Only variety absorbs complexity

Abstract

In the previous chapter, we have seen how the self-organized global criticality of a business ecosystem generates local complexity for its composing parts such as firms, suppliers, and customers. It is one way in which complexity can arise. There are other ways, but the important question remains the same: how can these parts in such a complex environment cope with this complexity? Put another way, suppose the inputs to a firm show all sorts of variations: customer demands, prices of resources, share prices, competitors’ actions, government regulations, and so on. How can a firm respond in order to obtain or maintain certain desired outputs such as quality of products, quality of work life, profitability, social corporate responsibility, and a favorable public image? And, how serious is this environmental complexity really? Can we measure it to get a feel for its magnitude? Subsequently, how can managers take responsibility, and develop their ability to respond creatively to the complexity of environmental inputs, which are in principle unpredictable?