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Business Agility and the Dynamics of Swarming
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The Dynamics of Swarming 1
BUSINESS AGILITY
AND THE DYNAMICS OF SWARMING
By Michael Hugos
Researchers and practitioners are beginning to notice a very powerful example of agility
that can teach businesses about operating in unpredictable and high change environments.
They find it as they study the behavior of flocks of birds and schools of fish.
What makes a flock of birds or school of fish move as if they are a single entity? What
makes them all suddenly rise, turn and accelerate at the same time? There is something
else at work here than just a leader bird or a captain fish telling all the others what to do.
The organization of a flock or school is not a hierarchy, it is a network. The quick
coordinated behavior from large groups of individuals in these networks is called
swarming.
Swarms place more emphasis on decentralized coordination rather than on centralized
control to get things done. We are used to the hierarchical, top-down model of centralized
control, but this model is proving to be too rigid, too slow moving, too cumbersome to
deliver the responsiveness we now need. So how can we use the example of quick
coordination that we see in swarms to guide our companies' behavior?
A Rich Opportunity Awaits Us
Consider this: what could happen if company managers made company performance
objectives very clear and understandable to everybody in a company and then started
streaming real time performance data to dashboards displayed on people's PCs, laptops
and mobile phones? Everybody in a company would be able to see a real-time picture of
the operations they are responsible for and they could see when their unit's performance
started to drift outside of desired operating parameters. Then they could quickly drill
down to access relevant information needed to respond quickly and effectively.
When everyone knows what their objectives or performance targets are and when they
can see moment to moment what is going on, and see whether their operations are on
target or off target, then something powerful starts to happen. Swarming behavior
emerges as people learn how their individual actions combine to create larger effects.
Those larger effects are the organizational responses that move their organization toward
achieving its performance targets even as the world continues to change. This is
Center for Systems InnovationThe Dynamics of Swarming 2
swarming behavior in a company. It is fast, powerful, and continuously responsive to
change.
People using swarming techniques can bring about organizational behavior that yields
continuous efficiency and profitability from a thousand small adjustments and some
occasional big wins. When customer service people start working together more
effectively with sales people, and sales people start working more effectively with
operations people and IT people start working more effectively with everybody, then
amazing things happen.
Swarming behavior depends on decentralization of information and delegation of
authority. Decentralization of information allows people to see how their individual
actions relate to overall company performance. Decentralization of control is
accomplished by giving everyone a clear set of performance targets that they are
motivated to achieve. Those performance targets define the results that are expected of
them but people have authority to figure out for themselves how to deliver those results.
The speed and efficiency demanded of responsive organizations can occur only if people
think for themselves and control their own actions; the notion that some central person (or
computer) can do all the thinking for everybody else is a quaint idea from the days of the
industrial revolution. It worked in a slower, simpler, more predictable world, but it does
not work now.
Most companies still use traditional hierarchical organization models. They employ
centralized command and control systems and most employees still have their work
closely regulated by supervisors and bosses. These companies focus on traditional
industrial concepts of economies of scale and operating efficiencies achieved through
rigorous application of standard operating procedures. In these circumstances there is
little incentive for anyone except senior managers to take any initiative or to try anything
different from the norm. People simply do as they are told and little more.
Many of us are still wedded to the notion that top-down command and control is the most
effective way to run big companies and get complex things done. This is a deeply held
belief based on the time-honored notion that the traditional pyramid shaped hierarchy is
the most logical and efficient way to structure an organization and manage work; this is
illustrated in Figure 1 below. Workers report to managers; managers report to directors;
directors report to vice presidents; and vice presidents report to a person known as "The
Big Cheese".
Center for Systems InnovationThe Dynamics of Swarming 3
Figure 1
Business as Usual
The BIG
CHEESE
Information Orders
VP of VP of
THIS THAT
MANAGER MANAGER MANAGER
A B C
PAWN PAWN PAWN PAWN PAWN PAWN 6
Centrally controlled hierarchies move too SLOWLY
For many people (myself included) the idea of a responsive organization at first seems
like just a speeded up version of the traditional hierarchy. I used to think a responsive
organization is what we would get if we took the avionic controls and heads-up data
display out of the cockpit of a jet fighter plane and installed them in the boss's desk. Then
we could hook up a high powered database to collect all sorts of information from all
over the company and run the data through the heads-up display. Then the boss would
know everything right away and could issue orders to everybody real fast - right?
Notions like swarming behavior violate our classic concepts of command and control;
they sound pretty chaotic. We might agree that swarming behavior could work when
objectives are simple and short term. But for more complex and long term objectives we
tend to believe we need complex management and control procedures. We believe that
decentralization of control would not be time or resource efficient. There are so many
complex interdependencies that exist between different activities; how could anyone
except a central supreme commander sort them all out?
Networks Work Better than Hierarchies in Complex Environments
Let me respond to these beliefs with a story from an economics professor I once studied
with. He would start his story by saying there were once two contending points of view
about how to best organize and control a nation's economy. And, of course, controlling a
Center for Systems InnovationThe Dynamics of Swarming 4
nation's economy certainly involves a lot of complex interdependencies to sort out, and
certainly it is a long term project.
He went on to say one point of view held that a centrally controlled, rationally organized
economy directed by experts was the best way to deal with all the complex issues (this is
a classic pyramid-shaped hierarchy). He said the other point of view believed all that was
needed was a central group to coordinate and enforce a basic set of rules such as respect
for contracts and honest reporting of financial activities, and otherwise no further
involvement from them was needed, because people and companies could effectively
organize and control themselves without further intervention (this is a swarming
network).
Then he described how a high-level delegation from the government of a developing
country tried to figure out which of these two models to adopt. First they traveled to New
York City and visited the trading floor of the New York Stock Exchange. It was a chaotic
crowd scene; people were running about writing things on scraps of paper; they were
shouting at each other, waving their arms, making hand signals; and the walls were
covered with huge computer screens and electronic displays showing a constantly
changing barrage of numbers and words.
Next, the delegation traveled to the former Soviet Union and visited the Ministry of
Economic Planning. They saw buildings filled with rows of orderly desks; well-educated
scientists, engineers and economists collected information; and the ministry made plans
and issued orders for what each sector of the economy should produce and when and how
much would be needed in order to meet the nation's development goals. Which model do
you think the delegation recommended to their government when they returned home
from their travels?
The notion that some central person or group can do all the thinking for everybody else
and tell them what to do and how to do (no matter how many fancy systems they may
have) is fundamentally flawed. No amount of centralized reporting and planning systems
and computing power can adequately process the amount of data that needs to be
processed in the short time frames now required. The answer lies in breaking up the data
to be processed and the decisions to be made into many smaller jobs that can all run
simultaneously - this is swarming dynamics. It is similar to the concepts used in the
design of massively parallel computer networks (the Internet itself is a massively parallel
network).
Companies that employ decentralized control structures, that incentivize and train their
people to think and act for themselves, and provide them with the real-time performance
data they need to make good decisions will outperform their competitors. This is because
people working in self-directed teams striving to achieve common performance objectives
Center for Systems InnovationThe Dynamics of Swarming 5
find hundreds of ways to make continuous small adjustments that increase their profits
and decrease their costs every day, every week, every month.
These companies benefit from a continuous stream of efficiencies generated by many
small, rapid adjustments as business situations change. They also benefit from profits
gained by avoiding threats or quickly responding to market opportunities as they appear.
Walk through any company; talk to people in the operating units; ask them if they know
ways to make their activities more productive and ways to save more money. Ask them if
they know ways to better serve customers and if they have ideas for new products or
services that customers would want. In most cases people will answer yes to all these
questions.
What would happen if these people had clear performance objectives and authority to
figure out for themselves how to achieve those objectives? What would happen if they
received a constant stream of data from systems that showed them the results of their
actions and whether they were acting effectively or not? How fast would people learn to
act on their own initiative and be more productive, save money, increase customer service
and offer new products and services?
Figure 2
The Responsive Organization is a Network
Central Coordinator Operating Units free
says WHAT Operating to choose HOW
Unit A
Operating Operating
Unit F Unit B
Central
Coordinator
Operating Operating
Unit E Unit C
Coordination Network of
Operating
replaces control autonomous
Unit D
operating units
Center for Systems InnovationThe Dynamics of Swarming 6
Organizational swarming behavior causes an organization to act as a single coordinated
entity. An apt analogy for this is the human body; it can be seen as a swarm of cells that
continually sense their environment and act on their own without waiting to be told what
to do. Our brains are not aware of everything that our bodies are doing nor do they need
to be; individual cells and organs know how to act on their own. And the overall effect of
these swarming cells is to produce the coordinated behavior that makes our lives possible.
Unlike the slower and more predictable industrial economy of the 20th Century, we live
in an unpredictable global economy and the best efficiencies come from swarming
dynamics that make hundreds of small adjustments to respond quickly as situations
change. Organizations operating like this are structured as networks of many self-directed
operating units that respond quickly without waiting to be told what to do.
Michael Hugos is a mentor and practitioner in business agility at the Center for Systems
Innovation in Chicago, Illinois. He is an award-winning business architect who integrates
technology and business process to create decisive competitive advantage. He is also a speaker
nd
and has authored several books including Essentials of Supply Chain Management, 2 Edition
and The Greatest Innovation Since the Assembly Line: Powerful Strategies for Business Agility.
This article was first published in my CIO.com blog "Doing Business in Real Time", February
2007. © Copyright 2007, Michael Hugos.
Michael Hugos can be reached at: www.MichaelHugos.com
Center for Systems Innovation
BUSINESS AGILITY
AND THE DYNAMICS OF SWARMING
By Michael Hugos
Researchers and practitioners are beginning to notice a very powerful example of agility
that can teach businesses about operating in unpredictable and high change environments.
They find it as they study the behavior of flocks of birds and schools of fish.
What makes a flock of birds or school of fish move as if they are a single entity? What
makes them all suddenly rise, turn and accelerate at the same time? There is something
else at work here than just a leader bird or a captain fish telling all the others what to do.
The organization of a flock or school is not a hierarchy, it is a network. The quick
coordinated behavior from large groups of individuals in these networks is called
swarming.
Swarms place more emphasis on decentralized coordination rather than on centralized
control to get things done. We are used to the hierarchical, top-down model of centralized
control, but this model is proving to be too rigid, too slow moving, too cumbersome to
deliver the responsiveness we now need. So how can we use the example of quick
coordination that we see in swarms to guide our companies' behavior?
A Rich Opportunity Awaits Us
Consider this: what could happen if company managers made company performance
objectives very clear and understandable to everybody in a company and then started
streaming real time performance data to dashboards displayed on people's PCs, laptops
and mobile phones? Everybody in a company would be able to see a real-time picture of
the operations they are responsible for and they could see when their unit's performance
started to drift outside of desired operating parameters. Then they could quickly drill
down to access relevant information needed to respond quickly and effectively.
When everyone knows what their objectives or performance targets are and when they
can see moment to moment what is going on, and see whether their operations are on
target or off target, then something powerful starts to happen. Swarming behavior
emerges as people learn how their individual actions combine to create larger effects.
Those larger effects are the organizational responses that move their organization toward
achieving its performance targets even as the world continues to change. This is
Center for Systems InnovationThe Dynamics of Swarming 2
swarming behavior in a company. It is fast, powerful, and continuously responsive to
change.
People using swarming techniques can bring about organizational behavior that yields
continuous efficiency and profitability from a thousand small adjustments and some
occasional big wins. When customer service people start working together more
effectively with sales people, and sales people start working more effectively with
operations people and IT people start working more effectively with everybody, then
amazing things happen.
Swarming behavior depends on decentralization of information and delegation of
authority. Decentralization of information allows people to see how their individual
actions relate to overall company performance. Decentralization of control is
accomplished by giving everyone a clear set of performance targets that they are
motivated to achieve. Those performance targets define the results that are expected of
them but people have authority to figure out for themselves how to deliver those results.
The speed and efficiency demanded of responsive organizations can occur only if people
think for themselves and control their own actions; the notion that some central person (or
computer) can do all the thinking for everybody else is a quaint idea from the days of the
industrial revolution. It worked in a slower, simpler, more predictable world, but it does
not work now.
Most companies still use traditional hierarchical organization models. They employ
centralized command and control systems and most employees still have their work
closely regulated by supervisors and bosses. These companies focus on traditional
industrial concepts of economies of scale and operating efficiencies achieved through
rigorous application of standard operating procedures. In these circumstances there is
little incentive for anyone except senior managers to take any initiative or to try anything
different from the norm. People simply do as they are told and little more.
Many of us are still wedded to the notion that top-down command and control is the most
effective way to run big companies and get complex things done. This is a deeply held
belief based on the time-honored notion that the traditional pyramid shaped hierarchy is
the most logical and efficient way to structure an organization and manage work; this is
illustrated in Figure 1 below. Workers report to managers; managers report to directors;
directors report to vice presidents; and vice presidents report to a person known as "The
Big Cheese".
Center for Systems InnovationThe Dynamics of Swarming 3
Figure 1
Business as Usual
The BIG
CHEESE
Information Orders
VP of VP of
THIS THAT
MANAGER MANAGER MANAGER
A B C
PAWN PAWN PAWN PAWN PAWN PAWN 6
Centrally controlled hierarchies move too SLOWLY
For many people (myself included) the idea of a responsive organization at first seems
like just a speeded up version of the traditional hierarchy. I used to think a responsive
organization is what we would get if we took the avionic controls and heads-up data
display out of the cockpit of a jet fighter plane and installed them in the boss's desk. Then
we could hook up a high powered database to collect all sorts of information from all
over the company and run the data through the heads-up display. Then the boss would
know everything right away and could issue orders to everybody real fast - right?
Notions like swarming behavior violate our classic concepts of command and control;
they sound pretty chaotic. We might agree that swarming behavior could work when
objectives are simple and short term. But for more complex and long term objectives we
tend to believe we need complex management and control procedures. We believe that
decentralization of control would not be time or resource efficient. There are so many
complex interdependencies that exist between different activities; how could anyone
except a central supreme commander sort them all out?
Networks Work Better than Hierarchies in Complex Environments
Let me respond to these beliefs with a story from an economics professor I once studied
with. He would start his story by saying there were once two contending points of view
about how to best organize and control a nation's economy. And, of course, controlling a
Center for Systems InnovationThe Dynamics of Swarming 4
nation's economy certainly involves a lot of complex interdependencies to sort out, and
certainly it is a long term project.
He went on to say one point of view held that a centrally controlled, rationally organized
economy directed by experts was the best way to deal with all the complex issues (this is
a classic pyramid-shaped hierarchy). He said the other point of view believed all that was
needed was a central group to coordinate and enforce a basic set of rules such as respect
for contracts and honest reporting of financial activities, and otherwise no further
involvement from them was needed, because people and companies could effectively
organize and control themselves without further intervention (this is a swarming
network).
Then he described how a high-level delegation from the government of a developing
country tried to figure out which of these two models to adopt. First they traveled to New
York City and visited the trading floor of the New York Stock Exchange. It was a chaotic
crowd scene; people were running about writing things on scraps of paper; they were
shouting at each other, waving their arms, making hand signals; and the walls were
covered with huge computer screens and electronic displays showing a constantly
changing barrage of numbers and words.
Next, the delegation traveled to the former Soviet Union and visited the Ministry of
Economic Planning. They saw buildings filled with rows of orderly desks; well-educated
scientists, engineers and economists collected information; and the ministry made plans
and issued orders for what each sector of the economy should produce and when and how
much would be needed in order to meet the nation's development goals. Which model do
you think the delegation recommended to their government when they returned home
from their travels?
The notion that some central person or group can do all the thinking for everybody else
and tell them what to do and how to do (no matter how many fancy systems they may
have) is fundamentally flawed. No amount of centralized reporting and planning systems
and computing power can adequately process the amount of data that needs to be
processed in the short time frames now required. The answer lies in breaking up the data
to be processed and the decisions to be made into many smaller jobs that can all run
simultaneously - this is swarming dynamics. It is similar to the concepts used in the
design of massively parallel computer networks (the Internet itself is a massively parallel
network).
Companies that employ decentralized control structures, that incentivize and train their
people to think and act for themselves, and provide them with the real-time performance
data they need to make good decisions will outperform their competitors. This is because
people working in self-directed teams striving to achieve common performance objectives
Center for Systems InnovationThe Dynamics of Swarming 5
find hundreds of ways to make continuous small adjustments that increase their profits
and decrease their costs every day, every week, every month.
These companies benefit from a continuous stream of efficiencies generated by many
small, rapid adjustments as business situations change. They also benefit from profits
gained by avoiding threats or quickly responding to market opportunities as they appear.
Walk through any company; talk to people in the operating units; ask them if they know
ways to make their activities more productive and ways to save more money. Ask them if
they know ways to better serve customers and if they have ideas for new products or
services that customers would want. In most cases people will answer yes to all these
questions.
What would happen if these people had clear performance objectives and authority to
figure out for themselves how to achieve those objectives? What would happen if they
received a constant stream of data from systems that showed them the results of their
actions and whether they were acting effectively or not? How fast would people learn to
act on their own initiative and be more productive, save money, increase customer service
and offer new products and services?
Figure 2
The Responsive Organization is a Network
Central Coordinator Operating Units free
says WHAT Operating to choose HOW
Unit A
Operating Operating
Unit F Unit B
Central
Coordinator
Operating Operating
Unit E Unit C
Coordination Network of
Operating
replaces control autonomous
Unit D
operating units
Center for Systems InnovationThe Dynamics of Swarming 6
Organizational swarming behavior causes an organization to act as a single coordinated
entity. An apt analogy for this is the human body; it can be seen as a swarm of cells that
continually sense their environment and act on their own without waiting to be told what
to do. Our brains are not aware of everything that our bodies are doing nor do they need
to be; individual cells and organs know how to act on their own. And the overall effect of
these swarming cells is to produce the coordinated behavior that makes our lives possible.
Unlike the slower and more predictable industrial economy of the 20th Century, we live
in an unpredictable global economy and the best efficiencies come from swarming
dynamics that make hundreds of small adjustments to respond quickly as situations
change. Organizations operating like this are structured as networks of many self-directed
operating units that respond quickly without waiting to be told what to do.
Michael Hugos is a mentor and practitioner in business agility at the Center for Systems
Innovation in Chicago, Illinois. He is an award-winning business architect who integrates
technology and business process to create decisive competitive advantage. He is also a speaker
nd
and has authored several books including Essentials of Supply Chain Management, 2 Edition
and The Greatest Innovation Since the Assembly Line: Powerful Strategies for Business Agility.
This article was first published in my CIO.com blog "Doing Business in Real Time", February
2007. © Copyright 2007, Michael Hugos.
Michael Hugos can be reached at: www.MichaelHugos.com
Center for Systems Innovation
