking that focus on relationship in order to provide a way of interpreting complexity theory through human interaction.

The individual and the group on the same level of analysis…
"Interaction and human nature are the same phenomenon. While the other theories distinguish between individual and group as different levels of analysis, relationship psychology proposes that the individual is the singular of relating while the group is the plural of relating" p. 1

Interacting themes and responsive processes of relating…
"The symbols of human communication are arranged as narrative and propositional themes that organise the responsive experience of those individuals in their being and doing together and their experience is these themes. It is the themes, not the individuals, which interact… In other words, an organisation is thought of, not just as a group of individuals, but as responsive processes of relating, that is, communication between them." p. 3

The significance of conversation…
"If one takes this perspective, that an organisation is a pattern of talk (relational constraints), then, an organisation changes only insofar as its conversational life (power relations) evolves. Organisational change is the same thing as change in the pattern of talk and therefore the pattern of power relations. Creativity, novelty, and innovation are all the emergence of new patterns of talk and patterns of power relations." p. 5

It is the relationship between the two that is the key…
"…It is neither the official, nor the unofficial ideologies on their own that are sustaining current power relations. Rather, it is the complex interplay between them, between legitimate and shadow organising themes, that sustains current power relations." p. 8

"Legitimate themes are legitimate because they conform to official ideologies
Shadow themes/power relations are shadow because of the manner in which they are expressed in conversation. Such conversations always take place informally between small numbers of people and their distinguishing feature is that they do not conform to official ideology." p. 15

Conversation as a self-organizing phenomenon…
"Conversational life cannot develop according to an overall blueprint since no one has the power to determine what others will talk about all the time. Conversation is thus a self-organising phenomenon and this self-organisation continuously produces emergent patterns in itself." p. 15

"…There is usually some degree of misunderstanding in human communication. This is the analogue of random mutation." p. 16

System transformation…
"In the language of complexity theory, system transformation means that the system moves from one attractor to another. More fundamentally, transformation is movement not just from one attractor to another that already exists, but to a new one that is evolving." p. 16

"Transformation is possible only when the entities, their interactions with each other and their interaction with entities in the system's environment, are sufficiently heterogeneous, that is, sufficiently diverse." p. 16

"Repetitive patterns of conversation that block change are the analogue of equilibrium attractors in complex adaptive systems. Free flowing, flexible conversation that spontaneously shifts to new patterns (Shaw, 2000) is the analogue of the strange attractors at the edge of chaos. Highly emotional miscommunication would be the conversational analogue of the dynamics of disintegration. Organisational health has to do with the capacity to change, to produce new forms, and this depends crucially on free flowing, flexible conversation, that is, conversation displaying dynamics of bounded instability." p. 17

"The conversational equivalent of bounded instability at the edge of chaos is thus likely to occur in some critical range of richness in organising themes. If the themes are too impoverished then the dynamics are stable and if they are too rich then the dynamics are disintegrative." p. 18

"The 'good enough holding' of anxiety is an essential condition for the free flowing conversational dynamics that are the analogue of the edge of chaos…This interpretation of 'good enough holding' differs from the psychoanalytic interpretation in that it does not locate the 'good enough' in a leader or a consultant (Stapley, 1996) but in the quality of conversational interaction itself." p. 19

The importance of the shadow conversation…
"I suggest, then, that an organisation's potential for creativity lies in these shadow conversations and their tension with the legitimate." p. 20

"The capacity for emergent new ways of talking is fundamental to organisational creativity. If this is so, then it is a matter of considerable strategic importance to pay attention to the dynamics of ordinary conversation, particularly those in the shadow. The purpose of this attention is not to control the conversation or somehow produce efficient forms of it, but to understand it and particularly to understand what blocks it." p. 21

The anxiety, power relations, and conversational devices that inhibit emergence…
"I suggest that the most important additional aspects to incorporate in thinking about complex responsive processes of relating are the nature and impact of anxiety and the emotional responses of power relations." p. 18

"Without even being aware of it, people in ordinary conversation may be using conversational devices to dismiss the opinions of others and close down the development of a conversation in an exploratory direction. If this way of talking is widespread in an organisation, it will inevitably keep reproducing the same patterns of talk. The use of some rhetorical devices is therefore one of the most important blockages to flexible, free flowing conversation and thus the emergence of new knowledge." p. 22

Chapter 17

The Implications of Understanding Organisations as Complex Responsive Processes
This was the most difficult chapter for the author to write. "I find it difficult to deal with a theory that makes sense of my experience of life in organisations but does not enable me to apply and prescribe." Chapter 17 places managers' past roles in historical perspective and "prescribes" a refocusing of attention for managers who are looking to understand the new role and insights that complexity offers.

The progression of theories…
The progression from strategic choice theory, to learning organisation theory, to open systems theory, and now to chaos and complexity theory, "suggests a move from one theory of interaction to another so that uncertainty and unpredictability, and their relationship with diversity and creativity, are increasingly taken account of." p. 2

On quality actions…
"The other theories reviewed in this book implicitly assume that the criterion for selecting a quality action is its outcome. Quality actions are those that produce desired outcomes. However, in an unpredictable world, the outcomes of an action cannot be known in advance. It is necessary to act and then deal with the consequences." p. 10

"A quality action is one which creates a position from which further actions are possible…Another criterion for a quality action is that it enables error to be detected faster than some (other) option. Finally, the most important criteria for quality actions are moral and ethical in nature." p. 13

Recognizing the importance of deviance…
"A condition for creativity is therefore some degree of subversive activity with the inevitable tension this brings between shadow and legitimate themes organising the experience of relating." p. 12

"For me, the implication of recognising the importance of deviance has to do with people making sense of their own engagement with others in the shadow conversations that express deviance. It means paying attention to how what they are doing may be collusively sustaining the legitimate themes organising experience, so making change impossible. It means developing a greater sensitivity to the socially unconscious way in which together people create categories of what is 'in' and what is 'out' and the effect that this has on people and organisations." p. 12

The manager as inquiring participant…
"…Effective managers are those who notice the repetitive themes that block free flowing conversation and participate in such a way as to assist in shifting those themes. They may do this, for example, by repeatedly asking why people are saying what they are saying. Effective managers will seek opportunities to talk to people in other communities and bring themes from those conversations into the conversational life of their own organisation. They will be particularly concerned with trying to understand the covert politics and unconscious group processes they are caught up in and how those might be trapping conversation in repetitive themes. They will also pay attention to the power relations and the ideological basis of those power relations as expressed in conversations." p. 11

"I am suggesting, then, that in moving from the position of manager as objective observer to that of manager as inquiring participant, attention is focused on the unexpected responses of organisational members to managers' intentions. Intention is understood as emergent and problematic. The emphasis shifts from the manager focusing on how to make a choice to focusing on the quality of participation in self-organising conversations from which such choices and the responses to them emerge." p. 10

"I have been arguing that the main implication of a complex responsive processes' perspective is the way in which it refocuses attention, not on what members of an organisation should be doing, but on what they are already, and always have been, doing. If there is a prescription, it is that of paying more attention to the quality of your own experience of relating and managing in relationship with others." p. 14-15

"Examples of the necessary skills are the capacity for self-reflection and owning one's part in what is happening, skill in facilitating free flowing conversation, ability to articulate what is emerging in conversations, and sensitivity to group dynamics." p. 15

"Strategic management is the process of actively participating in the conversations around important emerging issues. Strategic direction is not set in advance but understood in hindsight as it is emerging or after it has emerged." p. 15

"The purpose is not to apply or to prescribe but to refocus attention. When people focus their attention differently, they are highly likely to take different kinds of actions. However, a theory that focuses attention on self-organising processes and emergent outcomes can hardly yield general prescriptions on how that self-organisation should proceed and what should emerge from it. The theory would be proposing to do the opposite of what it is explaining. The theory invites recognition of the uniqueness and non-repeatability of experience." p. 9



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