In three recent posts I laid out a Paradox of Systems Science (Part I , Part II. and Part III). To recap, the Systems Paradox is:

• The whole of each business is, and always will be, a complex adaptive system containing, and interacting with, many other complex adaptive systems.
• To take action within this whole complex world, though, we must at least partly reduce it by focusing on parts and systems. These reductions are a focus of traditional systems science.
• No matter how successful these reductions, they always create errors because we will no longer understand the whole world within which we must thrive. 

Having set up and explored the idea, this post concludes the series looking at complexity based principles by which we can leverage the value of system reductions while remaining capable of change and adaptation. Fortunately, by learning from complexity’s insights we find ways to do business which step outside system reductions to work alongside them so that companies are resilient when those systems inevitably fail (as they always will). Yet because there are no universal rules or laws for this challenge, so we work from sets of principles to limit the damage of system assumptions.

Principle: The system is NOT the goal; Company whole success IS the goal

Managerial training today tells managers and executives to focus on the system with the mythology that if the system is perfect, then the whole result will also be perfect. Except, no business in history has worked this way. As W. Edwards Deming has observed, if the whole is optimized the parts cannot be.

Belief in “the system,” though, tends to dominate company actions leading to future failure or mediocrity. Steve Jobs saw this:

“As a company becomes successful, it tends to assume there is ‘magic’ in the process that led to that success, and it tries to replicate that process.” Thus executives “institutionalize process across the company. Before long, people get confused that the process is the content. . . . I found that the best people are the ones that really understand the content. (By ‘content,’ think what truly drives results in your business.)”

Through time, then, companies and their entire range of employees need to continually return focus to their overall aspiration. Only clear aspirations enable employees to self-organize for the benefit of the company—self-organization which has extraordinary economic benefits and delivers, in the right situations, far more than traditional top down planning.

In many ways, one of the most severe failings of modern business is that aspirations for the company have been replaced by a focus on “shareholder value.” Yet the best shareholder value comes about when companies do what matters within their market. While shareholder value IS important, its is a secondary result of a company doing business with savvy and ingenuity.

Principle: Deciding “what NOT to do” will not ensure success

In a 1996 article in the Harvard Business Review Michael Porter suggests “The essence of strategy is choosing what not to do.” As this quote has become famous, we have forgotten that Porter noted many other things as ALSO the essence of strategy in statements like “essence of strategy is in the activities—choosing to perform activities differently or to perform different activities than rivals.” Also little remembered is the excellent observation that “A sound strategy is undermined by a misguided view of competition, by organizational failures, and, especially, by the desire to grow.”

It is unfortunate that the one idea became famous while the others were ignored as it suggests strategy is all about sacrifice—about what NOT to do. It should be clear that this idea is not true. While it is a grave error to scatter resources so they cannot have a concerted effect, company success requires positive, pro-active focus on what should be done. While companies must choose where and how they operate, it is far more important to find what they SHOULD do in order to have outsized results—to deliver a value substantial enough that customers will want to pay for it (the essence of demand). Companies thrive by being proactive through actions which lead to valuable whole results. Only such a focus can keep a company from a deadly obsession with systems.

Another truth of complexity also suggests errors in the idea of strategy as sacrifice. The complex world around our companies is continually adapting and changing and we cannot predict when those changes move activities from the “not to do” list into activities which must be pursued. Companies rarely manage to adapt when this happens.

Principle: Complexity is always active—even within system reductions

When companies believe they have found a systematic way to ensure business health they assume the system is all that matters. Embedded in this assumption they also want to believe that complexity is no longer important leading management consultants to reserve issues of complexity for boards and executives.

Yet complex effects remain continually active throughout company efforts and always affect how a system proceeds. Thus, system assumptions are only guidance and cannot turn a business into a machine. Further, systems companies believe support their success do so only because they benefit from complex effects—not because they eliminate its presence.

How might this be? The critical effects of complexity needed for company success include employee self-organization, employee and organizational adaptation, leveraging unexpectedly useful connections, employee self-motivation, ecosystem effects, and far more. So while most companies wish their systems operated hierarchically to control all that happens within the system, nothing is further from the truth. While a well identified system can guide work to make it more effective, people remain people, parts continually interact, and emergent forces matter a great deal. In other words, a great deal will always happen (and is always needed to happen) outside the system.

Unfortunately, executives apply system assumptions as if they control the company. As one example, company HR organizations create systematic approaches to hiring they claim ensure the company hires the employees most important for its needs. Yet no hiring system does this. Further, all successful hiring requires accidents of connection and emergence leading the company to discover some newly hired employees deliver unexpected and outsized value while some who were expected to be extraordinary fail to deliver. Companies need these accidents if they are to have in place employees capable of building company success within a future reality which is unknown and cannot be predicted.

Principle: Be wary of growing system rigidity

A common pattern within systems thinking leads managers to impose systems ever more rigidly. We see this most clearly in companies which begin, and first succeed, entrepreneurially.

1. Entrepreneurial leadership discovers success and, over time, works within that success so that a system coalesces which appears to increase success—at least at the moment. Through this process, the entrepreneurial leadership will have learned a great deal about the pitfalls of their systems and the complexity within which the company succeeds.
2. As time passes, executives begin paying more attention to keeping investors happy both to satisfy the board and be able to raise future cash. Yet investors value companies according to whether they can reliably predict their future results. This demand for prediction encourages executives to impose systems ever more rigidly because they believe it will guarantee this future. While this focus may deliver success for a time, the effort will always, eventually, backfire.
3. Along the way, entrepreneurial founders will begin stepping back from day-to-day operations. When they do, managerially trained executives step into the void to impose systems more rigidly. Because these managers do not know system nuances which the founders had learned, they ignore what founders knew as they attempt to “cash in” the system in the company.
4. New CEOs often believe it is their job to bring “rigor” to the operation and board members may even have made that rigor the focus of their hiring. Such CEOs then bring in large numbers of managers to implement the system ever more rigorously.
5. At some point, this rigor turns into rigor mortis as it passes an inflection point to become so inflexible it is no longer capable of critical adaptation.

It is rare that companies avoid these dangers. Howard Schultz, after founding Starbucks as a drink chain, was CEO from 1987 until 2001. He returned as CEO in 2008 because management replicating the company “system” in vast numbers of new stores had led stores to lose the values by which they had originally succeeded. Schultz felt he was needed to right the ship of state and his return was effective as Starbucks returned to a path of excellent performance. And, yet, as soon as Schultz once again stepped back from being CEO, results and company obsession with system rigor appeared to have returned.

Let me re-emphasize the danger when companies hire managers focused on managerial methods. Such managers have, at Disney, become armies of MBAs who run the company without comprehending the creativity of the company’s animation businesses. Similar misguided hiring seems to have taken over Starbucks and stands in the way of their latest CEO’s attempts to return the company to health. It takes tremendous effort for a CEO to overcome the inertia of a managerial army trained to rigidly apply systems through metrics and standards.

Principle: A company must pass historical learning to new generations 

Throughout history, each new generation has had to re-learn critical lessons which prior generations had already learned. While words, bureaucracies, rules or laws, and culture help pass along these lessons, a great deal is always lost in the process. Many lessons only matter when learned directly and specifically by those who must internalize them. It is not possible to use company meetings to “tell people” what has been previously learned.

The situation is worse because each new generation is caught between existing success and wanting to offer something unique in time and place. While a new generation offers fresh learning through its fresh eyes, that learning can only succeed when combined with the experience of those with metaphorically grey hair. For my part, I believe every company needs to hold close a concept known as Chesterton’s Fence based on the writing of British author GK Chesterton who observed:

In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.” (emphasis added)

While experimentation and innovation among new generations is critical for survival, so is the conservatism of Chesterton’s Fence—a demand that the next generation must explain why a certain habit, rule, or cultural expectation came into existence before it is allowed to consider replacing or changing it. Chesterton does not deny, in this, that replacing the fence might be important. His argument is that the fence is in place for a reason and we should understand it’s purpose before we move it—otherwise the unintended consequences of our actions can be fatal.

Principle: Detect, and listen, to complexity as it affects your company

As companies do business, constant small signs of complexity affecting their work are always present and can be detected by those savvy with complex effects. These signs are small because early indications of complexity rarely loudly proclaim themselves. We usually first detect complexity at work when (a) small efforts deliver results far better than we would expect, (b) small actions or changes do far more damage than one would expect for their size, or (c) large efforts deliver far less than we expect. In all cases, these asymmetrical—non-linear—results of actions tell us that complexity is at work.

History shows those who remain, always, a step ahead of the competition have extraordinary skills for detecting and listening to these asymmetrical results. Such results begin revealing the limits of our system assumptions as well as where and how they fail. This helps us think about systems in new ways—changing our understanding, expanding how we interpret them, or even modifying the assumptions—in ways which enhance company growth.

Critically, these whispers of complexity, clearly and accurately heard, will always challenge a company’s system assumptions. This truth also makes them difficult as they those who hear them face considerable opposition within entrenched company structures who believe the system assumptions are absolute.

Principle: Making system efficiency your top priority is a deadly mistake

Once companies believe they have found effective systems, they begin making those systems ever more efficient—partly because it is easier to show increased efficiency than long term effectiveness. Yet in the natural world, survival goes to the fittest or most effective species members in a time and place—not the most efficient. Further, systems in the natural world have a requisite inefficiency which is critical to their being resilient within inevitable change.

The truth about efficiency is that:

1. No company can “efficiency itself” to success as there is no future success without demand for products and services at that future time. Efficiency cannot—ever—ensure future demand.
2. There are a few times when a given company is so inefficient that a short-term focus on efficiency is critical for it to survive into the long term. These times, though, are the exceptions and not the rule.

Principle: Always be experimenting 

System reductions in place, companies believe “innovation” must live within their system. This is a serious mistake. Innovation does not succeed if forced to live within the company system as this prevents it discovering what will be critical in the future. After all, there will only be future demand when innovation shows the way to succeeding in conditions far different from those within which the system thrives today.

Experimentation must be continually pursued at two levels:

1. Every department at every level in every company must experiment continually in small ways. No matter how thoroughly a company trusts its systems and best practices, the continual complex evolution of markets, customers, employees, and environment require continual experimentation testing the value of those best practices. It may be that 10% of a department’s efforts should explore beyond assumed boundaries. A customer service operation with carefully constructed phone scripts, then, should sometimes have key service reps try new things outside that script then learn from the experience.
2. Every company needs to also experiment with what we might call the big things—developing a foundation so they are prepared for the unknown they face next. System assumptions, after all, will fail at some point. No company will discover the ideas necessary to survive this failure if they handcuff experimentation within today’s system assumptions.

I have it particularly discouraging that many working in innovation reject exploration paths because they cannot see how they fit within the company’s system limits. I’ve often noted that if we believe limits force us to exist within a box then we have lost the battle—and no amount of “outside the box” thinking will help. Instead, those pursuing innovation should follow promising paths without initially attempting to fit them neatly into company systems. Only once the potential from the path is known should innovators return to consider what they discovered and its fit—or lack of fit—with company systems.

Unless companies experiment in these ways, they will remain always unprepared to respond as the complex whole within which they work adapts and changes.

Principle: Accumulate small advantages into long-term resilience

Companies LOVE to believe that only large efforts—introduced with great sturm und drang—are important. In reality, the more an effort is surrounded by pomposity the less we should expect that it matters. The major changes which will enable a company to thrive despite having system reductions can only accumulate over time—a summary of small forces which lead to exceptional results and resilience.

It is important to note the companion to this reality—that excellent strategies die the death of a thousand paper cuts as they accumulate to kill wise and savvy strategies.

It is important to remain always aware of the power which accumulates through small forces and actions.

In Closing

To apply these principles, managers must first identify the system assumptions their companies have taken on. Such assumptions are found everywhere. Retailers, for example, impose systems assumptions in the goods they stock through sizes, styles, colors and assume these limitations are key to their success (they might be and they might not be). Service companies create systems for generating new business which assume they find the most success among certain groups of customers—but societal changes will change those customers. Advertising agencies have created systems based on assumptions for what makes their work effective yet the need for such work is continually evolving. One advertising assumption I’ve written about I call “creative correctness“—a system of assumptions about what makes a “good advertisement” which are decidedly insufficient for many clients.

With this in mind, let me suggest readers spend time considering the system assumptions applied within their work then consider how to combine these principles within their company’s time and place—all focused on a future resilience.

Until next time, be well.

Note: My ideas on this topic have developed significantly through in-depth discussions with JP Castlin as we have looked deeply at these issues. That said, the opinions expressed here are my own. So while JP deserves credit for contributing to what is useful and good, he deserves no blame if my writing has gone astray..

©2026 Doug Garnett — All Rights Reserved

Image: Black Maps, ©1997 Timothy C. Ely, Used With Permission.

My upcoming book, The Complexity Paradigm: Using System Science to Drive Business Success, will be published by Columbia Business School Publishing in January 2027. It can be pre-ordered today through Columbia or on Amazon.

You can read more about my unusual background (math, aerospace, supercomputers, consumer goods & national TV ads) at www.Protonik.net. Through Protonik LLC I consult with companies as they design and bring to market new and innovative products. Since 2001 I have taught marketing, consumer behavior, and advertising at Portland State University and I am an active member of the RetailWire.com Braintrust with regular discussions of unusual retail challenges. Together with my podcast partner Shahin Khan, current issues in marketing and business are discussed on The Marketing Podcast — available on Google, Spotify, the OrionX website, and Apple Podcast.