The reproduction of business units into smaller units as and when the need arose created units small enough to operate with a commonly shared set of values, philosophy and culture. The organization was bound together by the three interdependent core values: Employee Participation, Profit Sharing and Free Flow of Information.These three values stemmed from the belief that participation in design and implementation of work procedures would give employees control over their work; profit sharing would bring in a sense of ownership; and the availability of information as and when needed would help the employees understand to improve their work practices continuously. Thus, culture was very helpful to develop a creative environment.

Leadership and change management Semler can be credited with supporting the essential changes at Semco. He nurtured changes that might have been viewed as taking away his power and authority.He created an empowered environment where employees could innovate continuously. An idea he generated would later flood to the whole workforce. 3. 0 Complexity Complexity has always been a part of our environment, and therefore many scientific fields have dealt with complex systems and phenomena. Indeed, some would say that only what is somehow complex – what displays variation without being random – is worthy of interest.

(www. wikipedia. org/) Complexity is a way of describing what occurs in a system by its very nature complexity does not predict an outcome but looks at how complex systems can generate simple outcomes.This means that complexity science provides a new perspective to consider organisations and organisational activities. It analyse a business organisation to give a better insight into the nature of organisational behaviour than is offered by current approaches. According to Levy (1994) “complexity is a promising framework that accounts for the dynamic evolution of industries and the complex interactions among industry actors. ” Organizations and complex systems are non linear such that there is no proportionality between cause and effect.

This means that in non linear systems a small amount of input can lead to enormous change in the output.In the non linear systems the change is not continuous. Long term forecasting is almost impossible and dynamic change can occur unexpectedly as a result, flexibility and adaptiveness is essential for organisations to survive. Therefore, the organization needs to be creative and innovative so that they can move further and survive in this complex environment. Complex adaptive system Every human organization is a network of people, that is, individual agents who interact with each other and with agents in the other organizations that constitute its environment (Charan 1991; Mueller, 1986; Nohria and Eccles, 1992).

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Complexity in human organization is usually drawn on a concept of chaos theory and complex adaptive system. Complex means composed of many parts which are joined together. Adaptive refers to the fact that all living systems dynamically adapt to their constantly changing environments as they strive to survive and thrive and system means everything is interconnected and interdependent. Complex adaptive systems are succinctly defined by Mitlenton-Kelly (1998) as ‘dynamic systems able to adapt and change within, or as apart of a changing environment’.Emergence, co-evolution, self-organization, informality and unpredictability are the main features of complex adaptive systems (Stacey, 2000) and (Henry, 2003). Complex adaptive system Source: www. trojanmice. com Complex adaptive system are made up agents who explore, self organize and learn to adapt changes.

People as agents working in the organization are adept at self organizing. They learn from their experiences and turn things to their own advantage Human networks There are two types of networks which can be found. These networks are legitimate network and the shadow network.The Legitimate network: – it is that type of network interaction which is formally established by the most powerful members of the organization or established by well-understood, implicit principles that are widely accepted by members of the organization – that is a shared culture or accepted ideology. Such links exists before action is taken and are normally designed, or evolved, to enable the performance of what is judged by the most powerful, or the majority, to be organization’s primary task – what the members of an organization need to do to sustain the support of others outside the organization at a given time.The links in this network are in formal nature and are linear in the sense that one and only one response is permitted for any given stimulus, any outputs are proportional to inputs and the system is not more or less than its parts.

* The shadow network: – The second category of links is shadow network. It is informally established and is completely different from legitimate network. The links in shadow network are informally created in which agents develop their own local rules for interacting with each other in the course of that interaction.This system is nonlinear as compared to legitimate which is linear. In shadow system, many qualities are present which are not there in legitimate network. These are: – additional flow of information, energy and actions are flow of emotions, friendship, trust and other qualities. Therefore, an organization consists of two sub-systems, one ideally linear but in practice non-linear to some extent.

This system is legitimate system. The other system is quite definitely nonlinear, which is known as shadow system.Both of these systems can be considered as non-linear as shadow system is always non-linear and legitimate is sometimes. Chaos Theory Chaos theory was discovered by Edward Lorenz in 1960 when he was working on a problem f weather prediction (Higgins, 2007). Chaos theory is a rigorous and formal attempt to deal with the issue of emergent changes that take place in the business environment. According to Kellert (1993) “chaos theory is a qualitative study of unstable aperiodic behaviour in deterministic non linear dynamic systems.” Kellert’s statement suggests that system changes over time and its behaviour do not repeat itself. Chaos theory looks at how very simple things can generate very complex outcomes that could not be predicted by just looking at the parts by themselves.

It also focuses on the behaviour of dynamic systems that are inherently unstable. Chaos science is a science that seeks to explain the phenomena that have always existed, but its focus upon them is fresh and it has a multidisciplinary approach that comes out from the western science tradition that had become increasingly reductionism.A chaotic system is not a random system rather it is a deterministic one. For example: – earth’s atmosphere is a chaotic system. The weather comprises patterns in independent forces such as pressure, temperature, humidity and wind speed which are related to each other by non-linear relationships. The concepts of chaos carry improved details of organizational behavior.

It attempts to explain the fact that complex and unpredictable results can occur in organization that are sensitive to their initial conditions.This means to predict the future with certainty, we need to know the initial conditions with infinite accuracy, since errors increase rapidly even with the slightest inaccuracy. This is the reason why the weather forecast is so difficult because we need to know the initial conditions which are independent forces with infinite accuracy. Chaos theory attempts to explain the fact that complex and unpredictable results can and will occur in systems that are sensitive to their initial conditions. The butterfly effect illustrates the essential idea of chaos theory.

The butterfly effect was first described by Lorenz in December 1972. It is related to a saying that, “a butterfly that flaps its wings can cause a hurricane on the other side of the world”. This relates it to the non-linear system which states that small changes in condition of the system lead to large changes in future. It means that a very small incidence can produce impulsive and sometimes severe results by triggering a series of increasingly major events. The butterfly effect occur under two conditions i. e. when the system is nonlinear and each state of the system is determined by the previous state.For example: – in a business of transportation where trucks are loaded with goods by the help of big machines, a small defect in a machine can lead to delay in transportation of goods, which may lead to fatal causes.

Emergent Property of complex adaptive system There are various properties of complex adaptive systems, important of them are emergence, co-evolution, sub-optimal, connectivity, simple rules, self-organising and many more. Emergent property: – Rather than being planned or controlled, the agents in the system interact in apparently random ways.From all these interactions, patterns emerge which informs the behaviour of the agents within the system and the behaviour of the system itself. (www. trojanmice. com) Emergence refers to the global behavior of the system that cannot be understood from observing the local behaviors between system components among themselves and their environment.

Common example of emergence is a termite hill which is a wondrous piece of architecture with a maze of interconnecting passages, large caverns, ventilation tunnels and much more. Yet there is no grand plan, the hill just emerges as a result of the termites following a few simple local rules.Another good example of emergence is stock-market. As a whole it precisely regulates the relative process of companies across the world, yet it has no leader. There is no one entity which controls the workings of the entire market. Agents, or investors, have knowledge of only a limited number of companies within their portfolio, and must follow the regulatory rules of the market.

Through the interactions of individual investors the complexity of the stock market as a whole emerges. An emergent behaviour can appear when a number of simple agents operate in an environment, collectively forming more complex behaviours.Two of the major reasons why emergent behaviour occurs are intricate causal relations across different scales and feedback.

Emergent systems must have a method by which the output of the system affects the input, and where the past results affect the future results. The type of feedback, however, can neither be purely positive or negative but must consist of a transformative combination of both. Emergent behaviour is hard to predict because the number of interactions between components of a system increases combinatorial with the number of components, thus potentially allowing for many new and subtle types of behaviour to emerge.Complex adaptive systems are not only emergent but are also self organizing in nature. Self organizing means that system structure often appears without any pressure or involvement from outside the system. According to Prigogine’s theory (1983), self organizing systems not only maintain themselves in a stable far from equilibrium, but may even evolve. When the flow of matter and energy increases, they may go through new instabilities and transform themselves into new structures of increased complexity.This means the agents in organizations interact according to their own principles and intentions.

They adapt themselves to the changes that take place in the organizational environment and act accordingly to the circumstances. Self-organizing systems need to be open to their environments. By being open they can exchange matter and energy and so stay alive and far from equilibrium. For example, when we look at the flock of the birds flying all together in the sky, we would think the birds would have to be rather intelligent to work out how to fly in formation like that.We would probably also assume there must be a ‘bird in charge’ giving the others instructions. But the reason is the birds self-organize themselves that they don’t clash with each other and fly in one direction. This is another important property of complex adaptive system.

Self organization and emergence lead to fundamental structural development and not just superficial changes. Innovation is a key tool of complex adaptive system operating in the edge of chaos where stable experiments, learning and adaptation to changes are carried out.This is how the organizations survive the over long and short term futures. Innovation at Semco as an emergent property of CAS Semco did some changes which made it an innovative organization. Following are its characteristics which categories these changes as an emergent property. Structure as an emergent property Emergent structures are patterns which are not created by a single event or rule. There is nothing that commands the system to form a pattern, but instead the interactions of each part to its immediate surroundings cause a complex process which leads to order.One might conclude that emergent structures are more than the sum of their parts because the emergent order will not arise if the various parts are simply coexisting; the interaction of these parts is central.

The structure of Semco is a flat structure. It is more like an emergent structure as it doesn’t have any proper commands over the “satellite program”. The teams are made according to their interest and are complex in nature. It can be thus, easily predicted that structure of Semco is an emergent one. Culture as an emergent propertyAn emergent behaviour can appear when a number of simple agents operate in an environment, collectively forming more complex behaviours. Two of the major reasons why emergent behaviour occurs are intricate causal relations across different scales and feedback.

In Semco, the teams or satellites are made up of various agents who come in a group to achieve their aim. Thus, the culture of Semco can also be categorized as an emergent property of complex adaptive system. Therefore, it can be explored that Semco is an innovative organization and its procedures for innovation can be seen as an emergent property of the complex adaptive system.