Page 34 - Complexity Perspective_Neat

The Idea of Requisite Complexity

What is Requisite Complexity?

Every business exists in a context with the primary objective of
serving a (customer) need; that is the nature of business! So, if a
context is characterized by rapid change, an organization within it
must adapt or it will be left behind and may die.

The theory underlying the above statement is rooted in
cybernetics, the study of control systems. Originally called Ashby's
Law after W. Ross Ashby (1956) who formulated it as the Law of
Requisite Variety, others have reframed it as the Law of
Requisite Complexity (McKelvey and Boisot, 2009). It has been called
the only idea on which every systems theorist agrees!!
Implications of the Need to Adapt

Constant Adaptation

At its simplest, McKelvey and Boisot's version of Ashby's Law posits
that for a system to survive its internal complexity must
match the external complexity it confronts. The word match
here does not mean 'mirror' precisely; it means 'be appropriate to' so
that the firm can control its operations and survive. Remember
Ashbyès Law was derived from the study of control systems:
cybernetics.

Example: over the last thirty years the rate of change in the business
context has accelerated as business globalized and communications
(internet) became instant and ubiquitous with innovation-to-survive
being a necessity in a hyper-competitive context. As a result,
organizational structures have shifted through at least three models:
● The traditional pyramidal command and control model
with thick system boundaries and embedded in a relatively
slow-moving context

● The network model of global outsourcing. In this model,
nodes in the network (suppliers, partners) can be ‘hot-swapped’,
added or subtracted to meet the shifting needs of the market

34
©Business Games Works 2018 (V1 Beta)