COMPLEXITY THEORY IN ACTION

This case study explores the e¡orts made by Humberside Training and Enterprise Council under the leadership of its Managing Director (MD), Peter Fryer, to transform itself into a ‘learning organization’ by making use of complexity theory. The account is taken from material written by Frances Storr and Peter Fryer (and available on Peter Fryer’s website at

www.trojanmice.com), and from the ¢ndings of a PhD student of mine, Maria Ortegon (see Ortegon, 2002), who was invited to study the later stages of the process. Peter Fryer (in press) has recently provided a further account.

Training and Enterprise Councils (TECs) were established by govern-ment to promote local economic developgovern-ment by ensuring the provision of appropriate training and encouraging businesses to take advantage of the opportunities made available. In 1998 Humberside TEC had approximately 150 sta¡ and a budget of around »30 million with which to reach its objectives.

Humberside TEC determined that it would achieve its purposes better if it could become a ‘learning organization’ and, during the second half of the 1990s, a number of initiatives were undertaken designed to bring this about. These included: the establishment of action learning groups; the introduction of 360^appraisal; experiments with soft systems thinking; and various other activities designed speci¢cally to promote learning, such as the MD’s ‘serious thinking sessions’ and the installation of an electronic bulletin board called CollabraShare.

During this period it became clear that what the TEC hoped to achieve, and much of what it was trying to do, was compatible with and could be better understood and facilitated using ideas from the emerging ¢eld of complexity theory. In ‘Becoming a learning company’, Storr explains that

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complexity theory demands a shift from a command-and-control style of management to one more suitable to organizations viewed as complex evolving systems. Complexity theory is a holistic rather than systematic approach and emphasizes creativity and change rather than stability. When organizations are pushed far from equilibrium, self-organizing processes occur naturally and they become capable of generating more variety and responding more £exibly to their environments. Sustaining this ‘edge of chaos’ state is essential because today’s business environment is constantly changing as a result of decisions made by the tightly interconnected organiza-tions inhabiting it. Using the ‘¢tness landscape’ analogy, only £exible organizations are able to take adaptive walks to higher ¢tness points.

The TEC set out on the road to implementing complexity theory ^ although not in any tightly planned manner. Appropriate initiatives were introduced when they felt right rather than according to a linear trajectory.

Crucial to the whole process were the leadership style adopted by the MD and a number of clearly identi¢ed organizational design principles.

The MD gave a clear lead in pushing the TEC to the edge of chaos. He described his own role as: explore the environment, share feedback, clear pathways, give oceans of support and bugger things up! At the same time, he sought to contain anxiety by stressing that mess and confusion were inevitable, even to be welcomed. In this vein, supportive messages were conveyed, such as ‘the best ideas do not always come from the top’,

‘control is only an illusion’ and ‘people in the organization want to do a good job and will do so given the right support’.

The organizational design principles were articulated in such a way that people who were not interested in the technicalities of complexity theory could still nevertheless understand its essence and make use of its main ideas. In other words, they were the TEC’s means of operationalizing the concepts of complexity theory. There were three principles: ‘make connec-tions’, ‘learn continuously’ and ‘make processes ongoing’.

If the TEC was to survive and thrive, it was seen as essential that it be highly interconnected both internally and externally. Strong networking allows information and knowledge to £ow, breeds creativity and o¡ers new opportunities for action. Various mechanisms were employed to encourage networking. Developments, such as moving to new premises and the 360^ appraisal, were planned by cross-TEC groups. A new role was created with the remit to facilitate networking. Regular conferences and learning sessions were held for all sta¡. Informality and accessibility to managers at all levels, especially the MD, became the norm. Forms of dialogue, aimed at ensuring win^win rather than win^lose outcomes, were introduced to help overcome

barriers to communication. The ‘messages’ conveyed to support ‘making connections’ were ‘everyone can talk to everyone and should’, ‘everyone is responsible’ and ‘network extensively’.

The TEC needed to learn continuously if it was to improve its perform-ance and be responsive to its coevolving and rapidly changing ¢tness landscape. Both single-loop and double-loop learning, involving a radical shift in world view, were essential. To ensure continuous learning, TEC sta¡ needed to develop sophisticated thinking skills. They were encouraged to attend ‘thinking skills modules’ as well as the MD’s ‘serious thinking sessions’. The ‘whole brain model’ was introduced as a way of helping people to understand di¡erent modes of thinking. Sta¡ completed a ‘devel-opment activity sheet’ each month, setting out what they had learned.

These were read and followed-up by the MD. The messages conveyed to support ‘learn continuously’ were ‘love mistakes to death’, ‘respond to the environment’ ‘learn by doing’, ‘be comfortable with the uncomfortable’, and ‘think out of the box’.

‘Make processes ongoing’ was meant to stress that the TEC was a self-organizing system and that structures and strategy should therefore follow rather than dictate what needed doing. To prosper in a continuously changing environment, learning, planning and evaluating had to be ongoing. This degree of £exibility and £uidity could only be obtained if controls were dropped and sta¡ trusted to use their own judgement and exercise responsibility. TEC policies were changed to ensure they were related to outcomes rather than following procedures and that they were premised on the best people in the organization rather than the one or two who could not be trusted. Fixed working hours were abolished as long as the job got done. The expenses policy was simply to reimburse any reason-able expense incurred on TEC business. Any member of sta¡ attending a meeting was granted the authority to commit the organization there and then. Sta¡ were made responsible for their own appraisal under the 360^ scheme. A favourite analogy used by Peter Fryer, to support the notion of

‘make processes ongoing’, likened rules and regulations to the stabilizers on a bicycle. They are useful when you are learning to ride, but a hindrance once you are able to cycle. Furthermore, the best way to teach someone to ride a bike is to provide supportive guidance, but then to let go when the time is right.

Storr and Fryer do not claim that a perfect result was achieved in the TEC on all the control parameters listed by Stacey as needing attention if the

‘edge of chaos’ state is to be reached and sustained. They conclude that at any one time certain parts of the organization exhibited chaos while others

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were much more stable. Nevertheless, the informal system was engaged to handle information; ‘valuing the di¡erence’ became embedded in people’s thinking; explicit attention was given to connectivity; sta¡ were assisted in dealing with high levels of anxiety; and hierarchy was combined with giving people self-responsibility. As a result the whole system was robust enough to tolerate a creative mixture of stability and instability. External auditors rated the performance of Humberside TEC against its objectives very highly indeed.

Maria Ortegon, as a participant^observer during the later stages of the complexity programme, was able to judge the impact of the changes made.

In her view, thanks to the language used in setting out the organization design principles, the main ideas of complexity theory were relatively easily absorbed in the TEC. People worked out the implications of the new concepts for themselves. Terms such as self-organization and the edge of chaos became part of the jargon used by sta¡ to understand their situation.

In this way the essentials of complexity theory were assimilated into the culture of the organization and began to change values and actions as people found alternative ways of doing things.

Observing one self-managed team of around 30 consultants, within the

‘investors in people’ directorate, Ortegon saw initial uncertainty develop into increasing con¢dence. People began to enjoy working in this way, collective decisions were taken, commitment was gained and creativity was enhanced. The team began to learn how to learn and to think more strategically about their role in the organization.

For those who witnessed the introduction of complexity theory to Humberside TEC, two questions continue to loom large. The ¢rst is whether the TEC, as a medium-sized organization with a high degree of interconnectivity, provided a rather favourable environment for testing the ideas of complexity theory. The second is whether the paradox of using command and control to get rid of command and control can ever be overcome.