Co-founder, Torsten Hvidt, on leadership and self-organised criticality

December 12, 2015


Co-founder, Torsten Hvidt, on leadership and self-organised criticality

In today’s edition of the Danish newspaper Berlingske, Co-founder at QVARTZ, Torsten Hvidt, shares his thoughts on how we create robust organisations in a world of complex disorder.

The concept of “self-organised criticality” refers to a system that, by itself, develops towards a state where it is poised to change radically, at even the slightest impulse. It has been compared to a pile of sand. At first, the sand pile is relatively stable, with only few and insignificant slides, but in the end, the pile becomes so steep that one single grain of sand can set off an avalanche, or nothing. As the complexity between the increasing numbers of grains inside the pile grow, the pile has organised itself into an unstable condition.

The sand pile theory demonstrates how outdated and unrealistic the idea of an orderly world in constant equilibrium is. We now have to manage imbalances and we have to lead nations, companies and ourselves, in a world that is in constant disarray, and always on the brink of major or minor crises. The days of simple solutions have long past, because we now face problems that cannot be solved, at least not in the short term.

With the recognition of complex disorder, we will see a shift towards increased humility. It is intuitively clear to many that we cannot steer clear of all the storms, all the time, so consequently, we must build better boats. Boats that can roll with the punches and make it possible for us to learn from crisis, so that we become more resilient with each hurricane and each tsunami.

Read the feature in Danish

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The Cities and the Towers

By Torsten Hvidt, Partner, QVARTZ

Our geopolitical, ecological and economic systems are connected and interwoven, now more-so than ever before. The majority of the world’s seven billion individuals are connected to the internet, global trade is increasing and so is the number of travellers. Fifteen to twenty billion machines and devices are connected, and this number is expected to double within the next five years. We have created an overwhelmingly complex global system, where everyone and everything is, or will be, connected. This system has provided us with huge advantages, but it has also increased our vulnerability quite significantly, as it has enabled very complex and highly unpredictable non-linear outcomes. In the old days, this point was illustrated by saying that the gentle movement of a butterfly’s wing in Brazil can set off a violent tornado in Texas. Today, we might use a less poetic illustration: A terrorist attack can set off stock market panic, which can set off economic crises, which can set off riots, which can set off revolutions, which can set off large flows of refugees and migrants, which can set off political crises in dozens of counties.

There is a well known advertisement proposing that solutions must be simple. This sentiment is not foreign to us. We plan to stop terror with war. Refugees with border posts. Workplace demotivation with performance management. Eating disorders with local community counselling. The simple solutions are as numerous as they are appealing. But they will not solve our fundamental problems.

If one wants to understand how hyper-complex systems work and react, there is actually quite a bit of research and literature in this domain. Many of the sources and publications are American, but nonetheless, a Danish theoretical physicist, Per Bak, appears in or has influenced the majority of them. In 1987, Bak and his colleagues introduced the theory of “self-organised criticality”, which refers to a system that, by itself, develops towards a state where it is poised to change radically, at even the slightest impulse.

Bak used an effective method to illustrate the concept, which consisted of dropping grains of sand onto a plate. At first, the sand pile is relatively stable, with only few and insignificant slides, but in the end, the pile becomes so steep that one single grain of sand can set off an avalanche, or nothing. Bak would argue that the pile, as the complexity between the increasing numbers of grains inside the pile grew, organised itself into an unstable condition.

The theory created a wave of new research, and Bak became a genuine superstar in academic circles. The hyper-complex dynamic that researchers found in the sand pile is now considered to be one of the mechanisms that creates complexity in nature. The brilliant Dane had introduced a new way of understanding systems on the verge of unpredictable change. He obviously also saw stability in the world, but he saw it as a passing phase, as a pause in an incredibly and incomprehensibly dynamic system. The world that Bak showed us was much like a game of Russian roulette. One arbitrary soft pull on the trigger can deliver an explosion of change. Or nothing.

The sand pile theory demonstrates how outdated and unrealistic the idea of an orderly world in constant equilibrium is. We now have to manage imbalances and we have to lead nations, companies and ourselves, in a world that is in constant disarray, and always on the brink of major or minor crises. The days of simple solutions have long past, because we now face problems that cannot be solved, at least not in the short term.

The suicide of a street vendor in Tunisia sets off the so-called “Arab Spring” and indirectly the large influx of refugees we now face. Aggressive subprime loans in the U.S. set off a global financial crisis, which forces nation states on the other side of the world to their knees. Tesla increases its worth by billions of dollars in a very short time. VW reduces its worth by billions of dollars even faster. Companies like Apple, AirBnB and Netflix transform entire industries before our eyes, while giants like Blockbuster, Kodak and Nokia fight to survive. They are all major or minor avalanches in a constantly unstable sand pile.

With the recognition of complex disorder, we will see a shift towards increased humility. It is intuitively clear to many that we cannot steer clear of all the storms, all the time, so consequently, we must build better boats. Boats that can roll with the punches and make it possible for us to learn from crisis, so that we become more resilient with each hurricane and each tsunami.

But how do we build better boats? Or rather, how do we build increased resilience into our societies, organisations and companies?

The answer to that question starts with the obvious, but essential and critical, difference between a grain of sand and a human being. Because even though our world is influenced by the same logic and complex dynamics as we see in a sand pile, the objects are not the same. We humans are not confined to be passive or helpless. We can act. And our actions and dreams can influence everything around us. So when we ask how to build more resilience into our communities and companies, we must start by eliminating the conditions and barriers that confine us into passivity and helplessness.

In doing so, it is worth contemplating whether or not hierarchies tend to overrate experience and underrate new thinking. We must also contemplate whether simple control mechanisms, such as budgets and reviews, tend to create an illusion of extrapolation-based predictability. Further, we must discuss whether specialisation, both in terms of job descriptions and functional silos, tend to limit the very cross-boundary fertilisation on which disruptive innovation often depends. In a world where smartphones and social networks have reduced the effect of physical distance and created more direct contact between people and across both organisational and national boundaries, the need for old-fashioned command-and-control is very limited. In fact, organisations today run the risk of demotivation and paralysis if the managerial style is not adapted to the obvious reality of our times. Chaplin made “The Great Dictator” a comic figure back in 1940, and as a stereotype, he has only become increasingly ridiculous since.

It often makes sense for decision-makers to approach contemplations and discussions regarding resilience through metaphors. Do we think of leadership and organisation as you would in a city, or as you would in a tower? The answer is quite crucial when it comes to considering just how resilient our countries or our organisations and corporations will prove to be. A lot of practical experience and also some impressive academic figures, with Gary Hamel as the most prominent, point to the fact that cities are one of the most resilient organisational constructions known to us. While the tower, in many ways, represents a less robust form.

Cities are horizontal, towers are vertical. Cities grow and change their shape continuously, towers are static and frozen in their final form. Cities are characterised by openness, mobility and tolerance, towers are more restrictive, closed and unapproachable. Cities are run by the very people who enjoy followership, towers are often governed by the person who owns the tower. Cities often allow for or encourage cultural and human diversity, towers are typically dominated by a monoculture. Cities can gather citizens from all neighbourhoods and social classes and create cohesion, towers make it difficult to come together, even when there are good reasons for doing so. The list of differences is long. Experience shows it is worth considering and discussing.

The majority of this text was written earlier in the fall, and as such, it is not a perspective on the tragedy in Paris, or about the twin towers in New York for that matter. With that said, however, it must also be said that Paris and New York are two of the cities that embody the metaphor of the city as an organisation. They are expansive, creative, tolerant, inclusive and magnetic. They survive avalanches. And become stronger.