Parsing the Influential Increment in the Language of Complexity

1. Parsing the Influential Increment in the Language of Complexity Academy of Management Annual Meeting 2007 Jim Hazy Adelphi University Reference as: Hazy, J. K. (2007). Parsing the "influential increment" in the language of complexity: Uncovering the systemic mechanisms of leadership influence. Paper presented at the Academy of Management Annual Conference, Philadelphia, PA.

2. Open Systems Definitions Incomplete design Internal change External change Boundary issues Membership challenges Complex Systems “Interpretations” Dynamic bottom-up self-organization Dynamical System Stabilities/Instabilities Adaptive tensions Networks, the meaning of boundaries Autonomous self-interested agents in a complex adaptive system (cas) Katz & Kahn – “Influential Increment”

3. Organization: A Rent Producing System of Capabilities Operating Profits & Cash Flow + Resources Available for Investment + + Revenue From Market Carrying Capacity Current Operations Investment in Capabilities Value Creation Loop + + - + Competition - + Capabilities Services, Delivery, etc. The firm processes its resources for the benefit of its stakeholders. Agents organize to benefit from these resource flows.

4. Agents organize where the boundaries between their system and its environment are sufficiently far from thermodynamic equilibrium (i.e where there is adaptive tension) such that order is possible. This doesn’t happen in the blind. Cognitive, social agents form mental models of the system and the environment and try to identify and shape the “dynamical attractors” in their models to predict and enact the “best” interactions Models are not enough. The system-level dynamic capabilities processes must also be influenced or biased. Leadership is needed. Models of System & Environment Dynamic Configuration of Capabilities Generative Exploration & New Capabilities Building Markets Leadership Generative leadership is needed to “create new possible futures” for the organization. It is closely related to “leading innovation” but includes exploration in the environment for new resources as well. Information They do this by reconfiguring themselves to address opportunities... New & Emerging Organizational Boundary Unifying Leadership Resources Unifying leadership identifies & evolves useful boundaries (i.e., where order can evolve) and sustains a unified organizational identity. Outputs Existing Information In order to o explore and build new capacity, and ... Exploitation of Existing Capabilities Convergent Leadership to exploit their current capabilities. Convergent leadership operates on agents’ expectations with respect to interactions to move organizing activities toward perceived dynamical attractors. Each of these leadership dimensions will be described in detail in the following charts. Organizational System In this way, the presence of adaptive tension enables “order” to evolve as resource & information flows are organized into quasi-stable configurations and are thus quasi-predictable using dynamical systems models. Environment

5. Convergent Leadership • Variables identified for certain dimensions of the organization’s state. • Leadership catalyzes interactions that “converge” system’s flow toward attractors. • These interactions enact an “adaptive walk” toward efficient performance at a local optimum. • Deviations from norm (including fluctuations not along adaptive walk) are attenuated through negative feedback.

6. Convergent Leadership… Capabilities Operate to Exploit Existing Markets Models of Known Opportunities & Capabilities a Profits from operations Leadership interactions converge action and decisions toward models-in-use Organizational Slack Rent Potential from Existing Markets Market Capacity & Competition Value Gathering Investment in Exploitation b Limits to Existing Capabilities Boundary Complacency & Limits to Models-in-Use

7. Generative Leadership • Variables only generally understood- specifics about future state “to be determined.” • Leadership catalyzes interactions that generate possible futures for the system. • Leadership catalyzes interactions that evaluate select and partition interactions. • Deviations from norm (including fluctuations not along adaptive walk) are amplified through positive feedback.

8. Generative Leadership… Dynamic Capabilities Explore & Build New Capabilities Models of Search Strategies & Possible Opportunities Leadership interactions search for opportunities & generate a variety of possible new models-in-use Profits from New activities g Organizational Slack Rent Potential from New Markets New & Emerging Markets & Competition Value Identifying Investment in Building New Capabilities d Limits to New Capabilities Boundary Failure to “Prime” the System, Fatigue from Long Time Delays & Limits to Imagination

9. Unifying Leadership • Define boundaries internally, externally and ecologically including permeability • Define and evolve identity • Select among and disambiguate strategies • Moderate and balance tensions • Across boundaries • Between exploitation (convergent leadership) & exploration (generative leadership) activities.

10. Unifying Leadership… Models of the System, Its Boundaries & Models-in-Use Capabilities Built, Configured & Eliminated Failure to Sustain Innovation Leadership interactions adjust system parameters to establish & clarify identity, boundaries & models-in-use Value Identifying Rent Potential from Markets e Markets & Competition Organizational Slack Value Gathering Boundary Failure to Select & Apply Execution Pressure to Appropriate Models-in-Use

11. Complex Systems “Interpretations” Dynamic bottom-up self-organization Dynamical System Stabilities/Instabilities Adaptive tensions Networks, the meaning of boundaries Autonomous self-interested agents in a complex adaptive system (cas) Leadership Mechanisms Generative Leadership Convergent Leadership Unifying leadership Influential Increment & Complexity

12. Additional references on topic Hazy, J. K. (2006). Measuring leadership effectiveness in complex socio-technical systems. Emergence: Complexity and Organization (E:CO), 8((3)), 58-77. Hazy, J. K. (2007). Computer models of leadership: Foundation for a new discipline or meaningless diversion? The Leadership Quarterly, 18(4), 391-410. Hazy, J. K. (in press-a). Leadership or luck? The system dynamics of Intel's shift to microprocessors in the 1970s and 1980s. In M. Uhl-Bien & R. Marion (Eds.), Complexity and leadership, Volume 1: Conceptual foundations. Charlotte, NC: Information Publishing Associates. Hazy, J. K. (in press-b). Patterns of leadership: A case study of influence signaling in an entrepreneurial firm. In M. Uhl-Bien & R. Marion (Eds.), Complexity and leadership, Volume 1: Conceptual foundations. Charlotte, NC: Information Publishing Associates. Hazy, J. K., Goldstein, J. A., & Lichtenstein, B. B. (Eds.). (2007). Complex Systems Leadership Theory. Mansfield, MA: ISCE Publishing Company. Surie, G., & Hazy, J. K. (2006). Generative leadership: Nurturing innovation in complex systems. Emergence: Complexity and Organization (E:CO), 8(4), 13-26.