I have recently read a very interesting article of a Clay Shirky who refers to a Joseph Tainter and his book “The collapse of Complex Societies”. In the article Shirky claims that when structures get to complex and difficult to understand for their “inhabitants” and only a little “elite” understands how to navigate in the complex structure, they will eventually collapse and new and more adaptable structures will rise from their ashes. My thesis is; will this be the reason for the European Crisis and for big enterprises?
Tainter explains in his book that structures as the Roma Empire and the Soviet Union collapsed, even though these regimes had complex social structures and even advanced technology they could not survey. These regimes had developed a bureaucracy, which had a firm grip of the power structures and despite of that they collapsed. Tainter explains the collapses with the cultural sophistication of the societies. I will add two more dimensions into this explanation:
- The lack of public support of these complex structures – “The people do not understand what it lead to”
- The lack of proper communication and integrating of the people in the development of the structure
Do we have a similar story in the European Union?
One can say that we have a structural crisis in EU as well as an economical crisis. Compared to the Roman Empire and the Soviet Union, EU has sought to create a structure that can accommodate all countries that just showed a desire to participate. EU forgot to ensure that Europe has different speeds in the development of democracy and other structures as financial accountability. To counter this, the "European empire" has built a complex of officer structure, which helps to define the rules and guidelines in all key areas. This complexly structure is not based on each member's cultural and developmental stage. It is a structure designed for bureaucrats, by bureaucrats. The complexly structure is one of the reasons that countries like Greece, Portugal and Ireland has managed to participate in the Euro cooperation and with-out solid economic power has issued bonds for sale to the “hungry” European banks as they were told that it is solid gold. These countries has with their membership of EU developed a Society which when they entered was fare behind the other members and gained a similar society as the “old” members in a 20 year period. This has taken the “old members” more than 60 years to reach the same level of social and economic development. To move from a simple rural agricultural structure to a complex EU structure demands cultural and social changes for the new member states. This has been a problem for several of the member states south of the Alps. It is a fact a number of these countries like Greece, Spain and Portugal are in trouble. Some of these countries are, close to a collapse. The collapse of these countries threaten the solid countries north of the Alps, and herby threaten the entire European structure. According to Tainter complex societies collapse because, when some stress comes, those societies have become too inflexible to respond. Could these societies just re-tool in less complex ways? Tainter answer is - When societies fail to respond to reduced circumstances through orderly downsizing, it is not because they do not want to, it is because they can’t. One reason they can’t is that the public opinion has turned against the complexity due to lack of understanding in the public. When this happens, the cultural difference in the member country and the Central EU has departed so much that it is inventible that a collapse will happen. This is the most appropriate response according to Tainter.
Is it possible to avoid collapses in complex structures?
Even though Tainter says that it is impossible to avoid a collapse when the structure is too complex, I believe that you can postpone the collapse by communicating the circumstances with your population as a country and as a company your employees. Social Media is a good example of how complex situations become down scaled and easy to access problems, solved outside the complex organizations/structure by peer-to-peer communications.
The complexity problem will create new and simpler structures that will bring value to societies and organizations who adapt them. A new world order and another economic system will appear when the old and complex system turns negative and looses value towards its population an organizations. The Warsaw pact community is a good example of that. These societies was plagued by an inability to react and even communicate their message to the population, their complexity and efficiency had reached a point where it becomes suddenly and dramatically simpler up to 1989 – which was the moment of collapse.
Could a collapse also happen in an enterprise?
Big companies or enterprises do have complex structures and the bigger they get the more complex and process oriented they get. This lead to the situation that nothing (no costumer contact no sale) can be done simple. The complexity increase with the size of the enterprise and the decrease of new ideas and employees happens. In the period of 1990 – 1994, small entrepreneurs (100 and less employees) generated approximately 8 million new jobs. At the same time, the complex enterprises (100 and more employees) destroyed more than 3 million jobs.
Take the case of selling a service to a costumer, how would the Entrepreneur react and how would the enterprise react?
The entrepreneur would look into the need of the costumer and make the service available for the costumer. The enterprise would start a process attaching an offering manager, to the case, to help it progress. Next step would be having the service price looked through by the company lawyer. A third step would be to tell the costumer that they needed 4 weeks to deliver the price and product. What happened; the complexity of the selling process has increased to a “monster of processes”. What will the enterprise do – virtually nothing until the costumer reacts and even then not being able to do anything, as they fail to respond to reduce circumstances through orderly downsizing, it is not because they don’t want to, it is because they can’t . The enterprise has build a process system where there is no way to make things a little bit simpler. The enterprise edifice becomes a huge, interlocking system not readily amenable to change. The scenario could end in two ways:
1. The costumer agree to wait for the enterprise to serve.
2. The costumer reject the order and starts buying from an organization with less complex structures. Neither scenarios; will in the long run suite the costumer and the enterprise will loose costumers. This will lead to a collapse for the enterprise. Could you as an enterprise avoid this collapse – you could postpone it by communicating your message to the costumers in a clear way. To avoid it, you have to change culture and actually have a collapse, simply to get a method to simplification.
The answer to the question; can an enterprise collapse the answer is YES.
What is the outcome would it create a new world order?
I do not believe in revolution or violent uprisings but when ecosystems change and inflexible institutions collapse there will be a possibility to create a new world order. When members of the old system disperse, abandoning old beliefs, experimenting with new things and making a living in a different way than members used to do, could lead to a new world order. There is a compensating advantage for the people leaving the old system: When the ecosystem stops rewarding complexity, people who turn to a simple structure will be the new success and will be the one who would know what happens in the future. A new and simple world order has to occur, to get countries and enterprises, on economic growth again. We have seen it before and we will see it again new ways of communicating has already created enormous potential to create new jobs and possibilities. We have to participate in that direction, to be able to solve the problems of tomorrow.
