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.