Terminal equilibrium or high-level equilibrium trap

I have been struggling for ages to firstly remember the term, “high-level equilibrium trap” (not my idea but a good one), and then to find a better term for it; “terminal equilibrium”.

The term high-level equilibrium trap was coined by Patee to describe China under the Imperial Dynasties; satisfactory, locked-in and unable to change. When confronted with Western contact in the mid-1850s, it collapsed, leaving a governance void for nearly a century, until the Communists re-united the country.  http://en.wikipedia.org/wiki/Qing_Dynasty

To a point, the USA is suffering terminal equilibrium, holding onto an entrenched, out-dated system. The same thing probably happened to Britain after WW II.

In terms of my theory it is a long-established multi-level deep structure, built up over centuries and held in place by path dependency, (much more than Australia’s). The USA has some change at minor levels, but very difficult to change deeper levels of structure; gun laws, medicare etc. It is in danger of becoming more isolated as it moves toward self-sufficiency in energy via coal seam gas. It does not need to protect evil empires like Saudi Arabia if it doesn’t need their oil. They are moving toward terminal equilibrium and ill-prepared or incapable to face major threats or change.

Yes, a much better term, “terminal equilibrium”. High-level equilibrium trap is perhaps a more theoretical description, at least for me, but too hard to remember or too abstract. I could write a book on terminal equilibrium, but it is just a small part of my overall theory!

A quick Google on it shows some people have used the term, but not in the context I am suggesting, especially as part of my overall theory.

Endnote

This is part of identifying a social phenomena by naming it. The terms are not jargon, rather theoretical names.

Deep-level equilibrium trap?

 

Differentiating the scale of change: the multilevel structure perspective (draft)

Differentiating the scale of change: the multilevel structure perspective (draft)

The amount of change occurring tends to be exaggerated, sometimes to the point of fear of an “doomsday” event within our lifetime. It can occur in many areas such as politics, climate change health, and technology. This fear is used by some to further their own agenda, such as the mass media; it sells newspapers, politicians, and some scientists wanting money for their research, among many others.

The reality is a little different if considered in a longer time scale. The degree of change now is probably far less than during major periods of disruption, such as during the first and second world wars and their aftermath, during the industrial revolution in Britain in the 1800s. That is not to say there have been significant periods of change in the last few decades; the change in the role of women in the West, the computers (specifically micro-computers such as the personal computer, imbedded computers in cars, phones, and TV) and huge networks of PCs in business and internet), the on-going tension of the West with Islam, to name a few.

Multilevel structure is able to give considerable insight into the way change is perceived. In multilevel structure there is much change at less-fundamental levels, but progressively less change at more fundamental levels.

Change at less fundamental change creates much “noise” but is relatively superficial. Fashion in clothing follows a seasonal pattern each year. Fashion in automobiles has a longer time frame, annual models, new vehicle forms such as sports utility vehicles (SUV) but tends fairly insignificant. The hysteria of a new model Apple iPhone or iPad verges on the ridiculous. The perception of these relatively minor changes are amplified by the mass media who have the ability to report minor events from all over the world, celebrities, accidents, natural disasters, political upheaval and technological change. People feel swamped by change, albeit mainly minor change at less fundamental levels.

Change at more fundamental levels is quite different to minor change. With a multilevel structure, a change at more fundamental level affects all less fundamental levels. Further, the propagation of such change can occur over years or decades; such as has occurred with the changing role of women in the West that started in the 1960s; partially as a result of the contraceptive pill, and the infiltration of computers in our lives that began in the late 1970s with the first microcomputers and personal computers; the Apple II and the IBM PC.

Change at fundamental levels is not necessarily quiet; the events of September 11 2001 in New York, the Global Financial Crisis in 2008 or the election of neo-conservative politicians such as Thatcher or Reagan in the early 1980s, shook much of the world (Black Swan or Outlier events, to be discussed latter). However, the propagation of their effects were emergent over a period of years, as the less fundamental levels of multilevel re-formed based on the change to more fundamental levels.

The problem is that people have trouble differentiating between the uncommon changes at more fundamental levels and the constant changes at less fundamental levels. This difficulty is compounded when small events, the invention of the pill or microcomputer, eventually trigger change at more fundamental levels; the butterfly effect,( to be discussed latter).

Resilience, the ability to weather change, occurs because it is very difficult to change more fundamental levels of multilevel structure. Usually the best prediction of the future is more of the same, with the occasional hiccup, as has been the case in the West since WW II.

Resilience is why a doomsday is unlikely. Even with a significant change to a fundamental level of multilevel structure, the less fundamental levels will evolve and re-form over time. Some climate alarmists suggest horrific changes within fifty years. The more likely outcome is the environment will change and adapt to such slow changes; without the doomsday outcome.

However, sudden major changes can occur. Again with climate change, given the poor understanding of discontinuous climatic events, like the dramatic El Nino-La Nina that have been occurring in the Pacific Ocean periodically since living memory, more dramatic and unpredictable climatic events, like the reversal of sea currents in the Atlantic are possible. These are sudden, unpredictable climatic changes that can, and have occurred in the past.

While resilience or even equilibrium, a common assumption of economists, dramatic changes can occur. This is where fundamental levels of multilevel structure suddenly change, throwing less fundamental levels into disarray.  Even so, the fundamental levels will re-form to a new order and life will go on. In evolutionary biology, such events are known as punctuated equilibrium, long periods of “little change punctuated by short periods of rapid change” at many levels. The emergence of mammals with the demise of dinosaurs after an asteroid impact is a large scale example.

The point of this post is to illustrate how the concept of a multilevel structure gives a means of separating minor and major changes, as well as being aware of the different forms of change and the levels at which they occur or propagate to, such as change at a minor level propagating to a more fundamental level.

PS    One of my intents is to show how many of the ideas of recent management books can be explained within a broader theory; Outliers, Tipping Point, Black Swan, Robustness (forthcoming).

Multilevel Structure of organisations (draft)

Introduction. The idea of the multilevel structure of organisations is a core concept.  ??

Levels. Multilevel structure is the network or links that connects information, in its widest sense, together. It is multi-level in that some levels are more fundamental than others.  In an organisation’s multilevel structure, the fundamental levels are the core beliefs, culture and knowledge that provide the cohesion or unity that allows the organisation to function and differentiate itself from other organisations. These fundamental levels may not even be recognised as they are so deeply ingrained that they are taken as given to most people. At less-fundamental levels are customs, traditions and knowledge that provide more functionality. At the least fundamental levels, while imbedded in more-fundamental levels, are fashions, conventions, relationships and knowledge, which are part of day-to-day life.

Structure is the retention mechanism of change. It is multilevel structure that the processes and dynamics of change act upon.  It is parts of multilevel structure, as a retention mechanism, that re-configure when change is achieved.

Path-dependency- History matters!  Multilevel structure arises from the organisation’s history, through the centuries, decades, years and so on.  It is a reflection of past events, leaders, relationships, knowledge, culture and beliefs, each building on or demolishing what has gone before.  As such, multilevel structure is a structured artefact of history and it is what it is because of its history.  To begin to understand, or successfully change multilevel structure, you must do so in the context of its history.  History matters!  Put more generally, multilevel structure is path dependent; where it is now is a product of where it has come from. Because of path dependency, each organisation is unique.

Levels limit change. A crucial feature of multi-level structure is that fundamental levels are difficult or near impossible to change, while less-fundamental levels are progressively easier to change.  As such, there is considerable and on-going change at the least-fundamental levels, but less and less change at more and more fundamental levels.  As a result of the nesting of levels, a change at a more fundamental level will disrupt all levels less fundamental than it.  Similarly, a change at a less-fundamental level will not usually affect more-fundamental levels. In most circumstances multilevel structure resists change or can even revert a change back to an earlier state, because of the inertia of the more fundamental levels.

Punctuated change.  Change at more fundamental levels, resulting in consequent change at less fundamental levels is “punctuated-equilibrium”, long periods of little change punctuated by relatively short periods of rapid and extensive change. In exceptional circumstances, change at less fundamental levels can lead to change at more fundamental levels, resulting in major change through the organisation and even its environment; the “butterfly-effect” of complex systems (black swan…??),  discussed later??. 

Levels are infinitely complex. Each level of multilevel structure is infinitely complex, in that it is not possible to fully understand it, even for the collective minds people or experts at that level.  As such, multilevel structure itself is infinitely complex. To be discussed further re systems theory and bicycle analogy?? 

Simplifying complexity.  The complexity of each level would seem to be a barrier to our existence and functionality. We manage by simplifying or seeing broad patterns amid complexity of the level we work as well as other levels.  Within one organisation we have partially shared beliefs and language, making it possible to interact with others without knowing all the detail.  For example, we can use technology such as a mobile phone or computer without knowing the incredible complexity in such technological systems.  However, we tend to specialise our knowledge in one area at one level of multilevel structure and only have a functional or superficial knowledge of levels above or below our own level.  An organisation’s accountant will have a detailed understanding of the accounts of that organisation, but have a more limited understanding of the organisations production or operational technology as that is the domain of the engineers.  Neither profession is probably aware of the detailed relationships between the organisation’s departments or people.  They usually have enough knowledge to get by, but are prone to “surprises” from areas beyond their expertise.

Path-dependency and complexity inhibits competitors.  Trying to imitate another organisation can be very difficult as the imitator almost needs to mimic the history of the other organisation to achieve the same structure and competencies. Leading firms in their industry usually have a chequered history of successes and failures; “what doesn’t kill you makes you stronger”. To be discussed further??

Structure both constrains and but enables action. In somewhat of a contradiction, multilevel structure both constrains action because of the inertial effects of the more fundamental levels, but enables action because of the coordinated capabilities or competencies of the organization. A large manufacturing firm, while difficult to change, can produce unique products that competitors may have difficulty in imitating. However, the inertia of multilevel systems can inhibit adaptation or innovation leading to the demise of an organization if there is a major change in its environment; “creative destruction”. The constrain-enable (and specialist-generalist??) paradox will be discussed further??

 Conclusion. Tell them what I told them??  

References and notes

Multilevel structure- Simon 1961,1969.

 Deep structure- Gersick 199?, and others

Creative destruction- Schumpeter

My academic papers, for those that want to read ahead

I have written a number of academic papers related to my emerging book. Some were published, others were sent for publication, some are completed drafts. All were written in 2001 or before, hence do not have references to more recent work. Those that have been published, only a working draft is included; the full paper is available through the usual channels.


Punctuated equilibrium: A new view of complexity and chaos: https://docs.google.com/open?id=0B1Rz-TiROearNmJiNWU4ODItNzU2OS00ZDIyLWFiZWUtYmEzNDA0MTQ4NTZh

Rigor in theory-building from cases
https://docs.google.com/open?id=0B1Rz-TiROearOTY0ZmZhNzMtOTFmYi00NTI3LTg3NmYtZmUwNGRhZjQ4ZjNl

Endnotes 15 Oct 2011

Endnotes
 

Audience. The book is being written primarily for practising managers, but will be of interest to academics and students.

Writing style. I will write in a popular style, rather than academic, however I will use endnotes for further discussion and references.

Jargon? My writing may seem to use management jargon. I might briefly reflect on why terms or even new words are used. In any science, naming a phenomenon is to identify it. Black hole has a specific meaning in physics. Musca domestica is the scientific name for the house fly, to differentiate it from all the other flies in the world. The same practice is used in the social sciences, including business management. Value chain has a specific meaning. Unfortunately some words have become part of common language but their meaning corrupted from its original. Bureaucracy is an example, originally conceived to describe an efficient means of business structure and operation (Weber), but commonly viewed as quite the opposite.

Overview

Overview

Given the importance of change in businesses, you would think it would be well theorised. It is not, otherwise my writing would be superfluous. There are many books and papers on the subject but none contain a general theory, more bits of theory or consultant’s atheoretical recipes. Further, theory development on the subject has been slow (something I intend to explain why with my own theory).

The main ideas can need to be separated out:

·         Multilevel structure (deep structure). “The general scheme of things”, the complex ordering of society, the entity in which change occurs. The main point is that it is multilevel; hence revolutionary change (at more fundamental levels) through to minor change such as the seasonal change in fashions (an annual cycle) is possible. It is multilevel structure that the processes of change act upon.  It is multilevel structure, as a retention mechanism, that re-configures when change is achieved. DNA is a biological analogy. Multilevel structure has a number of features: It is a product of its past- history matters, it both enables and constrains change, …

·         Processes of change. There are a number of different processes that can achieve change, potentially at any level of multilevel structure:

o   Emergent change resulting from an unexpected event such as a new technology, climatic events, or at the extreme, a meteor hitting the earth

o   Programmed change. Programmed change has strongly predetermined nature and has at least two distinct forms.

§   Purposeful change (Design). It is a process used by people, which uses a generic process of design, formalised within the professions, in terms of designing a plan, an investment, a product, a technology, an organisational structure, an experiment or a medical treatment.

§  Cyclic change.  Cyclic change includes “natural” cycles, such as human development, but extends to product lifecycles or business cycles, where a predetermined program is underway.

·         Dynamics. Dynamics is the way processes interdependently interact with multilevel structure as change occurs.

o   Juxtaposition. Juxtaposition is the relative position between entities in both time and space. One of the most critical forms of juxtaposition is isolation. Innovations tend to appear in isolation to the mainstream. Further, time is relative.  The time scale for change at the less fundamental levels tends to be short, days or weeks, whereas change at more fundamental can be decades or centuries apart, although the period of change can be relatively short (punctuated equilibrium). Events that occur in one time period in one location can have unforeseen consequences for another place in another time (exaptation). Similarly a small event in one place can trigger a much larger event in another (butterfly effect)

o   Feedback loops. Feedback loops occur when some of the output of a process feeds back to the input of the process. A positive feedback loop occurs when the output of a process leads to even more of the same output. Stock market booms and busts are positive feedback loops as either virtuous or vicious cycles. Negative feedback loops are used to temper the output in order to achieve stability. Central banks use interest rates in an attempt to control the growth of the economy, raising them to slow it, lowering it to stimulate them. Not raising interest rates in a fast growing economy can become a positive feedback loop and create a bubble. Major changes are usually driven by positive feedback loops, virtuous or vicious.

o   Control systems. Control systems are inherent to any ordered system or society; it is what makes them stable and the process by which an attempt at orderly change can be attempted. Personal experience illustrates the difficulties in attempting to make a modest change or even keep stability in society, environmental or mechanical systems. Control systems at their simplest are concerned with the rate and extent of change of one thing on the desired output while avoiding instability or undesired change. Altering the hot and cold taps on a shower to achieve a desired temperature is a simple example.

o   Competition and cooperation. “Firms survive by not competing”. The aim of business strategy is to create a niche in the market to avoid direct competition with similar firms. Competition, in the sense of “free markets” is relatively rare in business and not very profitable for the firms that do. There are multitudes of ways to avoid direct competition, as any book on business strategy will elaborate. Somewhat paradoxically, cooperation, not in the sense of collusion, is very common but not as well recognised or discussed. Cooperation of businesses in a value-chain, from supplies through to end consumers is common and a feature of business systems like “just-in-time” manufacturing.

These ideas, of structure, processes and dynamics,  will seem daunting, especially their interaction. However they can be explained in simple language without mathematics and can be illustrated with real case studies or vignettes.

 These ideas can be used to explain seemingly paradoxical or unexpected events as well as the anticipated ones.

A key concept I want to convey is in understanding events and outcomes rather than predicting them. The ideas go even further and challenge the ability to predict future events and paths.  However by understanding how a system works gives insight into how to interact with it.

Preface

Preface

I have been writing a book on the theory of change over a number of years. I intend to publish parts of the book here for comment and just to keep the thing moving. Eventually I intend to publish my ramblings as a readable book aimed at managers, although the theory is much more generalizable.

My interest in change started while working as a manager of an engineering research group that concentrated on achieving major changes in existing industries, but of most interest, in assisting new industries, like coffee growing in North Queensland.

I have been working on the theory of change since doing my PhD in the early 1990s, especially while an academic at a university. While there, I published a number of papers and wrote, but never published others. I will put some of them here for those interested in the more theoretical side.

For medical reasons I retired in 2001. Somewhat serendipitously, we lived overseas for a number of years where I had the space to start writing again and reflect on vastly different social systems. By writing, I was able to get things out of my head and to see where the gaps were. This is another reason to be writing this blog.

Enough background for the moment; time for content.