Idea in Brief
The Challenge
Companies have ever shorter life spans because they are failing to adapt to the increasing complexity of the business environment. Too often they pursue approaches to strategy that emphasize short-term performance over long-term robustness.
The Analysis
Like biological species, companies are “complex adaptive systems” that continually evolve in hard-to-predict ways. Local interactions cascade and reshape the entire system; the new structure then influences individual agents, resulting in further changes to the system.
The Solution
Six principles that make a natural CAS robust apply to companies, which should:
- maintain heterogeneity of people, ideas, and endeavors
- sustain a modular structure
- preserve redundancy among components
- expect surprise, but reduce uncertainty
- create feedback loops and adaptive mechanisms
- foster trust and reciprocity in their business ecosystems
Companies operate in an increasingly complex world: Business environments are more diverse, dynamic, and interconnected than ever—and far less predictable. Yet many firms still pursue classic approaches to strategy that were designed for more-stable times, emphasizing analysis and planning focused on maximizing short-term performance rather than long-term robustness. How are they faring?
