This whirlwind journey through almost every aspect of existence might seem daunting at first, but Capra’s readable style links complex revelations from the leading edge of science in a clear and comprehensive framework. Capra begins at the beginning, with an examination of the simplest living system—a bacterial cell. Based on new findings, he defines a cell as “a membrane-bounded, self-generating, organizationally closed metabolic network; . . . it is materially and energetically open, using a constant flow of matter and energy to produce, repair and perpetuate itself; . . . it operates far from equilibrium, where new structures and new forms of order may spontaneously emerge, thus leading to development and evolution.”

His underlying premise is that these traits occur in all living systems: “there is a fundamental unity to life . . . different living systems exhibit similar patterns of organization.” For example, the network is one theme that characterizes all life forms. From this perspective, the author surmises, “a human organization will be a living system only if it is organized as a network or contains smaller networks within its boundaries.” These networks, in turn, must be self-generating: “Each communication creates thoughts and meaning, which give rise to further communications. In this way, the entire network generates itself, producing a common context of meaning, shared knowledge, rules of conduct, a boundary, and a collective identity for its members.” Such “communities of practice,” as organizational theorist Etienne Wenger calls such webs, develop within the formal structure. Yet these informal structures are the ones that support learning, creativity, and change.

“Disturbing” Systems

Ensuring an organization’s “aliveness” has profound implications for how managers behave. As Capra puts it, “A machine can be controlled; a living system, according to the systemic understanding of life, can only be disturbed. In other words, organizations cannot be controlled through direct interventions, but they can be influenced by giving impulses rather than instructions.” For people to respond constructively, the “disturbances” must be meaningful to them; that is, employees need to participate in the planning process rather than be put in the role of passive recipients.

Leadership involves finding the right balance between designed structures—which give the organization stability and emergent ones—which represent the organization’s vitality.

Capra also focuses much attention on another characteristic of living systems— “emergence,” that is, novelty that results from periods of instability. He explains how this principle works in an organization: “The event triggering the process of emergence may be an offhand comment, which may not seem important to the person who made it but is meaningful to some people in a community of practice. Because it is meaningful to them, they choose to be disturbed and disseminate the information rapidly through the organization’s networks.” As the information circulates, people build on it, until the organization can no longer integrate the concept into its existing structure. “At this stage, the system may either break down, or it may break through to a new state of order . . .” The resulting leap forward springs from the collective creativity of those in the organization. Capra concludes that “since the process of emergence is thoroughly nonlinear . . . it cannot be fully analyzed with our conventional, linear ways of reasoning, and hence we tend to experience it with a sense of mystery.”

Leadership, then, involves finding the right balance between designed structures—which give the organization stability—and emergent ones which represent the organization’s vitality. By understanding the different stages of emergence, a leader can actively support the process; for instance, by nurturing communication networks, creating a learning culture, being open and honest, and valuing experimentation. At the same time, “leaders who facilitate emergence use their own power to empower others. The result may be an organization in which both power and the potential for leadership are widely distributed.”

Reshaping the Global Economy

The idea of organizations as living systems is far from new. But Capra’s mission in this book extends well beyond simply applying the latest scientific discoveries to the organizational world—he builds a case for reshaping the global economy to better mirror and sustain natural processes. He cites the dire consequences of the current economic system, which he calls “life-destroying” rather than “life-enhancing”: “social disintegration, a breakdown of democracy, more rapid and extensive deterioration of the environment, the spread of new diseases, and increasing poverty.” The author places much of the blame for this state of affairs on “unfettered capitalism” and the principle that “money-making should always be valued higher than democracy, human rights, environmental protection, or any other value.”

But Capra sees signs that grassroots organizations ranging from feminist groups to the ecology movement are beginning to sway our culture in positive directions. In different ways, these forces for change are making our value system more compatible with the demands of human dignity, ecological sustainability, and life itself than it currently it. Capra might argue that this quest is his—and our—biggest challenge of all.

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We live in the networked society, with over 1 billion people connected to the Internet and a projected 3 billion by 2015. More than 95 percent of all enterprises today leverage the Internet as a strategic element of their business. In such a hyper-connected, networked economy, behaviors have shifted radically. Individuals expect real-time information, collaboration has become the norm, and pervasive technologies no longer seem so pervasive.

In a networked economy, experience and experimentation are the primary means of learning. Individuals no longer rely on an expert model for advice and guidance; instead, bottomup information emerges from the masses and is rapidly distributed across social networks to influence behavior. Passive, top-down learning seems to have given way to a more active process of exploration and inquiry. Consumer personalization is no longer a concept that is forecasted for the future; in fact, a do-it-yourself population deconstructs products and services in order to adapt them for their own personal needs. The boundaries between buyers, producers, sellers, and consumer have become so radically blurred that new models of double-sided markets have emerged to describe these relationships. A consumer today may be a provider tomorrow. Self-organizing networks are proliferating at an unprecedented velocity, and intense, real-time feedback loops have the capacity to revolutionize markets at a moment’s notice.

We’re now finding that, when our time-tested principles are challenged by radical change, they are found wanting.

Pervasive connectivity has the potential to generate swarm-like behaviors that replicate the spreading of a virus. Yet leaders are still taught command-and-control tactics to influence and manage behavior. The bias of deep analysis, comprehensive planning, and methodical execution still rules the day. Adaptation, experimentation, and collaboration are only considered in desperation when conventional wisdom has failed. But we’re now finding that, when our time-tested principles are challenged by radical change, they are found wanting.

The Napster Example

We don’t have to look too far for examples of such limitations. In the late 1990s, when the music industry was at its heyday, 85 percent of the recording business was owned by what was then considered “the big five.” However, in 1999, a 19-year-old student attending Northeastern University in Boston changed the industry forever. Shawn Fanning, known by his friends as “Napster,” wrote a simple peer-to-peer search and retrieval system for online music. His aspirations were quite simple: to develop a program that provided online users an easy way to download music.

Fanning couldn’t have predicted that, almost overnight, online file sharing would become a creative, musical epidemic. From June of 1999 to February of 2001, Napster (the name Fanning gave to his software) had grown to 26.4 million users. Based on conventional wisdom, the recording industry responded to the rise of Napster by filing a flurry of lawsuits for copyright infringements. In July 2001, a district court ruled in the recording industry’s favor, and Napster was forced to shut down services. The industry declared success and turn their attention to the Napster clones.

What the recording industry seemed to ignore was the impetus behind the Napster explosion. Napster created an easy user interface to download music while also enabling users to select one song at a time. Record companies had become incredibly profitable by selling a complete CD through the popularity of a couple of best-selling songs, an approach that often frustrated consumers. The industry seemed to ignore the unfolding opportunity around distributing songs one at a time and instead dedicated its attention to protecting its profit pool.

According to the recording Industry Association of America statistics, this strategy proved to be a costly mistake. The dollar value of the sales of physical CDs has shifted radically since the introduction of Napster. In 1999, revenue generated from physical sales exceeded $14.5 billion, while annual sales for 2007 were less than $8 billion (Recording Industry Association of America, Year-End Shipment Statistics, 2007). The recording industry launched an irrational war on the peer-to-peer providers, filing more than 20,000 lawsuits against individual users while ignoring the basic premise behind the shift—a new consumer preference.

At the same time the recording industry was applying conventional wisdom to squeeze out what leaders saw as a threat, Apple’s management was observing the emergence of a new channel for online music distribution. On October 23, 2001, Steve Jobs announced that “listening to music will never be the same again.” The new iPod provided users with the ability to place their entire music collection in their pockets, and iPods quickly became a major fashion icon of the early 2000s. Generation after generation of enhancements and the launching of the iTunes store in 2003 have made Apple the number one retailer of music in the United States and the dominant force in online distribution, providing more than 85 percent of downloads. Thus, the conventional leadership wisdom of the music industry proved not so wise within the dynamic context of a networked economy.

A Shift in Leadership

We no longer live in a world dominated by hierarchies with rigid boundaries. Today’s institutions are much messier and require a constant need to explore and discover on a real-time basis. In a real-time environment, no single individual can know everything, and no one person has control. To believe otherwise is at best illusionary or at worst pure arrogance. Complexity has surpassed individual human capacity, significantly limiting the ability of our command-and-control design.

These days, we live in a world that is becoming more plastic and liquid and ever less concrete in nature. The world’s financial services ecosystem changed within a month, just as in the early 1990s we saw an old paradigm around dominant government control crumble with the Berlin Wall. Likewise, the fear and cost of threats of continued disruption from terrorism keeps us in a constant state of heightened awareness.

MACRO-LEVEL LEADERSHIP NETWORK MAP

In government and business alike, we need to create new models to balance a need for appropriate control and the fluid nature of open markets. We must move beyond outdated paradigms of static and behaviorally based approaches to leadership. There are still times when conventionally wisdom holds true. The ability to shift between traditional and emerging models of leadership represents a new type of navigational wisdom.

Michael Arena, PhD, is an adjunct faculty member of Queens University’s Master in Organization Development program. He is also a senior vice president of Leadership Development at Bank of America, where he serves as an Executive in Residence within the Center for Future Banking, a partnership with MIT’s Media Lab to drive banking innovation. His research findings on whole system change and complexity science have been published in multiple peer-reviewed management journals.

Sharon Benjamin, PhD, serves as adjunct faculty in the Wagner School of Public Service at New York University, where she teaches the capstone course in leadership for graduating Master of Public Service students. Sharon also serves on the governing boards of Plexus Institute, BlueVoice.org, Earthworks, and Oceana.

For Further Reading

• Brafman, Ori, and Rod A. Beckstrom. The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations (Portfolio, 2006).
• National Intelligence Council. GlobalTrends 2015: A Dialogue about the FutureWith Nongovernment Experts (Issue NIC 2000-02, December 2000).
• Tapscott, Don, and Anthony D. Williams. Wikinomics: How Mass Collaboration Changes Everything (Portfolio, 2006).

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