Being the first to cross the finish line makes you a winner in only one phase of life. It’s what you do after you cross the line that really counts.
– Ralph Boston
Does winner-take-all strategy apply outside the boundaries of a complex system? Let us put it another way. If one were to pursue a winner-take-all strategy, then does this willful strategic move not bind them to the constraints of complexity theory? Will the net gains accumulate at a pace over time far greater than the corresponding entropy that might be a by-product of such a strategy? Does natural selection exhibit a winner-take-all strategy over time and ought we then to regard that winning combination to spur our decisions around crafting such strategies? Are we fated in the long run to arrive at a world where there will be a very few winners in all niches and what would that mean? How does that surmise with our good intentions of creating equal opportunities and a fair distribution of access to resources to a wider swath of the population? In other words, is a winner take all a deterministic fact and does all our trivial actions to counter that constitute love’s labor lost?
Natural selection is a mechanism for evolution. It explains how populations or species evolve or modify over time in such a manner that it becomes better suited to their environments. Recall the discussion on managing scale in the earlier chapter where we discussed briefly about aligning internal complexity to external complexity. Natural selection is how it plays out at a biological level. Essentially natural selection posits that living organisms have inherited traits that help them to survive and procreate. These organisms will largely leave more offspring than their peers since the presumption is that these organisms will carry key traits that will survive the vagaries of external complexity and environment (predators, resource scarcity, climate change, etc.) Since these traits are passed on to the next generate, these traits will become more common until such time that the traits are dominant over generations, if the environment has not been punctuated with massive changes. These organisms with these dominant traits will have adapted to their environment. Natural selection does not necessarily suggest that what is good for one is good for the collective species.
An example that was shared by Robert Frank in his book “The Darwin Economy” was the case of large antlers of the bull elk. These antlers developed as an instrument for attracting mates rather than warding off predators. Big antlers would suggest a greater likelihood of the bull elk to marginalize the elks with smaller antlers. Over time, the bull elks with small antlers would die off since they would not be able to produce offspring and pass their traits. Thus, the bull elks would largely comprise of those elks with large antlers. However, the flip side is that large antlers compromise mobility and thus are more likely to be attacked by predators. Although the individual elk with large antler might succeed to stay around over time, it is also true that the compromised mobility associated with large antlers would overall hurt the propagation of the species as a collective group. We will return to this very important concept later. The interests of individual animals were often profoundly in conflict with the broader interests of their own species. Corresponding to the development of the natural selection mechanism is the introduction of the concept of the “survival of the fittest” which was introduced by Herbert Spencer. One often uses natural selection and survival of the fittest interchangeable and that is plain wrong. Natural selection never claims that the species that will emerge is the strongest, the fastest, the largest, etc.: it simply claims that the species will be the fittest, namely it will evolve in a manner best suited for the environment in which it resides. Put it another way: survival of the most sympathetic is perhaps more applicable. Organisms that are more sympathetic and caring and work in harmony with the exigencies of an environment that is largely outside of their control would likely succeed and thrive.
We will digress into the world of business. A common conception that is widely discussed is that businesses must position toward a winner-take-all strategy – especially, in industries that have very high entry costs. Once these businesses entrench themselves in the space, the next immediate initiative would be to literally launch a full-frontal assault involving huge investments to capture the mind and the wallet of the customer. Peter Thiel says – Competition is for losers. If you want to create and capture lasting value, look to build a monopoly.” Once that is built, it would be hard to displace!
Scaling the organization intentionally is key to long-term success. There are a number of factors that contribute toward developing scale and thus establishing a strong footing in the particular markets. We are listing some of the key factors below:
- Barriers to entry: Some organizations have natural cost prohibitive barriers to entry like utility companies or automobile plants. They require large investments. On the other hand, organizations can themselves influence and erect huge barriers to entry even though the barriers did not exist. Organizations would massively invest in infrastructure, distribution, customer acquisition and retention, brand and public relations. Organizations that are able to rapidly do this at a massive scale would be the ones that is expected to exercise their leverage over a big consumption base well into the future.
- Multi-sided platform impacts: The value of information across multiple subsystems: company, supplier, customer, government increases disproportionately as it expands. We had earlier noted that if cities expand by 100%, then there is increasing innovating and goods that generate 115% -the concept of super-linear scaling. As more nodes are introduced into the system and a better infrastructure is created to support communication and exchange between the nodes, the more entrenched the business becomes. And interestingly, the business grows at a sub-linear scale – namely, it consumes less and less resources in proportion to its growth. Hence, we see the large unicorn valuation among companies where investors and market makers place calculated bets on investments of colossal magnitudes. The magnitude of such investments is relatively a recent event, and this is largely driven by the advances in technology that connect all stakeholders.
- Investment in learning: To manage scale is to also be selective of information that a system receives and how the information is processed internally. In addition, how is this information relayed to the external system or environment. This requires massive investment in areas like machine learning, artificial intelligence, big data, enabling increased computational power, development of new learning algorithms, etc. This means that organizations have to align infrastructure and capability while also working with external environments through public relations, lobbying groups and policymakers to chaperone a comprehensive and a very complex hard-to-replicate learning organism.
- Investment in brand: Brand personifies the value attributes of an organization. One connects brand to customer experience and perception of the organization’s product. To manage scale and grow, organizations must invest in brand: to capture increased mindshare of the consumer. In complexity science terms, the internal systems are shaped to emit powerful signals to the external environment and urge a response. Brand and learning work together to allow a harmonic growth of an internal system in the context of its immediate environment.
However, one must revert to the science of complexity to understand the long-term challenges of a winner-take-all mechanism. We have already seen the example that what is good for the individual bull-elk might not be the best for the species in the long-term. We see that super-linear scaling systems also emits significant negative by-products. Thus, the question that we need to ask is whether the organizations are paradoxically cultivating their own seeds of destruction in their ambitions of pursuing scale and market entrenchment.
Scale represents size. In a two-dimensional world, it is a linear measurement that presents a nominal ordering of numbers. In other words, 4 is two times two and 6 would be 3 times two. In other words, the difference between 4 and 6 represents an increase in scale by two. We will discuss various aspects of scale and the learnings that we can draw from it. However, before we go down this path, we would like to touch on resource consumption.
As living organisms, we consume resources. An average human being requires 2000 calories of food per day to sustain themselves. An average human being, by the way, is largely defined in terms of size. So it would be better put if we say that a 200lb person would require 2000 calories. However, if we were to regard a specimen that is 10X the size or 2000 lbs., would it require 10X the calories to sustain itself? Conversely, if the specimen was 1/100th the size of the average human being, then would it require 1/100th the calories to sustain itself. Thus, will we consume resources linearly to our size? Are we operating in a simple linear world? And if not, what are the ramifications for science, physics, biology, organizations, cities, climate, etc.?
Let us digress a little bit from the above questions and lay out a few interesting facts. Almost half of the population in the world today live in cities. This is compared to less than 15% of the world population that lived in cities a hundred years ago. It is anticipated that almost 75% of the world population will be living in cities by 2050. The number of cities will increase and so will the size. But for cities to increase in size and numbers, it requires vast amount of resources. In fact, the resource requirements in cities are far more extensive than in agrarian societies. If there is a limit to the resources from a natural standpoint – in other words, if the world is operating on a budget of natural resources – then would this mean that the growth of the cities will be naturally reined in? Will cities collapse because of lack of resources to support its mass?
What about companies? Can companies grow infinitely? Is there a natural point where companies might hit their limit beyond which growth would not be possible? Could a company collapse because the amount of resources that is required to sustain the size would be compromised? Are there other factors aside from resource consumption that play into what might cap the growth and hence the size of the company? Are there overriding factors that come into play that would superimpose the size-resource usage equation such that our worries could be safely kept aside? Are cities and companies governed by some sort of metabolic rate that governs the sustenance of life?
Geoffrey West, a theoretical physicist, has touched on a lot of the questions in his book: Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies. He says that a person requires about 90W (watts) of energy to survive. That is a light bulb burning in your living room in one day. That is our metabolic rate. However, just like man does not live by bread alone, an average man has to depend on a number of other artifacts that have agglomerated in bits and pieces to provide a quality of life to maximize sustenance. The person has to have laws, electricity, fuel, automobile, plumbing and water, markets, banks, clothes, phones and engage with other folks in a complex social network to collaborate and compete to achieve their goals. Geoffrey West says that the average person requires almost 11000W or the equivalent of almost 125 90W light bulbs. To put things in greater perspective, the social metabolic rate of 11,000W is almost equivalent to a dozen elephants. (An elephant requires 10X more energy than humans even though they might be 60X the size of the physical human being). Thus, a major portion of our energy is diverted to maintain the social and physical network that closely interplay to maintain our sustenance. And while we consume massive amounts of energy, we also create a massive amount of waste – and that is an inevitable outcome. This is called the entropy impact and we will touch on this in greater detail in later articles. Hence, our growth is not only constrained by our metabolic rate: it is further dampened by entropy that exists as the Second Law of Thermodynamics. And as a system ages, the impact of entropy increases manifold. Yes, it is true: once we get old, we are racing toward our death at a faster pace than when we were young. Our bodies are exhibiting fatigue faster than normal.
Scaling refers to how a system responds when its size changes. As mentioned earlier, does scaling follow a linear model? Do we need to consume 2X resources if we increase the size by 2X? How does scaling impact a Complex Physical System versus a Complex Adaptive System? Will a 2X impact on the initial state create perturbations in a CPS model which is equivalent to 2X? How would this work on a CAS model where the complexity is far from defined and understood because these systems are continuously evolving? Does half as big requires half as much or conversely twice as big requires twice as much? Once again, I have liberally dipped into this fantastic work by Geoffrey West to summarize, as best as possible, the definitions and implications. He proves that we cannot linearly extrapolate energy consumption and size: the world is smattered with evidence that undermines the linear extrapolation model. In fact, as you grow, you become more efficient with respect to energy consumption. The savings of energy due to growth in size is commonly called the economy of scale. His research also suggests two interesting results. When cities or social systems grow, they require an infrastructure to help with the growth. He discovered that it takes 85% resource consumption to grow the systems by 100%. Thus, there is a savings of 15% which is slightly lower than what has been studied on the biological front wherein organisms save 25% as they grow. He calls this sub linear scaling. In contrast, he also introduces the concept of super linear scaling wherein there is a 15% increasing returns to scale when the city or a social system grows. In other words, if the system grows by 100%, the positive returns with respect to such elements like patents, innovation, etc. will grow by 115%. In addition, the negative elements also grow in an equivalent manner – crime, disease, social unrest, etc. Thus, the growth in cities are supported by an efficient infrastructure that generates increasing returns of good and bad elements.
Max Kleiber, a Swiss chemist, in the 1930’s proposed the Kleiber’s law which sheds a lot of light on metabolic rates as energy consumption per unit of time. As mass increases so does the overall metabolic rate but it is not a linear relation – it obeys the power law. It stays that a living organism’s metabolic rate scales to the ¾ power of its mass. If the cat has a mass 100 times that of a mouse, the cat will metabolize about 100 ¾ = 31.63 times more energy per day rather than 100 times more energy per day. Kleiber’s law has led to the metabolic theory of energy and posits that the metabolic rate of organisms is the fundamental biological rate that governs most observed patters in our immediate ecology. There is some ongoing debate on the mechanism that allows metabolic rate to differ based on size. One mechanism is that smaller organisms have higher surface area to volume and thus needs relatively higher energy versus large organisms that have lower surface area to volume. This assumes that energy consumption occurs across surface areas. However, there is another mechanism that argues that energy consumption happens when energy needs are distributed through a transport network that delivers and synthesizes energy. Thus, smaller organisms do not have as a rich a network as large organisms and thus there is greater energy efficiency usage among smaller organisms than larger organisms. Either way, the implications are that body size and temperature (which is a result of internal activity) provide fundamental and natural constraints by which our ecological processes are governed. This leads to another concept called finite time singularity which predicts that unbounded growth cannot be sustained because it would need infinite resources or some K factor that would allow it to increase. The K factor could be innovation, a structural shift in how humans and objects cooperate, or even a matter of jumping on a spaceship and relocating to Mars.
We are getting bigger faster. That is real. The specter of a dystopian future hangs upon us like the sword of Damocles. The thinking is that this rate of growth and scale is not sustainable since it is impossible to marshal the resources to feed the beast in an adequate and timely manner. But interestingly, if we were to dig deeper into history – these thoughts prevailed in earlier times as well but perhaps at different scale. In 1798 Thomas Robert Malthus famously predicted that short-term gains in living standards would inevitably be undermined as human population growth outstripped food production, and thereby drive living standards back toward subsistence. Humanity thus was checkmated into an inevitable conclusion: a veritable collapse spurred by the tendency of population to grow geometrically while food production would increase only arithmetically. Almost two hundred years later, a group of scientists contributed to the 1972 book called Limits to Growth which had similar refrains like Malthus: the population is growing and there are not enough resources to support the growth and that would lead to the collapse of our civilization. However, humanity has negotiated those dark thoughts and we continue to prosper. If indeed, we are governed by this finite time singularity, we are aware that human ingenuity has largely won the day. Technology advancements, policy and institutional changes, new ways of collaboration, etc. have emerged to further delay this “inevitable collapse” that could be result of more mouths to feed than possible. What is true is that the need for new innovative models and new ways of doing things to solve the global challenges wrought by increased population and their correspondent demands will continue to increase at a quicker pace. Once could thus argue that the increased pace of life would not be sustainable. However, that is not a plausible hypothesis based on our assessment of where we are and where we have been.
Let us turn our attention to a business. We want the business to grow or do we want the business to scale? What is the difference? To grow means that your company is adding resources or infrastructure to handle increased demand, at a cost which is equivalent to the level of increased revenue coming in. Scaling occurs when the business is growing faster than the resources that are being consumed. We have already explored that outlier when you grow so big that you are crushed by your weight. It is that fact which limits the growth of organism regardless of issues related to scale. Similarly, one could conceivably argue that there are limits to growth of a company and might even turn to history and show that a lot of large companies of yesteryears have collapsed. However, it is also safe to say that large organizations today are by several factors larger than the largest organizations in the past, and that is largely on account of accumulated knowledge and new forms of innovation and collaboration that have allowed that to happen. In other words, the future bodes well for even larger organizations and if those organizations indeed reach those gargantuan size, it is also safe to draw the conclusion that they will be consuming far less resources relative to current organizations, thus saving more energy and distributing more wealth to the consumers.
Thus, scaling laws limit growth when it assumes that everything else is constant. However, if there is innovation that leads to structural changes of a system, then the limits to growth becomes variable. So how do we effect structural changes? What is the basis? What is the starting point? We look at modeling as a means to arrive at new structures that might allow the systems to be shaped in a manner such that the growth in the systems are not limited by its own constraints of size and motion and temperature (in physics parlance). Thus, a system is modeled at a presumably small scale but with the understanding that as the system is increases in size, the inner workings of emergent complexity could be a problem. Hence, it would be prudent to not linearly extrapolate the model of a small system to that of a large one but rather to exponential extrapolate the complexity of the new system that would emerge. We will discuss this in later articles, but it would be wise to keep this as a mental note as we forge ahead and refine our understanding of scale and its practical implications for our daily consumption.
The Law of Unintended Consequence is that the actions of a central body that might claim omniscient, omnipotent and omnivalent intelligence might, in fact, lead to consequences that are not anticipated or unintended.
The concept of the Invisible Hand as introduced by Adam Smith argued that it is the self-interest of all the market agents that ultimately create a system that maximizes the good for the greatest amount of people.
Robert Merton, a sociologist, studied the law of unintended consequence. In an influential article titled “The Unanticipated Consequences of Purposive Social Action,” Merton identified five sources of unanticipated consequences.
Ignorance makes it difficult and impossible to anticipate the behavior of every element or the system which leads to incomplete analysis.
Errors that might occur when someone uses historical data and applies the context of history into the future. Linear thinking is a great example of an error that we are wrestling with right now – we understand that there are systems, looking back, that emerge exponentially but it is hard to decipher the outcome unless one were to take a leap of faith.
Biases work its way into the study as well. We study a system under the weight of our biases, intentional or unintentional. It is hard to strip that away even if there are different bodies of thought that regard a particular system and how a certain action upon the system would impact it.
Weaved with the element of bias is the element of basic values that may require or prohibit certain actions even if the long-term impact is unfavorable. A good example would be the toll gates established by the FDA to allow drugs to be commercialized. In its aim to provide a safe drug, the policy might be such that the latency of the release of drugs for experiments and commercial purposes are so slow that many patients who might otherwise benefit from the release of the drug lose out.
Finally, he discusses the self-fulfilling prophecy which suggests that tinkering with the elements of a system to avert a catastrophic negative event might in actuality result in the event.
It is important however to acknowledge that unintended consequences do not necessarily lead to a negative outcome. In fact, there are could be unanticipated benefits. A good example is Viagra which started off as a pill to lower blood pressure, but one discovered its potency to solve erectile dysfunctions. The discovery that ships that were sunk became the habitat and formation of very rich coral reefs in shallow waters that led scientists to make new discoveries in the emergence of flora and fauna of these habitats.
If there are initiatives exercised that are considered “positive initiative” to influence the system in a manner that contribute to the greatest good, it is often the case that these positive initiatives might prove to be catastrophic in the long term. Merton calls the cause of this unanticipated consequence as something called the product of the “relevance paradox” where decision makers thin they know their areas of ignorance regarding an issue, obtain the necessary information to fill that ignorance gap but intentionally or unintentionally neglect or disregard other areas as its relevance to the final outcome is not clear or not lined up to values. He goes on to argue, in a nutshell, that unintended consequences relate to our hubris – we are hardwired to put our short-term interest over long term interest and thus we tinker with the system to surface an effect which later blow back in unexpected forms. Albert Camus has said that “The evil in the world almost always comes of ignorance, and good intentions may do as much harm as malevolence if they lack understanding.”
An interesting emergent property that is related to the law of unintended consequence is the concept of Moral Hazard. It is a concept that individuals have incentives to alter their behavior when their risk or bad decision making is borne of diffused among others. For example:
If you have an insurance policy, you will take more risks than otherwise. The cost of those risks will impact the total economics of the insurance and might lead to costs being distributed from the high-risk takers to the low risk takers.
How do the conditions of the moral hazard arise in the first place? There are two important conditions that must hold. First, one party has more information than another party. The information asymmetry thus creates gaps in information and that creates a condition of moral hazard. For example, during 2006 when sub-prime mortgagors extended loans to individuals who had dubitable income and means to pay. The Banks who were buying these mortgages were not aware of it. Thus, they ended up holding a lot of toxic loans due to information asymmetry. Second, is the existence of an understanding that might affect the behavior of two agents. If a child knows that they are going to get bailed out by the parents, he/she might take some risks that he/she would otherwise might not have taken.
To counter the possibility of unintended consequences, it is important to raise our thinking to second-order thinking. Most of our thinking is simplistic and is based on opinions and not too well grounded in facts. There are a lot of biases that enter first order thinking and in fact, all of the elements that Merton touches on enters it – namely, ignorance, biases, errors, personal value systems and teleological thinking. Hence, it is important to get into second-order thinking – namely, the reasoning process is surfaced by looking at interactions of elements, temporal impacts and other system dynamics. We had mentioned earlier that it is still difficult to fully wrestle all the elements of emergent systems through the best of second-order thinking simply because the dynamics of a complex adaptive system or complex physical system would deny us that crown of competence. However, this fact suggests that we step away from simple, easy and defendable heuristics to measure and gauge complex systems.
The whole is greater than the sum of its parts. “Emergent properties” refer to those properties that emerge that might be entirely unexpected. As discussed in CAS, they arise from the collaborative functioning of a system. In other words, emergent properties are properties of a group of items, but it would be erroneous for us to reduce such systems into properties of atomic elements and use those properties as binding elements to understand emergence Some common examples of emergent properties include cities, bee hives, ant colonies and market systems. Out thinking attributes causal effects – namely, that behavior of elements would cause certain behaviors in other hierarchies and thus an entity emerges at a certain state. However, we observe that a process of emergence is the observation of an effect without an apparent cause. Yet it is important to step back and regard the relationships and draw lines of attribution such that one can concur that there is an impact of elements at the lowest level that surfaces, in some manner, at the highest level which is the subject of our observation.
Jochenn Fromm in his paper “Types and Forms of Emergence” has laid this out best. He says that emergent properties are “amazing and paradox: fundamental but familiar.” In other words, emergent properties are changeless and changing, constant and fluctuating, persistent and shifting, inevitable and unpredictable. The most important note that he makes is that the emergent property is part of the system and at the same time it might not always be a part of the system. There is an undercurrent of novelty or punctuated gaps that might arise that is inexplicable, and it is this fact that renders true emergence virtually irreducible. Thus, failure is embodied in all emergent systems – failure being that the system does not behave according to expectation. Despite all rules being followed and quality thresholds are established at every toll gate at the highest level, there is still a possibility of failure which suggests that there is some missing information in the links. It is also possible that the missing information is dynamic – you do not step in the same water twice – which makes the study to predict emergent systems to be a rather difficult exercise. Depending on the lens through which we look at, the system might appear or disappear.
There are two types of emergence: Descriptive and Explanatory emergence. Descriptive emergence means that properties of wholes cannot be necessarily defined through the properties of the pasts. Explanatory emergence means laws of complex systems cannot be deduced from the laws of interaction of simpler elements that constitute it. Thus the emergence is a result of the amount of variety embodied in the system, the amount of external influence that weights and shapes the overall property and direction of the system, the type of resources that the system consumes, the type of constraints that the system is operating under and the number of levels of sub-systems that work together to build out the final system. Thus, systems can be benign as in the system is relatively more predictable whereas a radical system is a material departure of a system from expectation. If the parts that constitute a system is independent of its workings from other parts and can be boxed within boundaries, emergent systems become more predictable. A watch is an example of a system that follows the different mechanical elements in a watch that are geared for reading the time as it ultimate purpose. It is a good example of a complex physical system. However, these systems are very brittle – a failure in one point can cascade into a failure of the entire system. Systems that are more resilient are those where the elements interact and learn from one another. In other words, the behavior of the elements excites other elements – all of which work together to create a dance toward a more stable state. They deploy what is often called the flocking trick and the pheromone trick. Flocking trick is largely the emulation of the particles that are close to each other – very similar to the cellular automata as introduced by Neumann and discussed in the earlier chapter. The Pheromone trick reflects how the elements leave marks that are acted upon as signals by other elements and thus they all work together around these signal trails to behave and thus act as a forcing function to create the systems.
There are systems that have properties of extremely strong emergence. What does Consciousness, Life, and Culture have in common? How do we look at Climate? What about the organic development of cities? These are just some examples of system where determinism is nigh impossible. We might be able to tunnel through the various and diverse elements that embody the system, but it would be difficult to coherently and tangibly draw all set of relationships, signals, effectors and detectors, etc. to grapple with a complete understanding of the system. Wrestling a strong emergent system would be a task that might even be outside the purview of the highest level of computational power available. And yet, these systems exist, and they emerge and evolve. Yet we try to plan for these systems or plan to direct policies to influence the system, not fully knowing the impact. This is also where the unintended consequences of our action might take free rein.
There are two models in complexity. Complex Physical Systems and Complex Adaptive Systems! For us to grasp the patterns that are evolving, and much of it seemingly out of our control – it is important to understand both these models. One could argue that these models are mutually exclusive. While the existing body of literature might be inclined toward supporting that argument, we also find some degree of overlap that makes our understanding of complexity unstable. And instability is not to be construed as a bad thing! We might operate in a deterministic framework, and often, we might operate in the realms of a gradient understanding of volatility associated with outcomes. Keeping this in mind would be helpful as we deep dive into the two models. What we hope is that our understanding of these models would raise questions and establish mental frameworks for intentional choices that we are led to make by the system or make to influence the evolution of the system.
Complex Physical Systems (CPS)
Complex Physical Systems are bounded by certain laws. If there are initial conditions or elements in the system, there is a degree of predictability and determinism associated with the behavior of the elements governing the overarching laws of the system. Despite the tautological nature of the term (Complexity Physical System) which suggests a physical boundary, the late 1900’s surfaced some nuances to this model. In other words, if there is a slight and an arbitrary variation in the initial conditions, the outcome could be significantly different from expectations. The assumption of determinism is put to the sword. The notion that behaviors will follow established trajectories if rules are established and the laws are defined have been put to test. These discoveries by introspection offers an insight into the developmental block of complex physical systems and how a better understanding of it will enable us to acknowledge such systems when we see it and thereafter allow us to establish certain toll-gates and actions to navigate, to the extent possible, to narrow the region of uncertainty around outcomes.
The universe is designed as a complex physical system. Just imagine! Let this sink in a bit. A complex physical system might be regarded relatively simpler than a complex adaptive system. And with that in mind, once again …the universe is a complex physical system. We are awed by the vastness and scale of the universe, we regard the skies with an illustrious reverence and we wonder and ruminate on what lies beyond the frontiers of a universe, if anything. Really, there is nothing bigger than the universe in the physical realm and yet we regard it as a simple system. A “Simple” Complex Physical System. In fact, the behavior of ants that lead to the sustainability of an ant colony, is significantly more complex: and we mean by orders of magnitude.
Complexity behavior in nature reflects the tendency of large systems with many components to evolve into a poised “critical” state where minor disturbances or arbitrary changes in initial conditions can create a seemingly catastrophic impact on the overall system such that system changes significantly. And that happens not by some invisible hand or some uber design. What is fundamental to understanding complex systems is to understand that complexity is defined as the variability of the system. Depending on our lens, the scale of variability could change and that might lead to different apparatus that might be required to understand the system. Thus, determinism is not the measure: Stephen Jay Gould has argued that it is virtually impossible to predict the future. We have hindsight explanatory powers but not predictable powers. Hence, systems that start from the initial state over time might represent an outcome that is distinguishable in form and content from the original state. We see complex physical systems all around us. Snowflakes, patterns on coastlines, waves crashing on a beach, rain, etc.
Complex Adaptive Systems (CAS)
Complex adaptive systems, on the contrary, are learning systems that evolve. They are composed of elements which are called agents that interact with one another and adapt in response to the interactions.
Markets are a good example of complex adaptive systems at work.
CAS agents have three levels of activity. As described by Johnson in Complexity Theory: A Short Introduction – the three levels of activity are:
- Performance (moment by moment capabilities): This establishes the locus of all behavioral elements that signify the agent at a given point of time and thereafter establishes triggers or responses. For example, if an object is approaching and the response of the agent is to run, that would constitute a performance if-then outcome. Alternatively, it could be signals driven – namely, an ant emits a certain scent when it finds food: other ants will catch on that trail and act, en masse, to follow the trail. Thus, an agent or an actor in an adaptive system has detectors which allows them to capture signals from the environment for internal processing and it also has the effectors that translate the processing to higher order signals that influence other agents to behave in certain ways in the environment. The signal is the scent that creates these interactions and thus the rubric of a complex adaptive system.
- Credit assignment (rating the usefulness of available capabilities): When the agent gathers experience over time, the agent will start to rely heavily on certain rules or heuristics that they have found useful. It is also typical that these rules may not be the best rules, but it could be rules that are a result of first discovery and thus these rules stay. Agents would rank these rules in some sequential order and perhaps in an ordinal ranking to determine what is the best rule to fall back on under certain situations. This is the crux of decision making. However, there are also times when it is difficult to assign a rank to a rule especially if an action is setting or laying the groundwork for a future course of other actions. A spider weaving a web might be regarded as an example of an agent expending energy with the hope that she will get some food. This is a stage setting assignment that agents have to undergo as well. One of the common models used to describe this best is called the bucket-brigade algorithm which essentially states that the strength of the rule depends on the success of the overall system and the agents that constitute it. In other words, all the predecessors and successors need to be aware of only the strengths of the previous and following agent and that is done by some sort of number assignment that becomes stronger from the beginning of the origin of the system to the end of the system. If there is a final valuable end-product, then the pathway of the rules reflect success. Once again, it is conceivable that this might not be the optimal pathway but a satisficing pathway to result in a better system.
- Rule discovery (generating new capabilities): Performance and credit assignment in agent behavior suggest that the agents are governed by a certain bias. If the agents have been successful following certain rules, they would be inclined toward following those rules all the time. As noted, rules might not be optimal but satisficing. Is improvement a matter of just incremental changes to the process? We do see major leaps in improvement … so how and why does this happen? In other words, someone in the process have decided to take a different rule despite their experiences. It could have been an accident or very intentional.
One of the theories that have been presented is that of building blocks. CAS innovation is a result of reconfiguring the various components in new ways. One quips that if energy is neither created, nor destroyed …then everything that exists today or will exist tomorrow is nothing but a reconfiguration of energy in new ways. All of tomorrow resides in today … just patiently waiting to be discovered. Agents create hypotheses and experiment in the petri dish by reconfiguring their experiences and other agent’s experiences to formulate hypotheses and the runway for discovery. In other words, there is a collaboration element that comes into play where the interaction of the various agents and their assignment as a group to a rule also sets the stepping stone for potential leaps in innovation.
Another key characteristic of CAS is that the elements are constituted in a hierarchical order. Combinations of agents at a lower level result in a set of agents higher up and so on and so forth. Thus, agents in higher hierarchical orders take on some of the properties of the lower orders but it also includes the interaction rules that distinguishes the higher order from the lower order.
A walled garden in the context of the internet relays to full control of the user experience. In other words, it is a methodology that is deployed to ensure closed or exclusive content for consumption by a set of users.
One of the prime examples of the walled garden in the technology world is the Apple ecosystem. This constitutes the interplay or hardware and software intricately tied in a manner that precludes any legal way to contaminate the harmony of user experience. Well, at least that is what Apple has vociferously claimed over the ages. They have argued that adopting the walled garden has served to be a bedrock of innovation, and the millions of applications on the Appstore bears out that fact. But the open source folks argue otherwise.