reality as an integrated hierarchy of organizations
of matter and energy
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James Grier Miller, Living Systems (1978) - 0 views
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My presentation of a general theory of living systems will employ two sorts of spaces in which they may exist, physical or geographical space and conceptual or abstracted spaces
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The characteristics and constraints of physical space affect the action of all concrete systems, living and nonliving.
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These conceptual and abstracted spaces do not have the same characteristics and are not subject to the same constraints as physical space
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Social and some biological scientists find conceptual or abstracted spaces useful because they recognize that physical space is not a major determinant of certain processes in the living systems they study
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one cannot measure comparable processes at different levels of systems, to confirm or disconfirm cross-level hypotheses, unless one can measure different levels of systems or dimensions in the same spaces or in different spaces with known transformations among them
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It must be possible, moreover, to make such measurements precisely enough to demonstrate whether or not there is a formal identity across levels
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Any change of state of matter-energy or its movement over space, from one point to another, I shall call action.
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Meaning is the significance of information to a system which processes it: it constitutes a change in that system's processes elicited by the information, often resulting from associations made to it on previous experience with it
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Information is a simpler concept: the degrees of freedom that exist in a given situation to choose among signals, symbols, messages, or patterns to be transmitted.
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. The amount of information is measured as the logarithm to the base 2 of the number of alternate patterns
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Signals convey information to the receiving system only if they do not duplicate information already in the receiver. As Gabor says:
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[The information of a message can] be defined as the 'minimum number of binary decisions which enable the receiver to construct the message, on the basis of the data already available to him.'
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The term marker was used by von Neumann to refer to those observable bundles, units, or changes of matter-energy whose patterning bears or conveys the informational symbols from the ensemble or repertoire.
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If a marker can assume n different states of which only one is present at any given time, it can represent at most log2n bits of information. The marker may be static, as in a book or in a computer's memory
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Communication of almost every sort requires that the marker move in space, from the transmitting system to the receiving system, and this movement follows the same physical laws as the movement of any other sort of matter-energy. The advance of communication technology over the years has been in the direction of decreasing the matter-energy costs of storing and transmitting the markers which bear information.
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There are, therefore, important practical matter-energy constraints upon the information processing of all living systems exerted by the nature of the matter-energy which composes their markers.
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If two parts are interrelated either quantitatively or qualitatively, knowledge of the state of one must yield some information about the state of the other. Information measures can demonstrate when such relationships exist
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The disorder, disorganization, lack of patterning, or randomness of organization of a system is known as its entropy (S)
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Increase of entropy was thus interpreted as the passage of a system from less probable to more probable states.
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according to the second law, a system tends to increase in entropy over time, it must tend to decrease in negentropy or information.
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. Making one or more copies of a given informational pattern does not increase information overall, though it may increase the information in the system which receives the copied information.
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the concept of Prigogine that in an open system (that is one in which both matter and energy can be exchanged with the environment) the rate of entropy production within the system, which is always positive, is minimized when the system is in a steady state.
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in systems with internal feedbacks, internal entropy production is not always minimized when the system is in a stationary state. In other words, feedback couplings between the system parameters may cause marked changes in the rate of development of entropy. Thus it may be concluded that the "information flow" which is essential for this feedback markedly alters energy utilization and the rate of development of entropy, at least in some such special cases which involve feedback control. While the explanation of this is not clear, it suggests an important relationship between information and entropy
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amount of energy actually required to transmit the information in the channel is a minute part of the total energy in the system, the "housekeeping energy" being by far the largest part of it
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In recent years systems theorists have been fascinated by the new ways to study and measure information flows, but matter-energy flows are equally important. Systems theory is more than information theory, since it must also deal with energetics - such matters as
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Only a minute fraction of the energy used by most living systems is employed for information processing
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I have noted above that the movement of matter-energy over space, action, is one form of process. Another form of process is information processing or communication, which is the change of information from one state to another or its movement from one point to another over space
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Communications, while being processed, are often shifted from one matter-energy state to another, from one sort of marker to another
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One basic reason why communication is of fundamental importance is that informational patterns can be processed over space and the local matter-energy at the receiving point can be organized to conform to, or comply with, this information
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. Conversely there is no regular movement in a system unless there is a difference in potential between two points, which is negative entropy or information
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If the receiver responds primarily to the material or energic aspect, I shall call it, for brevity, a matter-energy transmission; if the response is primarily to the information, I shall call it an information transmission
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Moreover, just as living systems must have specific forms of matter-energy, so they must have specific patterns of information
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.The word "set" implies that the units have some common properties. These common properties are essential if the units are to interact or have relationships. The state of each unit is constrained by, conditioned by, or dependent on the state of other units. The units are coupled. Moreover, there is at least one measure of the sum of its units which is larger than the sum of that measure of its units.
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a correspondence between two variables, x and y, such that for each value of x there is a definite value of y, and no two y's have the same x, and this correspondence is: determined by some rule
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the set of values on some scale, numerical or otherwise, which its variables have at a given instant
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If these comparable variations are so similar that they can be expressed by the same function, a formal identity exists between the two systems
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Science advances as the formal identity or isomorphism increases between a theoretical conceptual system and objective findings about concrete or abstracted systems
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A conceptual system may be purely logical or mathematical, or its terms and relationships may be intended to have some sort of formal identity or isomorphism with units and relationships empirically determinable by some operation carried out by an observer
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a nonrandom accumulation of matter-energy, in a region in physical space-time, which is organized into interacting interrelated subsystems or components.
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Both units and relationships in concrete systems are empirically determinable by some operation carried out by an observer
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distinguishes a concrete system from unorganized entities in its environment by the following criteria
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Their boundaries are discovered by empirical operations available to the general scientific community rather than set conceptually by a single observer
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which can potentially change over time, and whose change can potentially be measured by specific operations, is a variable of a concrete system
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number of its subsystems or components, its size, its rate of movement in space, its rate of growth, the number of bits of information it can process per second, or the intensity of a sound to which it responds
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not to be confused with intersystemic variations which may be observed among individual systems, types, or levels.
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Most concrete systems have boundaries which are at least partially permeable, permitting sizable magnitudes of at least certain sorts of matter-energy or information transmissions to pass them. Such a system is an open system. In open systems entropy may increase, remain in steady state, or decrease.
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impermeable boundaries through which no matter-energy or information transmissions of any sort can occur is a closed system
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In closed systems, entropy generally increases, exceptions being when certain reversible processes are carried on which do not increase it. It can never decrease.
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the general case of concrete systems, of which living systems are a very special case. Nonliving systems need not have the same critical subsystems as living systems, though they often have some of them
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maintain a steady state of negentropy even though entropic changes occur in them as they do everywhere else
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The difference permits them to restore their own energy and repair breakdowns in their own organized structure.
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They have a decider, the essential critical sub-system which controls the entire system, causing its subsystems and components to interact. Without such interaction under decider control there is no system.
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other specific critical sub-systems or they have symbiotic or parasitic relationships with other living or nonliving systems
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Their subsystems are integrated together to form actively self-regulating, developing, unitary systems with purposes and goals
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A partipotential system must interact with other systems that can carry out the processes which it does not, or it will not survive
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relationships abstracted or selected by an observer in the light of his interests, theoretical viewpoint, or philosophical bias.
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Some relationships may be empirically determinable by some operation carried out by the observer, but others are not, being only his concepts
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The relationships mentioned above are observed to inhere and interact in concrete, usually living, systems
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The verbal usages of theoretical statements concerning abstracted systems are often the reverse of those concerning concrete systems
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representing a class of phenomena all of which are considered to have some similar "class characteristic." The members of such a class are not thought to interact or be interrelated, as are the relationships in an abstracted system
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their physical limits often do not coincide spatially with the boundaries of any concrete system, although they may.
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important difference between the physical and biological hierarchies, on the one hand, and social hierarchies, on the other
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we propose to identify social hierarchies not by observing who lives close to whom but by observing who interacts with whom
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in most biological and physical systems relatively intense interaction implies relative spatial propinquity
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To the extent that interactions are channeled through specialized communications and transportation systems, spatial propinquity becomes less determinative of structure.
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cumulative body of knowledge of the past, contained in memories and assumptions of people who express this knowledge in definite ways
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On the other hand, the society is an aggregate of social subsystems, and as a limiting case it is that social system which comprises all the roles of all the individuals who participate.
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What Ruesch calls the social system is something concrete in space-time, observable and presumably measurable by techniques like those of natural science
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To Parsons the system is abstracted from this, being the set of relationships which are the form of organization. To him the important units are classes of input-output relationships of subsystems rather than the subsystems themselves
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system is a system of relationship in action, it is neither a physical organism nor an object of physical perception
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[action] is not concerned with the internal structure of processes of the organism, but is concerned with the organism as a unit in a set of relationships and the other terms of that relationship, which he calls situation
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One fundamental distinction between abstracted and concrete systems is that the boundaries of abstracted systems may at times be conceptually established at regions which cut through the units and relationships in the physical space occupied by concrete systems, but the boundaries of these latter systems are always set at regions which include within them all the units and internal relationships of each system
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If the diverse fields of science are to be unified, it would be helpful if all disciplines were oriented either to concrete or to abstracted systems.
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Why Great Innovations Fail: It's All in the Ecosystem - 0 views
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Michelin developed a revolutionary new kind of tire with sensors and an internal hard wheel that could run almost perfectly for 125 miles after a puncture.
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Mastery of the ecosystem is the great strength that made Apple the supreme success story of our time,
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In a world where mobile phone makers sold their devices to operators to sell to consumers, Jobs had such a powerful ecosystem that he could get operators to compete to partner with him: “And here was Apple, offering not just exclusive access to the most talked-about phone in history, but also exclusive access to Apple consumers—the most desirable customer segment imaginable
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How do you take the measure of the ecosystem that your innovation will need to be part of and rely on? How do you not miss the blind spots that can lurk almost anywhere?
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There are terrible pitfalls in the usual progression from prototype to pilot to rollout. It relies perilously on getting everything right from the very start. Often a far wiser and safer approach can be what Adner calls a “minimum viable footprint (MVF) rollout followed by a staged expansion.” In other words, start with a complete ecosystem, but a limited one.
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shared by Tiberius Brastaviceanu on 07 Sep 11
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Permaculture Principles | Design Principles - 1 views
permacultureprinciples.com/principles_business.php
permaculture principles design business resilience paper
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A post-peak world will depend on detailed observation and good design rather than energy-intensive solutions.
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a shift to storages of parts and materials, as well as the need to financially not be so dependent on debt financing
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work slower with more financial reserves and take less risks, not building beyond what the company’s financial resources can support.
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either to not borrow any money at all, or to borrow so much money that you can’t fail, being bigger than the people you borrow money from, so they have a vested interest in your succeeding!
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see things that are flowing past and through the business that others don’t see as being a resource and having no monetary value as being valuable.
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any intervention we make in a system, any changes we make or elements we introduce ought to be productive
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A well-designed system using permaculture principles should be able to self-regulate, and require the minimum of intervention and maintenance, like a woodland ecosystem, which requires no weeding, fertiliser or pest control.
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moving from “we’re just obeying the law” to being proactive, acting before you get hit over the head with regulation and other vulnerabilities.
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The emerging opportunities for businesses are things that are renewable. Renewable energy sources are the ones that will ensure a business’s stability in the long run. We can also broaden the concept of renewable resources to include things like goodwill and trust, things which a business can rebuild with good husbandry. Most business doesn’t just depend on law and competition, trust is at the heart of much business and it is very much a renewable resource.
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The concept of waste is essentially a reflection of poor design. Every output from one system could become the input to another system. We need to think cyclically rather than in linear systems.
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keep a clearer sense of the wider canvas on which we are painting, and the forces that affect what we are doing.
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ask how is what we are doing part of a bigger picture, the move away from globalisation and towards the local, taking steps back from the everyday.
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This can be done firstly by allowing space for Devil’s advocates, for black sheep, for hearing the voices of those outside of the dominant culture of the organisation and secondly by looking from a holistic perspective of how things interconnect, rather than just relying on experts who are embedded in detail. It emphasises the need to value the generalist, to give value to holistic thinkers.
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Solutions are to be found in integrated holistic solutions rather than increased specialisation and compartmentalisation
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The challenge here is to move to seeing business as being part of the geographical community, as being rooted in place, rather than just part of a globalised community. At the moment for many larger businesses, the local is something one pays lip-service to as a source of good PR, something one is passing through, rather than actually being an integral part of the community.
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This is a profound structural challenge for large organisations. Part of the resilience of the organisation comes from the degree of lateral integration. Resilience is in all solutions, it is the characteristic of ecological systems. If we apply these principles, resilience is one of the emergent properties
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new opportunities are very hard to understand and exploit from a macro level perspective, and are much better done from small scale perspective. It is here that the idea of appropriateness of scale becomes key.
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have a diversity of small businesses, local currencies, food sources, energy sources and so on than if they are just dependent on centralised systems, globalisation’s version of monoculture.
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In the short term this kind of diversification could reduce profits, but in the longer term it will be more secure
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this is about the reverse of specialisation, about having a mixed portfolio, and presents a big culture change for businesses.
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it is a good strategy for business to keep a diverse portfolio of what sustains the business, keep some things that appear to be peripheral. They may not at this stage appear to be a serious part of how the business is run, but in this new world they will increasingly become so
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the point where two ecosystems meet is often more productive than either of those systems on their own.
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It is important that the business has as many fingers in as many pies as possible, as many interfaces, and recognises that every person working for the business represents it in the community.
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Remaining observant of the changes around you, and not fixing onto the idea that anything around you is fixed or permanent will help too.
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A healthy approach is to start with no complete plan, to allow the process to be emergent. This is not a time when we can work to a rigid plan as conditions will change so fast. Organisations will need to stay on their toes, without rigid management.
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Beyond Blockchain: Simple Scalable Cryptocurrencies - The World of Deep Wealth - Medium - 0 views
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I clarify the core elements of cryptocurrency and outline a different approach to designing such currencies rooted in biomimicry
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This post outlines a completely different strategy for implementing cryptocurrencies with completely distributed chains
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we are interested in the resilience that comes from building a rich ecosystem of interoperable currencies
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Holdings are electronic and only exist and operate by virtue of a community’s agreement about how to interpret digital bits according to rules about operation and accounting of the currency.
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Specifically, access, issuance, transaction accounting, rules & policies, should be collectively visible, known, and held.
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This cryptographic structure is used to enable a variety of people to host the data without being able to alter it.
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there must be a way to associate these bits with some kind of account, wallet, owner, or agent who can use them
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Other things that many take for granted in blockchains may not be core but subject to decisions in design and implementation, so they can vary between implementations
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does not have to be money. It may be a reputation currency, or data used for identity, or naming, etc
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Then you must tackle the problem of always tracking which coins exist, and which have been spent. That is one approach — the one blockchain takes.
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You might optimize for anonymity if you think of cryptocurrency as a tool to escape governments, regulations, and taxes.
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if you want to establish and manage membership in new kinds of commons, then identity and accountability for actions may turn out to be necessary ingredients instead of anonymity.
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In the case of the MetaCurrency Project, we are trying to support many use cases by building tools to enable a rich ecosystem of communities and current-sees (many are non-monetary) to enhance collective intelligence at all scales.
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Managing consensus about a shared reality is a central challenge at the heart of all distributed computing solutions.
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If we want to democratize money by having cryptocurrencies become a significant and viable means of transacting on a daily basis, I believe we need fundamentally more scalable approaches that don’t require expensive, dedicated hardware just to participate.
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Blockchain is about managing a consensus about what was “said.” Ceptr is about distributing a consensus about how to “speak.”
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how nature gets the job done in massively scalable systems which require coordination and consistency
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Each speaker of a language carries the processes to understand sentences they hear, and generate sentences they need
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we certainly don’t carry some kind of global ledger of everything that’s ever been said, or require consensus about what has been said
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there is certainly no global ledger with consensus about the state of trillions of cells. Yet, from a single zygote’s copy of DNA, our cells coordinate in a highly decentralized manner, on scales of trillions, and without the latency or bottlenecks of central control.
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Imagine something along the lines of a Java Virtual Machine connected to a distributed version of Github
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Every time this JVM runs a program it confirms the hash of the code it is about to execute with the hash signed into the code repository by its developers
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This allows each node that intends to be honest to be sure that they’re running the same processes as everyone else. So when two parties want to do a transaction, and each can have confidence their own code, and the results that your code produces
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Then you treat it as authoritative and commit it to your local cryptographically self-validating data store
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Allowing each node to treat itself as a full authority to process transactions (or interactions via shared protocols) is exactly how you empower each node with full agency. Each node runs its copy of the signed program/processes on its own virtual machine, taking the transaction request combined with the transaction chains of the parties to the transaction. Each node can confirm their counterparty’s integrity by replaying their transactions to produce their current state, while confirming signatures and integrity of the chain
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If both nodes are in an appropriate state which allows the current transaction, then they countersign the transaction and append to their respective chains. When you encounter a corrupted or dishonest node (as evidenced by a breach of integrity of their chain — passing through an invalid state, broken signatures, or broken links), your node can reject the transaction you were starting to process. Countersigning allows consensus at the appropriate scale of the decision (two people transacting in this case) to lock data into a tamper-proof state so it can be stored in as many parallel chains as you need.
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When your node appends a mutually validated and signed transaction to its chain, it has updated its local state and is able to represent the integrity of its data locally. As long as each transaction (link in the chain) has valid linkages and countersignatures, we can know that it hasn’t been tampered with.
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If you can reliably embody the state of the node in the node itself using Intrinsic Data Integrity, then all nodes can interact in parallel, independent of other interactions to maximize scalability and simultaneous processing. Either the node has the credits or it doesn’t. I don’t have to refer to a global ledger to find out, the state of the node is in the countersigned, tamper-proof chain.
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Just like any meaningful communication, a protocol needs to be established to make sure that a transaction carries all the information needed for each node to run the processes and produce a new signed and chained state. This could be debits or credits to an account which modify the balance, or recoding courses and grades to a transcript which modify a Grade Point Average, or ratings and feedback contributing to a reputation score, and so on.
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By distributing process at the foundation, and leveraging Intrinsic Data Integrity, our approach results in massive improvements in throughput (from parallel simultaneous independent processing), speed, latency, efficiency, and cost of hardware.
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Another noteworthy observation about humans, cells, and atoms, is that each has a general “container” that gets configured to a specific use.
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Likewise, the Receptors we’ve built are a general purpose framework which can load code for different distributed applications. These Receptors are a lightweight processing container for the Ceptr Virtual Machine Host
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Ceptr enables a developer to focus on the rules and transactions for their use case instead of building a whole framework for distributed applications.
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Most people think that money is just money, but there are literally hundreds of decisions you can make in designing a currency to target particular needs, niches, communities or patterns of flow.
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the challenging task of tracking all the coins that exist to ensure there is no counterfeiting or double-spending
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You wouldn’t need to manage consensus about whether a cryptocoin is spent, if your system created accounts which have normal balances based on summing their transactions.
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In a mutual credit system, units of currency are issued when a participant extends credit to another user in a standard spending transaction
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Managing the currency supply in a mutual credit system is about managing credit limits — how far people can spend into a negative balance
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keep in mind there can be different classes of accounts. Easy to create, anonymous accounts may get NO credit limit
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What if I alter my code to give myself an unlimited credit limit, then spend as much as I want? As soon as you pass the credit limit encoded in the shared agreements, the next person you transact with will discover you’re in an invalid state and refuse the transaction.
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If two people collude to commit an illegal transaction by both hacking their code to allow a normally invalid state, the same still pattern still holds. The next person they try to transact with using untampered code will detect the problem and decline to transact.
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Hawala is a network of merchants and businessmen, which has been operating since the middle ages, performing money transfers on an honor system and typically settling balances through merchandise instead of transferring money
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To minimize key management infrastructure, each hawaladar’s public key is their address or identity on the network. To join the network you get a copy of the software from another hawaladar, generate your public and private keys, and complete your personal profile (name, location, contact info, etc.). You call, fax, or email at least 10 hawaladars who know you, and give them your IP address and ask them to vouch for you.
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Once 10 other hawaladars have vouched for you, you can start doing other transactions because the protocol encoded in every node will reject a transaction chain that doesn’t start with at least 10 vouches
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As described in the Mutual Credit section, at the time of transaction each party audits the counterparty’s transaction chain.
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Our hawala crypto-clearinghouse protocol has two categories of transactions: some used for accounting and others for routing. Accounting transactions change balances. Routing transactions maintain network integrity by recording information about hawaladar
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The final hash of all of the above fields is used as a unique transaction ID and is what each of party signs with their private keys. Signing indicates a party has agreed to the terms of the transaction. Only transactions signed by both parties are considered valid. Nodes can verify signatures by confirming that decryption of the signature using the public key yields a result which matches the transaction ID.
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As with accounting transactions, the hash of the above fields is used as the transaction’s unique key and the basis for the cryptographic signature of both counterparties.
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Remember, instead of making changes to account balances, routing transactions change a node’s local list of peers for finding each other and processing.
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It would be possible for someone to hack the code on their node to “forget” their most recent transaction (drop the head of their chain), and go back to their previous version of the chain before that transaction. Then they could append a new transaction, drop it, and append again.
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After both parties have signed the agreed upon transaction, each party submits the transaction to separate notaries. Notaries are a special class of participant who validate transactions (auditing each chain, ensuring nobody passes through an invalid state), and then they sign an outer envelope which includes the signatures of the two parties. Notaries agree to run high-availability servers which collectively manage a Distributed Hash Table (DHT) servicing requests for transaction information. As their incentive for providing this infrastructure, notaries get a small transaction fee.
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This approach introduces a few more steps and delays to the transaction process, but because it operates on independent parallel chains, it is still orders of magnitude more efficient and decentralized than reaching consensus on entries in a global ledger
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millions of simultaneous transactions could be getting processed by other parties and notaries with no bottlenecks.
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There are other solutions to prevent nodes from dropping the head of their transaction chain, but the approach of having notaries serve out a DHT solves a number of common objections to completely distributed accounting. Having access to reliable lookups in a DHT provides a similar big picture view that you get from a global ledger. For example, you may want a way to look up transactions even when the parties to that transaction are offline, or to be able to see the net system balance at a particular moment in time, or identify patterns of activity in the larger system without having to collect data from everyone individually.
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By leveraging Intrinsic Data Integrity to run numerous parallel tamper-proof chains you can enable nodes to do various P2P transactions which don’t actually require group consensus. Mutual credit is a great way to implement cryptocurrencies to run in this peered manner. Basic PKI with a DHT is enough additional infrastructure to address main vulnerabilities. You can optimize your solution architecture by reserving reserve consensus work for tasks which need to guarantee uniqueness or actually involve large scale agreement by humans or automated contracts.
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It is not only possible, but far more scalable to build cryptocurrencies without a global ledger consensus approach or cryptographic tokens.
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Designing the Void | Management Innovation eXchange - 0 views
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This is about self-organization, putting in place bounderies and internal mechanisms to make the the system self-organize into something desirable. You can see this from a game theory perspective - how to set a game which will drive a specific human behavior.
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This is about self-organization, putting in place bounderies and internal mechanisms to make the the system self-organize into something desirable. You can see this from a game theory perspective - how to set a game which will drive a specific human behavior.
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Very similar to SENSORICA, an environment of entrepreneurs. The argument against this is that not everyone is a risk taker or has initiative. The answer to it is that not every role in the organization requires that.
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Very similar to SENSORICA, an environment of entrepreneurs. The argument against this is that not everyone is a risk taker or has initiative. The answer to it is that not every role in the organization requires that.
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The system is not made up of artifacts but rather an elegantly designed void. He says “I prefer to use the analogy of rescuing an endangered species from extinction, rather than engaging in an invasive breeding program the focus should be on the habitat that supports the species. Careful crafting of the habitat by identifying the influential factors; removing those that are detrimental, together with reinforcing those that are encouraging, the species will naturally re-establish itself. Crafting the habitat is what I mean by designing the void.”
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they are also responsible for managing their own capitalization; a form of virtual ownership develops. Everything they need for their work, from office furniture to high-end machinery will appear on their individual balance sheet; or it will need to be bought in from somewhere else in the company on a pay-as-you go or lease basis. All aspects of the capital deployed in their activities must be accounted for and are therefore treated with the respect one accords one’s own property.
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The result is not simply a disparate set of individuals doing their own thing under the same roof. Together they benefit from an economy of scale as well as their combined resources to tackle large projects; they are an interconnected whole. They have in common a brand, which they jointly represent, and also a business management system (the Say-Do-Prove system) - consisting not only of system-wide boundaries but also proprietary business management software which helps each take care of the back-end accounting and administrative processing. The effect is a balance between freedom and constraint, individualism and social process.
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Culture is like climate- it does not exist in and of itself- it cannot exist in a vacuum, it must exist within a medium.
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Incompatibility between the presenting culture and the underlying one provide a great source of tension
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The truth of course is that when tension builds to a critical level it takes just a small perturbation to burst the bubble and the hidden culture reveals itself powered by the considerable pent-up energy.
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Consider again the idea that for the health of an endangered species; the conditions in their habitat must be just right. In business, the work environment can be considered analogous to this idea of habitat.
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A healthy environment is one that provides a blank canvas; it should be invisible in that it allows culture to be expressed without taint
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The over-arching, high-level obligations are applied to the organization via contractual and legal terms.
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But it is these obligations that the traditional corporate model separates out into functions and then parcels off to distinct groups. The effect is that a clear sight of these ‘higher’ obligations by the people at the front-end is obstructed. The overall sense of responsibility is not transmitted but gets lost in the distortions, discontinuities and contradictions inherent in the corporate systems of hierarchy and functionalization.
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employees are individually rewarded for their contribution to each product. They are not “compensated” for the hours spent at work. If an employee wants to calculate their hourly rate, then they are free to do so however, they are only rewarded for the outcome not the duration of their endeavors.
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Another simplification is the application of virtual accounts (Profit and Loss (P&L) account and Balance Sheet) on each person within the business.
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The company systems simply provide a mechanism for cheaply measuring the success of each individual’s choices. For quality the measure is customer returns, for delivery it is an on-time-and-in-full metric and profit is expressed in terms of both pounds sterling and ROI (return on investment).
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The innumerable direct links back to an external reality -like the fragile ties that bound giant Gulliver, seem much more effective at aligning the presenting culture and the underlying embodied culture, and in doing so work to remove the existing tension.
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With a culture that responds directly to reality, the rules in the environment can be “bounding” rather than “binding”- limiting rather than instructive; this way individual behavior need not be directed at all. The goal is to free the individual to express himself fully through his work, bounded only by the limits of the law. With clever feedback (self-referencing feedback loops) integrated into the design, the individuals can themselves grow to collectively take charge of the system boundaries, culture and even the environment itself, always minded of the inherent risks they are balancing, leaving the law of the land as the sole artificial boundary.
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the conventional company, which, instead of rewarding enterprise, trains compliance by suppressing individual initiative under layer upon layer of translation tools.
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without the divisive and overbearing management cabal the natural reaction of humans is to combine their efforts
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recruited by another staff member (sponsor) and they will help you learn the basics of the business management system- they will help you get to know the ropes.
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Along with that job you will be given a cash float (risk capital), P&L Account, a Balance Sheet and computer software to help plan and record your activities. Your operation is monitored by your sponsor to see if you increase the margin or volume, and so establish a sustainable operation. Training and mentoring is provided to support the steep learning curve - but without removing the responsibility of producing a return on the sponsor’s risk capital.
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You will, in the meantime be looking to establish some of your own work for which you will not have to pay a commission or royalty to your sponsor and this will provide you with more profitable operations such that eventually you might pass back to the sponsor the original operation, as it has become your lowest margin activity. It will then find its way to a new employee (along with the associated Balance Sheet risk capital) where the process is repeated by the sponsor.[4]
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Remuneration for staff is calibrated in a way that reflects the balance of different forces around ‘pay’
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there is an obligation upon the company to pay a minimum wage even if the profitability of the operation does not support this
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there are therefore two aspects of the basic pay structure: one is “absolute” and reflects the entrepreneurial skill level of the employee according to a sophisticated grading scale
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A further 20% of the original profit will be paid into his risk capital account, which will be his responsibility to deploy in any way he sees fit as part of his Balance Sheet. Of the three remaining 20% slices of the original profit, one is paid out as corporation tax, another as a dividend to the shareholders and the last retained as collective risk capital on the company’s balance sheet- a war chest so to speak.
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Julian Wilson and Andrew Holm sell products / services to their staff (such as office space and software) they have an identical customer/supplier relationship with the other employees.
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Naturally there are some people that can’t generate a profit. The sponsor’s risk capital will eventually be consumed through pay. After a process of rescue and recovery- where their shortcomings are identified and they are given the opportunity to put them right, they either improve or leave, albeit with a sizeable increase in their skills.
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there is a gradual process of accustomisation; the void of the new employee is surrounded by others dealing with their particular activities, offering both role models and operations they may wish to relinquish. One step at a time the new employee acquires the skills to become completely self-managing, to increase their margins, to make investments, to find new business, to become a creator of their own success. Ultimately, they learn to be an entrepreneur.
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Matt Black Systems it is not simply commitment that they targeted in their employees, rather they aim for the specific human qualities they sum up as magic- those of curiosity, imagination, creativity, cooperation, self-discipline and realization (bringing ideas to reality).
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a new form of association of individuals working together under the umbrella of a company structure: a kind of collective autonomy
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Turning an organisation on its head- removing all management, establishing a P&L account and Balance Sheet on everyone in the organisation and having customers payment go first into the respective persons P&L account has revolutionised this company.
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This innovative company’s approach views business success as wholly reliant upon human agency, and its wellspring at the individual level.
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problem (of unnecessarily high overheads placed on production) that arguably is behind the decline in western manufacturing
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organizational design brings to light the unconscious socio-philosophical paradigm of the society in which it exists, organizational development points to how change occurs.
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scientific management employs rationalism and determinism in pursuit of efficiency, but leaves no place for self-determination for most people within the system.
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today, a really “modern” view of an organization is more likely to be depicted in terms that are akin to an organism.
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the Taylorist approach may be more real in theory than in practice: its instrumentalist view of the workforce is cursed by unintended consequences. When workers have no space for their own creative expression, when they are treated like automata not unique individuals, when they become demotivated and surly, when they treat their work as a necessary evil; this is no recipe for a functional organization.
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The natural, human reaction to this is unionization, defiance and even outright rebellion; to counter this, management grows larger and more rigid in pursuit of compliance, organizations become top heavy with staff who do not contribute directly to the process of value creation but wield power over those who do.
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Even when disgruntled employees strike free and start their own businesses they seem unable to resist the hegemony of the conventional command-and-control approach
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Making the transition involves adherence to a whole new sociology of work with all the challenging social and psychological implications that brings.
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In the “theory of constraints” the goal is to align front-line staff into a neat, compact line for maximum efficiency. Surely the most considered approach is to have front-line staff self-align in pursuit of their individual goals?
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The removal of hierarchy and specialization is key to a massive improvement in both profitability and productivity. In summary: there are no managers in the company, or foremen, or sales staff, or finance departments; the company is not functionally compartmentalized and there is no hierarchy of command. In fact every member of staff operates as a virtual micro-business with their own Profit & Loss account and Balance Sheet, they manage their own work and see processes through from end to end
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if one creates a space in which staff pursue their own goals and are not paid by the hour, they will focus on their activities not the clock; if they are not told what to do, they will need to develop their own initiative; if they are free to develop their own processes, they will discover through their own creative faculties how to work more productively- in pursuit of their goals
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The human qualities which are of greatest potential value to the business are: curiosity, imagination, creativity, cooperation, self-discipline and realization (bringing ideas to reality)
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These qualities are the very ones most likely to be withheld by an individual when the environment is ‘wrong’.
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Any elements in the business environment that undermine the autonomy and purpose of the individual will see the above qualities withheld
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the responsibility of the individual is formalized, specified and restricted. An improved system is not one where responsibility is distributed perfectly but rather one where there is simply no opportunity for responsibility to be lost (via the divisions between the chunks). Systems must be reorganized so responsibility -the most essential of qualities -is protected and wholly preserved.
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Matt Black Systems believe this can only be done by containing the whole responsibility within an individual, holding them both responsible and giving them ‘response-ability’
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productivity is up 300%, the profit margin is up 10%[3], customer perception has shifted from poor to outstanding, product returns are at less than 1%, “on time and in full” delivery is greater than 96%, pay has increased 100%.
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staff develop broader and deeper skills and feel greater job security; they get direct feedback from their customers which all go to fuel self-confidence and self-esteem.
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What is particular about their story is that behind it is a very consciously crafted design that surrounds the individualism of each person with hard boundaries of the customer, the law and the business. It is these boundaries rather than the instructive persona of ‘the boss’ that gives rise to the discipline in which individuals can develop. Autonomy is not the same as freedom, at least not in the loose sense of ‘do as you please’. An autonomous person is a person who has become self-governing, who has developed a capacity for self-regulation, quite a different notion from the absence of boundaries. Indeed, it is with establishing the right boundaries that the business philosophy is most concerned. The company provides the crucible in which the individual can develop self-expression but the container itself is bounded. Wilson calls this “designing the void”. This crucible is carefully constructed from an all-encompassing, interconnecting set of boundaries that provide an ultimate limit to behaviours (where they would fall foul of the law or take risks with catastrophic potential). It is an illusion to think, as a director of a company, that you are not engaged in a process of social conditioning; the basis of the culture is both your responsibility and the result of your influence. The trick is to know what needs to be defined and what needs to be left open. The traditional authoritarian, controlling characters that often dominate business are the antithesis of this in their drive to fill this void with process, persona and instruction. Alternatively, creating an environment that fosters enterprise, individuals discover how to be enterprising.