How to Behave in the Face of Complexity - From the Archive
If you aren’t confused, you aren’t paying attention - Charlie Munger
“In life, the challenge is not so much to figure out how best to play the game; the challenge is to figure out what game you’re playing.”
Kwame Appiah (Hat-tip to Alex Danco's excellent post for the quote)
The world seems to have gone mad or is unintelligible. Does anyone really understand what or why things are occurring at this point? Consider that one of the best performing crypto-coins this year is called “Fartcoin.” Not kidding - that’s a real thing - a ‘memecoin.’
It is not just the insanity of the headlines. Everything today is more complex. 30 types of toothpaste. Even the iPhone has 5 different models for sale now. The human brain has a hard time navigating complexity, especially complex systems.
Recall the difference between a complicated system and a complex system. A complicated system is like a Rube Goldberg machine - there may be a lot happening but cause and effect is still predictable.
A complex system is different. Simplifying a bit, in complex system independent actors interact in such a way that system’s behavior is distinct from the individuals. The whole becomes greater than the sum of the parts. The stock market is a great example - it is impossible to predict what will occur.
Increasingly, we participate in more and more complex systems. This could be our jobs, our families, etc. While our brains love to be able to tell a simple story of why something has occurred, this is less possible as we are involved in more complex domains.
So what do we do then - how should we behave?
I would like to propose there are 5 key types of behavior that are required to function well in these environments.
The first behavior is on-going learning. In an environment where cause and effect are discontinuous, you must have an ear to the ground to understand what is actually occurring. This provides the feedback necessary to determine whether a course of action is successful. It will also quickly alert you to changes within the system.
The best example of building this learning mechanism is Gen. Stanley McCrystal's seminal work Team of Teams. As he recounts, he had to dismantle the top-down, command and control model of the military for a distributed, wide ranging style of communication. Learning must occur at an aggregate system wide level, in addition to an individual level.
The second key behavior is probabilistic thinking. There are others who have covered this topic in great length and better details - see Annie Duke's Thinking in Bets . The point being that we need to think in terms of probability and ranges of outcomes vs. attempting to precisely develop a cause and effect.
Ultimately, this means we are less confident in our ability to 'call our shot.' We have to risk manage our choices, knowing that some will be wrong.
The third key behavior is to expect non-linear outcomes. There are cases in complex systems where an outcome will produce a non-linear outcome - either extreme upside or downside volatility. Like a 'super-bounce' on a trampoline in which two events merge to create one sizable event, the same can occur in systems.
The key is whether or not the system can survive the unexpected outcome, or as Taleb described Antifragility, actually become stronger during periods of stress.
The fourth behavior is learning to engage in integrative thinking. Nonlinear environments often mean that simplistic solutions to problems are unlikely to be effective. If that is the case, having a systematic methodology for developing and testing novel solutions is of vital importance. See my post on Integrative Thinking here.
The final behavior is speed. Counter-intuitively, in an environment where predictability is challenged, waiting until complete data is attained is both unlikely to ever occur, nor likely to improve the prediction accuracy. As such the ability to iterate, namely developing and testing solutions to problems, is of vital importance. As John Boyd highlighted in developing his concept of the OODA loop, the speed with which we Observe, Orient, Decide and Act can be a significant factor in in driving success.
The world is undoubtedly more complex. I recognize that this post may feel a bit theoretical. But understanding the game that you are playing is of vital importance. It can help you know what to do - and moreover lower stress in navigating a world with no simple answers.