Governing the Management of Complexity

Abstract

This paper shows that the way nature governs the management of complexity has application to organisations and global society by using Transaction Byte Analysis (TBA). TBA fills a gap in organisational theory in providing a way to compare hierarchical organisations with complex ones with multiple decision making centres, communication channels and control agents, such as found in the Mondragon Corporacion Cooperativa (MCC) and in biota. Like any other biota, humans have limited ability to receive, store, and reliably process bytes to manage complex activities. The science of governance, also described as system science or cybernetics, explicates the strategies found in nature to minimise the transaction of bytes to reliably sustain self-regulation in animals, machines, devices, software programs or organisations. TBA subsumes Transaction Cost Economics, when costs become a proxy for data, and higher order constructs like information, knowledge and wisdom that can be represented in bytes.

Note: Presented to the 19th EGOS Colloquium, European Group for Organisational Studies, Sub-theme 17, Governance-Management Relationship in a New Era.

Keywords: Bounded rationality, Cybernetics, Governance, Information, Holons, Mondragon, Organisational architecture, Transaction Byte Analysis, Transaction Cost Economics

JEL Classification: B49, B59, D70, G34, L16, L59