Dr Shann Turnbull FRSA responds to the RSA ANZ blogging challenge, hosted in collaboration with 92Y as part of the Seven Days of Genius Festival - a global festival celebrating the power of new ideas. Shann advocates for a form of governance inspired by the ecological.
Only modern humans attempt to simplify complexity with top down command and control hierarchies. All other biota reliably simplifies the management of complexity mainly from the bottom up to illustrate an ecological form of governance.
Ants and bees collectively make decisions on when, where and how to build and operate their complex homes without a centralized command and control hierarchy. With such small brains and limited communication signals, insects need to radically simplify complex tasks. System scientists have discovered the natural laws of governance that allows complexity to be reliably simplified for robots, or any biota, including humans.
System scientists have applied their knowledge to design robotic machinery, self-governing automobiles and space probes. However, graduate schools of business or public administration have yet to develop programs to teach the theory and practice of self-regulation and self-governance of social institutions. As a consequence, governments, regulators and CEO’s of large organizations are not aware of the “requisite variety” of the laws; or that reliable regulation of complexity requires a requisite variety of stakeholders to become engaged as supplementary co-regulators.
Dee Hock, the founding CEO of VISA International Inc., recognized the incompatibility of hierarchies with the laws of nature. He stated:
Industrial Age, hierarchical command and control pyramids of power, whether political, social, educational or commercial, were aberrations of the Industrial Age, antithetical to the human spirit, destructive of the biosphere and structurally contrary to the whole history and methods of biological evolution. They were not only archaic and increasingly irrelevant; there were a public menace.
Eight years before the financial crisis of 2008 Hock also noted:
We are experiencing a global epidemic of institutional failure that knows no bounds. We must seriously question the concepts underlying the current structures of organization and whether they are suitable to the management of accelerating societal and environmental problems – and, even beyond that, we must seriously consider whether they are the primary source of those problems[i].
Elinor Ostrom (winner of the 2009 economic Nobel Prize) confirmed the views of Hock. She identified how pre-modern humans used ecological governance to avoid over-exploiting natural resources on which they relied upon to sustain their existence. Elinor and her husband Vincent used the term “polycentric compound republics” to describe the distributed decision-making architecture of pre-modern societies. Distributed intelligence radically decomposes the intensity of data processing.
The human brain illustrates this point. It has no Chief Executive Neuron. The brains of all biota represent “polycentric compound republics” with different parts of the brain making different decisions in competition with each other. Competition arises from different physiological and environmental needs, preferences and existential priorities.
A problem in obtaining support for ecological governance is the emergence in modern times of religions with a single deity. This has created widespread belief that top down command and control hierarchies are the natural order of things. Nature shows that the opposite is true.
Hierarchies are created to avoid senior managers suffering information overload. However, this requires data to be condensed and so exposed to errors, biases and gaps in both communication and control signals that flow up or down through each level. As a result, hierarchies can only simplify complexity incompletely and so unreliably.
The problems can be aggravated by hierarchies concentrating power, facilitating groupthink, alienation, exploitation and corruption. Organisations with a single board obtain absolute power for its members to identify and manage their systemic conflicts of interest involved in decisions about their: appointment, benefits, retirement and accountability. As result single boards can corrupt absolutely their members, the organization and society.
Ecological governance avoids all these problems and allows complexity to be simplified as comprehensively as desired by increasing the density of its networks. This also increases the variety of cross checking communication and control channels to correct biases, errors, gaps and the loss of intelligence on existential threats or risks.
The legal practicality of introducing network forms of governance without changes in the law is demonstrated by its existence in many jurisdictions. Network governance without necessarily being of an ecological form has been reported around the world. Probably the three most significant firms that come closest to illustrating ecological governance are the Mondragon Stakeholder controlled cooperative complex in Spain, Visa International Inc. in the US and the John Lewis Partnership in the UK.
Integrating stakeholders into the governance architecture of organisations creates a win-win way for humanity to survive complexity simply at the local, regional and/or global level. This would also enrich the quality of democracy at each level to reduce the size and cost of governments at all levels.
Existential threats for humanity are arising from pollution, extinctions of flora and fauna, exploitation of non-renewable or non-recyclable resources, excessive population and climate change. To protect the environment and humanity on the planet modern society needs to develop a global form of ecological governance.
The re-invention and testing of ecological governance provides a crucial challenge for organizations interested in promoting a transition from the current self-destructive form of society to one that could maintain humanity for eternity on planet earth or any other place.
Shann is a prolific author on reforming the theories and practices of capitalism by introducing ecological ways of owning and controlling realty, enterprises and money. After obtaining an MBA from Harvard, Shann became a serial entrepreneur in Australia, establishing a number of enterprises, five of which became public while also becoming a co-founding member of a private equity group that acquired and re-organised eight listed companies. He obtained a PhD in governance after initiating and then co-founding in 1975 the first educational qualification in the world for company directors.
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Shann, I agree that we must design our systems to be adaptable and able to change. I agree that governance is crucial because in human systems agreement is the most economical way to implement change. The alternatives of force, coercion, or deception are expensive and have undesirable emergent properties.
In reply to the comments of Kevin Green and Julian Cribb, we can construct our systems as complex adaptive systems that are able to resolve ambiguities. The idea is not to build systems that as machines but to build systems that behave more like living organisms.
Our work on funding long-term investments makes adaptable loans. The systems are governed in ways that enable agreement on what to do when the inevitable changes to the environment occur.
It is an example of a system that operates in the way you describe. It will fund and operate Renewable Energy Systems that supply electricity to a community at 1/3 the price of Australian Energy Market.
https://medium.com/@kevin_34708/removing-costs-from-capital-markets-be7187848f14
You will notice that at least half the savings come by removing the time value of money as the mechanism to cover the risk of non-repayment of loans.
Very interesting Shann. I appreciate the biological analogy of the city, but keep returning to the point that humans are thinking beings. (Albeit not very good at it). I wonder if self-regulating systems allow for the fusion of mind body and spirit required to satisfy our need to tinker endlessly with the results?
I'm moving towards a view that networked complexity works best when it tolerates local adaptations and the intervention of human judgement. I'm sceptical of self regulating systems and prefer something which is altogether more contradictory, ambiguous and sometimes confusing; that which manifests itself in ideas like humanity, aesthetics or culture.
An excellent and though-provoking piece, Shann. I guess one of the main difficulties is that most forms of human self-organisation - money, politics, religion, the nation state - are contrary to the laws of Nature!
Thank you Julian, Your guess "of the main difficulties" explains why thinkers like Kevin Green are right to be sceptical.
His comment about the need for "contradictory, ambiguous and sometimes confusing" attributes is right on the money. This is exactly would needs to be built into organisation to mimic other natural systems like ourselves.
The word limit of the posting denied discussing that contrary behaviour is an essential feature to creates checks and balances, self-regulation and self-governance. It explains why evolution has hard wired contrary behaviour into social biota like humans to be competitive~cooperative, selfish~altruistic, suspicious~trusting and so on