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Copyright © 2007 Tennenbaum Institute. All rights reserved. Knowledge and Skills for Enterprise Transformation. Complex Systems Characteristics & Sense.

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Presentation on theme: "Copyright © 2007 Tennenbaum Institute. All rights reserved. Knowledge and Skills for Enterprise Transformation. Complex Systems Characteristics & Sense."— Presentation transcript:

1 Copyright © 2007 Tennenbaum Institute. All rights reserved. Knowledge and Skills for Enterprise Transformation. Complex Systems Characteristics & Sense Making William B. Rouse

2 Knowledge and Skills for Enterprise Transformation.2

3 3 Overview Complexity & Complex SystemsComplexity & Complex Systems –Definitions –Intentions –Views Healthcare DeliveryHealthcare Delivery –Stakeholders & Issues –Disease Detection –Complex Adaptive Systems –Market Complexity –Health Advisor Sense MakingSense Making –Value Philosophy –Organizational Behaviors –Situation Assessment SummarySummary

4 Knowledge and Skills for Enterprise Transformation.4 Complexity The intrinsic amount of resources, for instance, memory, time, messages, etc., need to solve a problem or execute an algorithm (NIST, 2004)The intrinsic amount of resources, for instance, memory, time, messages, etc., need to solve a problem or execute an algorithm (NIST, 2004) How long it would take, or how much capacity would be required, at a minimum, for a standard universal computer to perform a particular task (Gell-Mann, 1995)How long it would take, or how much capacity would be required, at a minimum, for a standard universal computer to perform a particular task (Gell-Mann, 1995) The length of a concise description of a set of an entitys regularities (Gell-Mann, 1995)The length of a concise description of a set of an entitys regularities (Gell-Mann, 1995) The essence of complexity is the elaboration of highly structured communication, computing, and control networks that also create barriers to cascading failure events (Carlson & Doyle, 1995)The essence of complexity is the elaboration of highly structured communication, computing, and control networks that also create barriers to cascading failure events (Carlson & Doyle, 1995)

5 Knowledge and Skills for Enterprise Transformation.5 Complex Systems System: A group or combination of interrelated, interdependent, or interacting elements that form a collective entity. Elements may include physical, behavioral, or symbolic entities. Elements may interact physically, mathematically, and/or by exchange of information. Systems tend to have purposes, although in some cases the observer ascribes such purposes. Complex System: A system whose perceived complicated behaviors can be attributed to one or more of the following characteristics: large numbers of elements, large numbers of relationships among elements, nonlinear and discontinuous relationships, and uncertain characteristics of elements and relationships. Complexity is perceived because apparent complexity can decrease with learning.

6 Knowledge and Skills for Enterprise Transformation.6 Complexity = f (Intentions) System (S) Input (U)Output (Y) IntentionExample Classification Its an instance of type S. Explanation Its type S because …. Prediction Its future output will be Y. Control If input is U, its output will be Y. Detection Its output is not Y, but should be. Diagnosis Its output is not Y because …

7 Knowledge and Skills for Enterprise Transformation.7 Views of Complex Systems Hierarchical MappingsHierarchical Mappings Uncertain State EquationsUncertain State Equations Discontinuous, Nonlinear MechanismsDiscontinuous, Nonlinear Mechanisms Autonomous AgentsAutonomous Agents

8 Knowledge and Skills for Enterprise Transformation.8 Hierarchical Mappings Systems engineering = Processes for designing, developing, deploying, and sustaining complex systemsSystems engineering = Processes for designing, developing, deploying, and sustaining complex systems Hierarchical decomposition of a very complicated design task into component tasksHierarchical decomposition of a very complicated design task into component tasks Management of the execution of these tasks and integration of task outcomesManagement of the execution of these tasks and integration of task outcomes Complexity typically due to large numbers of interacting elementsComplexity typically due to large numbers of interacting elements A large number of reasonably straightforward tasks whose outcomes will flow together to create a successful complex systemA large number of reasonably straightforward tasks whose outcomes will flow together to create a successful complex system Appropriate resolution of multi-attribute tradeoffs across multiple stakeholdersAppropriate resolution of multi-attribute tradeoffs across multiple stakeholders Complexity managed by dividing and conquering itComplexity managed by dividing and conquering it

9 Knowledge and Skills for Enterprise Transformation.9 State Equations Systems engineering = Design of mechanisms whereby the state evolves affecting system response and stabilitySystems engineering = Design of mechanisms whereby the state evolves affecting system response and stability Central design issue is nature of appropriate feedback mechanisms for controlling system stateCentral design issue is nature of appropriate feedback mechanisms for controlling system state Observability and controllability are key constructs; optimization of control often an overriding goalObservability and controllability are key constructs; optimization of control often an overriding goal Inabilities to fully specify state-transition mechanisms & uncertainties limit formulation to constrained optimality.Inabilities to fully specify state-transition mechanisms & uncertainties limit formulation to constrained optimality. Formal depiction and manipulation of mechanisms underlying complex behaviors seldom scale upFormal depiction and manipulation of mechanisms underlying complex behaviors seldom scale up Complexity due to large numbers of state variables and significant levels of uncertaintyComplexity due to large numbers of state variables and significant levels of uncertainty Pursuit of optimal control solutions often made possible by assumptions of linearityPursuit of optimal control solutions often made possible by assumptions of linearity

10 Knowledge and Skills for Enterprise Transformation.10 Nonlinear Mechanisms Simple underlying phenomena yield complex behaviors for systems with very few elements, perhaps even just one element with particular interaction termsSimple underlying phenomena yield complex behaviors for systems with very few elements, perhaps even just one element with particular interaction terms Nonlinear and/or discontinuous nature of the elements lead to behaviors labeled as catastrophes, chaos, etc.Nonlinear and/or discontinuous nature of the elements lead to behaviors labeled as catastrophes, chaos, etc. Systems that appear simple can produce very complex behaviors; complex phenomena may be attributable to simple mechanisms.Systems that appear simple can produce very complex behaviors; complex phenomena may be attributable to simple mechanisms. Complexity due to departures from our expectations of continuous, linear phenomenaComplexity due to departures from our expectations of continuous, linear phenomena Understand complexity by exploring underlying mechanisms which may lead to design solutions.Understand complexity by exploring underlying mechanisms which may lead to design solutions. Formal systems approaches tend to flounder when addressing fairly small numbers of nonlinear mechanismsFormal systems approaches tend to flounder when addressing fairly small numbers of nonlinear mechanisms

11 Knowledge and Skills for Enterprise Transformation.11 Autonomous Agents Composition of large numbers of simple behaviors into overall system behaviors that exhibit hallmark characteristics of complex systemsComposition of large numbers of simple behaviors into overall system behaviors that exhibit hallmark characteristics of complex systems Simple behaviors created by autonomous agents acting independently in pursuit of their individual goalsSimple behaviors created by autonomous agents acting independently in pursuit of their individual goals Reactions of agents to each others behaviors result in emergent phenomena that could not have been predicted by dissecting individual agents.Reactions of agents to each others behaviors result in emergent phenomena that could not have been predicted by dissecting individual agents. Understanding the nature of incentives, motivations, and prohibitions that will influence individual agents to contribute to creating desirable collective behaviorsUnderstanding the nature of incentives, motivations, and prohibitions that will influence individual agents to contribute to creating desirable collective behaviors Understanding and managing complexity are experimental rather than axiomatic undertakingsUnderstanding and managing complexity are experimental rather than axiomatic undertakings Many things can be demonstrated but few can be provenMany things can be demonstrated but few can be proven

12 Knowledge and Skills for Enterprise Transformation.12 Contrasting Views No.ViewApproachFocus 1 Hierarchical Mappings Design decomposition Engineering solutions 2 State Equations Axiomatic derivation Control performance 3 Nonlinear Mechanisms Behavior demonstration Basis of complexity 4 Autonomous agents Empirical assessment Emergent behaviors

13 Knowledge and Skills for Enterprise Transformation.13 An Example Effects of turbulent flow on aerodynamic behavior and vehicle performance in high-density trafficEffects of turbulent flow on aerodynamic behavior and vehicle performance in high-density traffic –View No. 1 for designing the vehicle –View No. 2 to explore vehicle dynamics –View No. 3 to model turbulence –View No. 4 to understand traffic effects Problem, e.g., poor vehicle handling qualities vs. traffic congestion problemsProblem, e.g., poor vehicle handling qualities vs. traffic congestion problems

14 Knowledge and Skills for Enterprise Transformation.14 Healthcare Delivery Stakeholders & IssuesStakeholders & Issues Disease DetectionDisease Detection Complex Adaptive SystemsComplex Adaptive Systems Market ComplexityMarket Complexity Health AdvisorHealth Advisor

15 Knowledge and Skills for Enterprise Transformation.15 Stakeholders & Interests Stakeholder Risk Mgt. PreventionDetectionTreatment Public e.g., Buy Insurance e.g., Stop Smoking e.g., Get Screened Delivery Sys Physicians Physicians & Hospitals Government Medicare, Medicaid, Congress NIH, CDC, DoD, et al. Non-Profits American Cancer Society, American Heart Association, et al. Academia Business Schools Basic Science Disciplines Technology & Medical Schools Medical Schools Business Employers, Insurance Companies, HMOs Guidant, Medtronic, et al. Lilly, Merck, Pfizer, et al.

16 Knowledge and Skills for Enterprise Transformation.16 Disease Detection Costs Covered Public Awareness Public Readiness Screening Available Screening Effective Public Communication Public Education Physician Education Consumer Advocacy Medical Research $$$$$ Public, Delivery System, Government, Non-Profits, Academia, Business

17 Knowledge and Skills for Enterprise Transformation.17 LEAPFROG AMA CMSSAOA LCME AOA-COPTJCAHOAAFPACGME FSMB ABMSAARPNBGHACCME

18 Knowledge and Skills for Enterprise Transformation.18 Complex Adaptive Systems They are nonlinear, dynamic and do not inherently reach fixed equilibrium points. The resulting system behaviors may appear to be random or chaotic.They are nonlinear, dynamic and do not inherently reach fixed equilibrium points. The resulting system behaviors may appear to be random or chaotic. They are composed of independent agents whose behavior can be described as based on physical, psychological, or social rules, rather than being completely dictated by the dynamics of the system.They are composed of independent agents whose behavior can be described as based on physical, psychological, or social rules, rather than being completely dictated by the dynamics of the system. Agents' needs or desires, reflected in their rules, are not homogeneous and, therefore, their goals and behaviors are likely to conflict -- these conflicts or competitions tend to lead agents to adapt to each other's behaviors.Agents' needs or desires, reflected in their rules, are not homogeneous and, therefore, their goals and behaviors are likely to conflict -- these conflicts or competitions tend to lead agents to adapt to each other's behaviors. Agents are intelligent, learn as they experiment and gain experience, and change behaviors accordingly. Thus, overall systems behavior inherently changes over time.Agents are intelligent, learn as they experiment and gain experience, and change behaviors accordingly. Thus, overall systems behavior inherently changes over time. Adaptation and learning tends to result in self-organizing and patterns of behavior that emerge rather than being designed into the system. The nature of such emergent behaviors may range from valuable innovations to unfortunate accidents.Adaptation and learning tends to result in self-organizing and patterns of behavior that emerge rather than being designed into the system. The nature of such emergent behaviors may range from valuable innovations to unfortunate accidents. There is no single point(s) of control – systems behaviors are often unpredictable and uncontrollable, and no one is "in charge." Consequently, the behaviors of complex adaptive systems usually can be influenced more than they can be controlled.There is no single point(s) of control – systems behaviors are often unpredictable and uncontrollable, and no one is "in charge." Consequently, the behaviors of complex adaptive systems usually can be influenced more than they can be controlled.

19 Knowledge and Skills for Enterprise Transformation.19 Pharmaceuticals Health Wholesalers Health Providers Consumers Pharmacy Medical Equipment Other Equipment Health Insurance Government & Policy Makers R&D Laboratories

20 Knowledge and Skills for Enterprise Transformation.20

21 Knowledge and Skills for Enterprise Transformation.21 Health Advisor

22 Knowledge and Skills for Enterprise Transformation.22

23 Knowledge and Skills for Enterprise Transformation.23 CONSUMER No. 1 Health State Provider Choice Benefits Provider Choice Information Provider Choice CONSUMER No. 2 Health State Provider Choice Benefits Provider Choice Information Provider Choice CONSUMER No. 3 Health State Provider Choice Benefits Provider Choice Information Provider Choice CONSUMER No. M Health State Provider Choice Benefits Provider Choice Information Provider Choice WORLD Economy, e.g., Recession Decreased Sales Politics, e.g., War Increased Acute Health Environment, e.g., Pollution Increased Chronic Health PROVIDER No. 1 Patients Outcomes Patients Claims Claims Revenue PROVIDER No. 2 Patients Outcomes Patients Claims Claims Revenue PROVIDER No. 3 Patients Outcomes Patients Claims Claims Revenue PROVIDER No. N Patients Outcomes Patients Claims Claims Revenue BENEFITS Family Coverage, e.g., Employee % Medical Coverage, e.g., 80/20% Out-of-Pocket, e.g., Co-Pay Wellness Coverage INFORMATION Provider Prices Provider Performance Symptoms Diagnosis Diagnosis Treatment Patient Health Record Wellness Programs Health HEALTH Probability of Chronic Problems Probability of Acute Problems CHOICES Coverage Yes/No Provider 1, 2, 3 or N EMPLOYER Sales Jobs Sales Benefits Rates Benefits INSURER Benefits Revenue Claims Costs Profits Rates

24 Knowledge and Skills for Enterprise Transformation.24 OrgSim Architecture

25 Knowledge and Skills for Enterprise Transformation.25 Sense Making Value PhilosophyValue Philosophy Organizational BehaviorsOrganizational Behaviors Situation AssessmentSituation Assessment

26 Knowledge and Skills for Enterprise Transformation.26 Value Philosophy Value focuses on organizational outputs (or outcomes), rather than inputs.Value focuses on organizational outputs (or outcomes), rather than inputs. Value relates to benefits of outcomes, rather than outcomes themselves.Value relates to benefits of outcomes, rather than outcomes themselves. Value implies relevant, usable, and useful outcomes.Value implies relevant, usable, and useful outcomes.

27 Knowledge and Skills for Enterprise Transformation.27 Organizational Behaviors Traditional System Complex System RolesManagementLeadership Methods Command & Control Incentives & Inhibitions MeasurementActivitiesOutcomes FocusEfficiencyAgility RelationshipsContractual Personal Commitments NetworkHierarchyHeterarchy Design Organizational Design Self Organization

28 Knowledge and Skills for Enterprise Transformation.28 Situation Assessment System StateSystem State –Current and projected value flows –Current and projected problems System PerformanceSystem Performance –Current and projected value, costs & value/cost –Current and projected options for contingencies System StakeholdersSystem Stakeholders –Involvement of each stakeholder group –Performance of each stakeholder group Information SystemsInformation Systems –Measurement, modeling & display of system state –Agile What If? experimentation & adaptation

29 Knowledge and Skills for Enterprise Transformation.29 Summary Complexity & Complex SystemsComplexity & Complex Systems –Definitions –Intentions –Views Healthcare DeliveryHealthcare Delivery –Stakeholders & Issues –Disease Detection –Complex Adaptive Systems –Market Complexity –Health Advisor Sense MakingSense Making –Value Philosophy –Organizational Behaviors –Situation Assessment

30 Knowledge and Skills for Enterprise Transformation.30


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