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The Law of Requisite Variety

Coming back to earlier discussions on embracing chaos, here is another lesson from nature!

The Law of Requisite Variety(LRV) : The survival of any system depdends on its capacity to CULTIVATE(not just tolerate!!) variety in its internal structure.

Failure to do so will result in an inability to cope successfully with variety when it is introduced from an external source. For example, fish in a bow can swim, breed, obtain food with minimal effort and remain safe from predators. But as those of us who own a aquarium would know that such fishes are extremely sensitive even to the slightest disturbances. Fish in the sea have to work harder to sustain themselves and cope up with variety, they are subject to many threats. But because they cope with more variation they are more robust when faced with change.

LRV is prevalent in nature. In an Organization's context, this means we not only respect diversity but actually cultivate it to survive!!. In other words Equalibrium is death, Chaos is life!!

Talking about Competition

I was doing some readings on competition and strategic counter alternatives, came across this striking one.

COMPETITORS: The best swordsman in the world doesn’t need to fear the second best swordsman in the world; no, the person for him to be afraid of is some ignorant antagonist who has never had a sword in his hand before; he doesn’t do the thing he ought to do, and so the expert isn’t prepared for him; he does the thing he ought not to do and often it catches the expert out and ends him on the spot.

Mark Twain (A Connecticut Yankee in King Arthur's Court, Chapter XXXIV)

Emergence in Organizations

Emergence became thought of as one of the defining properties of complex systems and over the last twenty years there has been a wide-ranging debate about its nature and causes. However, although emergence may be a defining property of complex systems but it is itself far from easy to define. A more easier(rather complicated) definition is

Emergence is the production of global patterns of behaviour by agents in a complex system interacting according to their own local rules of behaviour, without intending the global patterns of behaviour that come about. In emergence, global patterns cannot be predicted from the local rules of behaviour that produce them. To put it another way, global patterns cannot be reduced to individual behaviour. (Stacey 1996:287)

Designing for Emergence in Organizations is still in its infancy with traditional command and control paradigm widely adopted. Here is a list showing differences between command and control paradigm and emergent paradigm

Command & control paradigm	Emergent paradigm
Keep people in ‘silos’	Build connectivity
Ensure everyone ‘salutes the flag’	Encourage diversity
Manage communication initiatives	Have conversations in corridors
Blame people for failures	Learn from events
Make it clear who’s in charge	Give everyone leadership opportunities
Tell people what to do	Tell people what not to do
Set objectives	Agree clear goals
Keep busy	Wait expectantly

Reference
1. "Emergence in Organizations" by Richard Seel

Talent Acquisition

I read this amusing quote from Tom Peter's "Circle of Innovation", one of the strong advocates of "innovation as a way of life". Read through this slowly:

David Ogilvy the late great advertising man said fundamentally the same thing that “our business needs a major transfusion of talent, and talent I believe is most likely to be found among non-conformers, dissenters and rebels [Pause] The next time you are reviewing a CV, let me offer you a practical advice, if there is nothing strange on the CV, like a lost year, do not hire the person. Never hire people who had incredibly high grade point averages at the university. Because, those are the ones I worry about, The ones who had high averages at university and secondary schools, do you know what exceptionally high grades means, it means you played according to the rules, you bought the act, you colored inside the lines ,effectively to be sure, but the simple fact of the matter is but if some ain't screwed up in a majorly big way in the age of 23 , they are not going to do anything interesting by the age of 83. "

The thought is interesting though, Probably justifies some college drop outs who attained phenomenal success(Bill Gates, Michael Dell). It disproves the practices that organizations follow :look at just grades and degrees get the top cream of B-Schools, who obviously have done nothing else than studying to be on top!. The moral is to look for ordinary people who can pull out extraordinary things!!!

Core Competency Test

I recently went through a re-read of the much acclaimed work of C.K.Prahalad and Gary Hamel "Competing for Future", thought would pen down some of their thoughts through my words and experience!!

Prahalad and Hamel (1990) suggest that the roots of competitve advantantage can be found in the core competencies(dubbed as C2 by practitioners) of a firm. These can be equated to deeply rooted abilities which lie behind the products that a firm produces and which enable the firm to diversify into new markets, by reapplying what the firm does best. Because these competencies are "latent" they are difficult to imitate and they should be seen by management as an integral part of the firm's resources. The authors view core competencies as the culmination of the collective learning of the organisation; in particular, that involving the coordination of different production skills and the integration of multiple streams of technology, which involves a commitment to working effectively across organisational boundaries.

It is always difficult to differentiate core competencies from the rest, hence @SMR we have come up with a much more easier and practical way: The VGD(Value, Gateway,Differentiation) Test. A competency that passes the VGD test could be a "Core Competency" for a given firm.

Ask yourself for a given firm:

Value - Does this competency Produce Significant value to customers?

Gateway - Does this competency acts as a Gateway for survival and future of the organisation?

Differentiation - Does this competency differentiates the organisation from its competitors?

A competency must satisfy all the 3 conditions, to be designated as C2.

Example: Microsoft

Microsoft claims "Innovation" is their core competence(Anti MSFT people take note!!). When we apply VGD Test in this case, by boxing all kinds of innovation on top of its windows platform Microsoft creates immense value for it customers, and this rapid innovation pace(Which some times baffle customers) is definitely the gateway for Microsoft's survival in the cut throat IT industry. Finally the only differentiating factor between Microsoft and its competitors is it s ability to innovate faster. Microsoft spends some thing like USD 6.8 billion a year on its research efforts to be position itself on the frontiers of innovation. Bill Gates once rightly remarked "Microsoft is always 18 months away from going out of business", that is the speed they need to innovate.

Example: Sony

The next example that comes to my mind immediately is Sony Corporation. Just try to think what Sony's core competence is?? After a while you will conclude that it is "Miniaturization" anything and everything that sony does it tries to make it as small , sleek and stylish for us. When bulky radios ruled the world sony has come up with a revolutionary product called as "WalkMan" which swept the world. You can see anything ranging from Cameras to Playstations sony does is relatively small, sleek and stylish than any of its competitive products, that is core competence and that allows sony to pitch its price up than its competitors. You can apply VGD conditions and can see they perfectly pass "Miniaturization" as sony's core competence.

Quite Amusing isn't it, C2 is so hidden in to the firm, so hidden that you cant figure it out or imitate it(atleast immediately) to rip the firm of its competitive advantage.

Will write more regularly in the future!!!