When Soviet premier Nikita Khrushchev barked “We will bury you!” in 1956, it was not considered an empty threat. It was seen as a real existential threat to capitalism and the American way of life. Many Western intellectuals believed that planned economies might indeed outperform free markets, whose inherent shortcomings—such as volatile economic cycles, lower investment rates, and the inefficiencies of competition—put capitalism at a relative disadvantage.1
Of course, reality turned out very differently, and we can see clearly today why planned economies almost invariably fail. They suppress diversity, initiative, innovation, and the adaptive capacity necessary for survival in an unpredictable environment. This lesson from history reveals an important insight: not only are there inherent limits to human intervention in a complex system—such as the economy—but we have difficulty seeing those limits before the fact.
The same lesson applies to businesses operating in today’s rapidly changing and unpredictable global environment. We have argued that businesses, like forests or oceans or ant colonies, are complex adaptive systems (CASs), in which local behaviors and events can cascade and reshape the entire system.2 As such, businesses are neither fully controllable nor predictable. Traditional approaches to management, which presume the opposite, are therefore often inadequate to address current business challenges.
To succeed over the long run, business leaders must not rely only on the traditional “mechanical” approach to management, which seeks to direct a company toward desired outcomes by engineering processes and controlling the behavior of its various components. They must also learn a “biological” approach, which acknowledges the uncertainty and complexity of business problems and so addresses them indirectly.
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