Crisis and Renewal

The Dynamics of Natural Systems

Nature responds to opportunities. New spaces are colonized quickly after a fire that destroys a forest and leaves charred ground. Pioneering plants adapted to survive in harsh conditions arrive first, and spread quickly. Once established, they offer protection and pave the way for others. As vegetation re-establishes itself, early colonizers are followed by grasses, shrubs and trees. Over decades, a rich interconnected ecosystem is recreated. The system settles once again into a stable state.

Secondary Succession after Forest Fire. Source: Encyclopedia Britannica (2006)

Through this progression, the ecosystem redirects its energy from regaining a foothold to sustaining a mature forest.

In nature, this cycle is repeated again and again, triggered by new disruptions. Resilient ecosystems cope with shock and stress by adapting and rebounding from adverse events. If the disruption is too great, recovery isn’t always possible. The system may collapse rather than enter a new cycle of recovery and growth.

C. S. Holling was a pioneer in applying the concepts of nonlinear dynamics to ecology. He called the repeating pattern of crisis and renewal in natural systems the ‘Adaptive Cycle,’ and illustrated it graphically as an infinite loop.

The Adaptive Cycle. Source: Lance H. Gunderson and C. S. Holling.
Panarchy: Understanding Transformations in Human and Natural Systems (2001)

As an ecosystem moves through successive states, potential and connectedness increase or decrease. Potential is the accumulated reserve of nutrients and biomass inside the system. Connectedness is the strength of the internal linkages and controls that regulate the system and its relationship with the outside world.

There are two trajectories in the Adaptive Cycle. The foreloop moves from the bottom left to the top right of the diagram, transitioning from slow, incremental growth (exploitation) to stability and maintenance of the status quo (conservation). Triggered by a crisis, the backloop moves from the bottom right to the top left, transitioning from a rapid release of resources (release) to restructuring and emergence of a newly adapted system (reorganization).

If reorganization is successful, the cycle repeats itself. Otherwise, the system collapses (exit left).

The Dynamics of Organizations

Organizations and social systems follow a similar pattern. In Crisis and Renewal: Meeting the Challenge of Organizational Change (2002), David K. Hurst applied Holling’s Adaptive Cycle model to business organizations. Extending and enriching the model with management thinking, he called the resulting pattern an ‘ecocycle.’

Mary M. Crossan and David K. Hurst. “Strategic Renewal as Improvisation:
Reconciling the Tension Between Exploration and Exploitation.”
Advances in Strategic Management, Volume 23, 273–298. 2006.

Like Holling’s foreloop, Hurst says, “The first half of the ecocycle, the conventional life cycle, tracks the development of a performance-oriented organization from its entrepreneurial beginnings until it becomes dominated by its technical system and the institutions associated with it. It is toward the end of this loop that the total system starts to become negatively constrained, unable to adapt gradually to change and hence prone to crisis.” Like Holling’s backloop, he says, “The other half of the ecocycle, the learning loop, is the story of the evolution of a social system, which, after the constraints of the technical system are broken, leads to the emergence of choice, to freedom.”

“Thus,” Hurst says, “for an organization to survive it must continually traverse both loops at all scales – that is, on all levels of the organization.” As in natural systems, the cycle needs to repeat itself for the organization to adapt to changing conditions and survive.

Hurst used ‘birth,’ ‘maturity,’ ‘creative destruction’ and ‘reconception’ in place of the terms used in the Adaptive Cycle – ‘exploitation,’ ‘conservation,’ ‘release’ and ‘reorganization.’ The process is the same.

The challenge in business is to be able to cope with two opposing needs simultaneously: the drive to maintain efficiency, and the imperative to innovate quickly in response to change.

“Contradictions become compounded,” Hurst says, “when one juxtaposes the renewal cycle with the performance loop of the conventional life cycle. For during the renewal of established organizations, managers have to come to grips with both loops in real time. And the nexus of the conflict is where the two forms of rationality cross – where the demand to live our values clashes with the requirement for instrumental behavior. It is where the social vision of an egalitarian, participative community clashes with the need to run a technically rational, hierarchical organization.”

This creates deep tensions. An organization has to balance ‘Exploitation’ of a historically successful operating model with the ‘Exploration’ of new possibilities. Hurst calls this zone of tension at the centre of the Ecocycle the ‘Sweet Spot.’

Mary M. Crossan and David K. Hurst. “Strategic Renewal as Improvisation:
Reconciling the Tension Between Exploration and Exploitation.”
Advances in Strategic Management, Volume 23, 273–298. 2006.

In his book The New Ecology of Leadership: Business Mastery in a Chaotic World (2012) Hurst uses this model to distinguish between the roles of Management and Leadership.

Management, he says, is focused on the exercise of power.

“It takes power of many kinds to manage size and complexity and to keep an organization on track: power of position, power of processes, power over resources, power to reward, power to punish, and so on. With the organization’s goals considered as givens, management tools and settings are often the embodiment of hierarchical power over people in the form of rules and regulations, specialization, standardization, hierarchy, and incentives.”

Leadership, he says, is focused on transformation.

“Leadership is about synthesis, not analysis. If management is about tasks and means (transactional), leadership is about relationships and ends (transformational). Leadership is about hunting, exploration, movement – finding the right questions rather than supplying the right answers. Leadership tools and settings create contexts and conditions for innovation and the discovery of new opportunities.”

Accelerating Change

We have traversed this cycle many times through history, and it is a truism that we now live in a time of rapid change. The shocks are  stronger and more frequent, challenging organizations and social systems to cope with an accerating cycle of crisis and renewal. One of the biggest tests is soon to come.

In the twenty-first century, technology will continue to be the primary driver of social and economic disruption. Ray Kurzweil proposed “The Law of Accelerating Returns” in his book The Age of Spiritual Machines: When Computers Exceed Human Intelligence (1999), and elaborated on these ideas in The Singularity is Near: When Humans Transcend Biology (2005). His exponential curve of technological change was illustrated in a Time magazine article ().

2045: The year man becomes immortal.” Source: Kurzweil AI.

Ray Kurzweil described the far-reaching implications of the curve in an essay published on the Kurzweil AI website in 2001 — a prospect viewed by some as utopian and by others as dystopian.

“An analysis of the history of technology shows that technological change is exponential, contrary to the common-sense ‘intuitive linear’ view. So we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate). The ‘returns,’ such as chip speed and cost-effectiveness, also increase exponentially. There’s even exponential growth in the rate of exponential growth. Within a few decades, machine intelligence will surpass human intelligence, leading to The Singularity — technological change so rapid and profound it represents a rupture in the fabric of human history.”

Machine intelligence will be a massively destabilizing force. We are already teetering on the edge of a new tipping point, entering a period Erik Brynjolfsson and Andrew McAfee call the Second Machine Age [The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. 2014.], where smart machines will be able to perform tasks that previously required human intelligence. This will deliver a blow as great as the first Industrial Revolution. Carl Benedikt Frey and Michael Osborne at the University of Oxford estimate 47 per cent of jobs will be automated.

It is hard to imagine the impact. The past will not provide a helpful guide to the future, yet organizations and social systems will be compelled to respond. “If the rate of change on the outside exceeds the rate of change on the inside,” Jack Welch, former CEO of General Electric, once said, “then the end is near.” This will launch an urgent new round of creative destruction and renewal.

Featured image: Seedling. Pixabay.