Dealing with Complexity LO7476

Gordon Housworth (
Fri, 17 May 1996 17:08:19 -0400

Replying to LO7457 --


At 06:58 16/05/1996 -0400, you wrote:

>Gordon also raises issues about process subversion because of the fact
>that new processes are perceived as defective along the lines of Gregory's

I feel at a disadvantage in that I do have your depth of structured
research and so must rely on empirical observation -- but as it appears to
have had some success in reaching similar conclusions, let me continue.

Process subversion is, to my mind, linked to perceived rational choices
and risk assessment.

I've spent time in VC (Venture Capital) backed firms, and raised venture
capital for both startups and restarts so have a window into that mindset.
(As an aside, VCs are not as risk taking as the general populace thinks --
it is exceedingly difficult to find the "lead" investor around which the
"seconds" will flock (and by and large second their due diligence to that
done by the lead). ) VCs invest in a mere fraction of the proposals
offered to them -- less than 2% -- and go through a massive due diligence
of the technics, market, financials and key corporate players; and then
make a final vote at a partner's meeting (which any single partner can

No VC sets out to lose money, to throw away their investment, yet only
some 5 - 6% of investments generate the fabled 40 to 1 return, some 5 - 7%
merely "wash" or return their initial investment, and the balance goes
down the round clay pipe. This massive mechanism of bright, positive,
reasonably empowered individuals, committed to investing (to action),
committed to making a positive decision, surrounded by a unrivaled wealth
of supporting information, sees the vast majority of its members'
decisions fail. (The investment market, most certainly the venture side,
remains a very imperfect mechanism.)

I try to extrapolate this mindset to more ordinary mortals who have far
less corporate freedom and far more threats which they cannot dodge -- and
am reminded of a lecture by Herman Kahn, some thirty years ago, on
cultural relativity, the punch line of which was that, "The Rockefeller's
chauffeur doesn't care how many millions Rockefeller has but he gets
ulcers if he hears the Vanderbilt's chauffeur is getting 50 cents an hour
more," i.e., that one perceives themselves rich or poor, well off or less
well, according to their peers. In contrast to the venture market of
millions, I've watched professors scheme and position themselves no less
intently for a minor research stipend numbering in the hundreds, or a mere
trip to a convention. I am currently watching the rank and file members of
a commercial client knife one another for one-up-man-ship at the expense
of their overall success and their corporate mission.

No matter what the scope or "radio horizon" of the player, the player
plays for everything on the table, **making the best possible judgment at
the moment of decision among the choices on offer** (or they would have
made a different decision). I see a [non-technical] correlation between
an individual's lack of control (currently and historically) and the
self-interest/myopia of their decision process. There is also, for lack
of a better word, a collapse of time/scale in that the least powerful are
reduced to grabbing that which is within arm's length. And the fewer the
options, the more desperately they are clung thereto.

Already noted in another thread of this forum was the value of using the
Prisoner's Dilemma paradox to show that a stakeholder's rational choice,
the best possible judgment at the moment of decision among the choices on
offer, is often destructive to the group, and ultimately to the
individual. (I use the Dilemma to show clients that unless they can
modify behavior, they can expect to see decisions of short term,
self-interest remain the rule.) Until stakeholders have additional
**believable** options, i.e., modify their behavior, perceiving those new
options as having less risk and more chance of success than the historic
choices, process subversion is the rule rather than the exception. The
consultant or manager that fails to understand the interests and needs of
their stakeholder groups is flogging a dead horse, or certainly a very
inefficient or loss-plagued one.

>send me a snail mail address and
>I will forward the document to you.It is 33 pages long, shows a brief for
>each law, and positions the laws in the Behavior-Outcomes Matrix...
>but you have to promise to send some feedback. I'm not interested in
>just filling up file drawers.

Understood, snail mail address follows, and you may be assured of

Gordon Housworth
Managing Principal
Intellectual Capital Group
26775 Crestwood
Franklin, MI 48025-1347

>We basically use a process called Interactive Management (IM) which has
>been designed to eliminate all of the factors that other processes possess
>which are dysfunctional; and to incorporate factors that other
>dysfunctional processes lack.

I should also like to see a bit more material on IM as well. Thanks for a
good post.

Best regards, Gordon Housworth
Intellectual Capital Group
Tel: 810-626-1310


Gordon Housworth <>

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