Tuesday, July 04, 2006
"THE COMPLEXITY ECONOMICS REVOLUTION"
John Hagel, who I wish would post more frequently than he does, reviewing Eric Beinhocker's The Origin of Wealth, at Edge Perspectives:
"Beinhocker’s book takes on a more ambitious task. As he indicates in his preface,
. . . the field of economics is going through its most profound change in over a hundred years. I believe that this change represents a major shift in the intellectual currents of the world that will have a substantial impact on our lives and the lives of generations to come. I also believe that just as biology became a true science in the twentieth century, so too will economics come into its own as a science in the twenty-first century. . . . .
Despite the importance of economic thinking, few people outside the hushed halls of academia are aware of the fundamental changes under way in the field today. This book is the story of what I will call the Complexity Economics revolution: what it is, what it tells us about the deepest mysteries in economics, and what it means for business and for society as a whole.
...First, like most of the complexity theorists that influenced him, Eric puts great emphasis on the need for adaptability. This is certainly appropriate, but it under-estimates the potential for shaping strategies. In environments undergoing rapid change and a high degree of uncertainty, players have more degrees of freedom to alter outcomes than they would have in more static environments. Shaping is of course different from dictating – we are talking about the ability to alter probabilities on the margin rather than designing and imposing outcomes. This is an enormous opportunity for companies of all sizes, yet very little is understood about what is required to be a successful shaper. This is a topic for another blog posting, but shapers have very different mindsets and practices relative to adapters, even though both types of players in the end have to be highly adaptable in the strategies they pursue.
Second, and related to the first, Eric’s rich discussion of business strategy towards the end of his book suffers from a tendency to focus solely on individual enterprises without exploring significant opportunities to pursue strategies that mobilize large networks or webs of participants. His discussion of strategy tends to assume a dichotomy of firm and market, without acknowledging the rich spectrum of relationships that exist between these two extremes. This is particularly surprising since, earlier in his book, Eric explores with great insight the role of networks in complex adaptive systems. "
Read John Hagel's post in full. ¶ 8:56 PM
John Hagel, who I wish would post more frequently than he does, reviewing Eric Beinhocker's The Origin of Wealth, at Edge Perspectives:
"Beinhocker’s book takes on a more ambitious task. As he indicates in his preface,
. . . the field of economics is going through its most profound change in over a hundred years. I believe that this change represents a major shift in the intellectual currents of the world that will have a substantial impact on our lives and the lives of generations to come. I also believe that just as biology became a true science in the twentieth century, so too will economics come into its own as a science in the twenty-first century. . . . .
Despite the importance of economic thinking, few people outside the hushed halls of academia are aware of the fundamental changes under way in the field today. This book is the story of what I will call the Complexity Economics revolution: what it is, what it tells us about the deepest mysteries in economics, and what it means for business and for society as a whole.
...First, like most of the complexity theorists that influenced him, Eric puts great emphasis on the need for adaptability. This is certainly appropriate, but it under-estimates the potential for shaping strategies. In environments undergoing rapid change and a high degree of uncertainty, players have more degrees of freedom to alter outcomes than they would have in more static environments. Shaping is of course different from dictating – we are talking about the ability to alter probabilities on the margin rather than designing and imposing outcomes. This is an enormous opportunity for companies of all sizes, yet very little is understood about what is required to be a successful shaper. This is a topic for another blog posting, but shapers have very different mindsets and practices relative to adapters, even though both types of players in the end have to be highly adaptable in the strategies they pursue.
Second, and related to the first, Eric’s rich discussion of business strategy towards the end of his book suffers from a tendency to focus solely on individual enterprises without exploring significant opportunities to pursue strategies that mobilize large networks or webs of participants. His discussion of strategy tends to assume a dichotomy of firm and market, without acknowledging the rich spectrum of relationships that exist between these two extremes. This is particularly surprising since, earlier in his book, Eric explores with great insight the role of networks in complex adaptive systems. "
Read John Hagel's post in full. ¶ 8:56 PM
