Cities and Corporations

The growth and behavior of cities and corporations, and Google’s recent organizational shifts

Both cities and corporations are apt targets for complex systems research, as they are both composed of entities interacting over various scales.  Its undeniable that both are significant- in the best cases cities for providing a wealth of opportunities, and corporations for improving the quality of living.

Understanding their behavior is essential- everyday decisions are made for the future of cities, and future of companies.  To have the tools to understand their growth and behavior leads to better models for prediction.  City planning and organizational design can be well informed by findings within complexity research.

Cities: Designing for efficiency on a runaway treadmill

Geoffrey West provides some exciting insight regarding the scaling laws within cities and corporations in a recent NYTimes article.  He is an eminent mathematician at the Santa Fe Institute, researching scaling laws within complex systems.  As mentioned before, understanding scale plays a huge role in modeling the behavior of complex systems.

To me, the most interesting parallel is that with Jane Jacobs, where West describes:

“What the data clearly shows, and what she [Jane Jacobs] was clever enough to anticipate, is that when people come together, they become much more productive.”

To interpret these equations as quantifying the productivity of human interactions reveals their relevance, though I don’t believe that these equations alone come close to accomplishing what Jacobs has in respecting individual potential and understanding the collective dynamics in cities.  But it is incredible- to have developed a metric that can give an approximated quantified measure of collaboration.

The crux of West’s research in cities lies in the statistical findings that

Many diverse properties of cities from patent production and personal income to electrical cable length are shown to be power law functions of population size with scaling exponents, β, that fall into distinct universality classes.

Which basically means that as the population of a city changes, one can predict quantities like the level of innovation (by measuring patents) the income for individuals, and the amount of infrastructure development.

Supercreative employment increases with population

So one can develop a framework to see all cities as spanning the axis of population size of the same fundamental city.  It is a startling finding, not without its exceptions though.

On average per person, an individual uses less energy in a city than they would if they lived in the suburbs, and that is due to economies of scale.  In developing a world model for sustainaiblity, cities are an essential tool, West describing them as “one of the single most important inventions in human history”.

In looking at the long term dynamics of a city, feedback phenomena are essential to understand.

As a city grows, the larger population requires more resources (though less per capita). The city moves faster, the pace of life becomes faster.  As resources deplete, the city requires innovation.  Innovations cause the city to grow.  And the cycle moves faster and faster- so lifestyle changes faster, and  innovations are required at a faster rate.

What this means is that, for the first time ever, people are living through multiple revolutions. And this all comes from cities. Once we started to urbanize, we put ourselves on this treadmill. We traded away stability for growth. And growth requires change.

Companies: The urge for growth towards probable failure

The difference with corporations is that as size increases, innovation can’t keep up.  The corporations become tied down with bureuacracy, too much time is spent on just maintaining the structure, and there is little flexibility to adapt.  So the corporations fail.  Every corporations goal is to earn a profit, and profit is growth, but growth leads closer to failure.  West’s research supports this.  But, I believe this is due to an old school model of corporate organization- people can rethink the way an organization operates as it scales up, in such a way to improve innovation.

Lately its been common knowledge that hierarchies don’t work in fields that require adaptive organizations, that a relatively flat structure is the way to go- ideas evangelized by IDEO and Google.  But you can’t sweep an elephant under the rug- scale will still become a problem, and Google has recently shown serious action on that issue- how can a company scale in an industry as competitive as internet tech.

A recent Businessweek article describes Google’s recent deliberate actions to ensure the company stays ahead of its competition, and maintain itself with a competitive edge of innovation.  In the article, Larry Page says

“We do pay a price for [shared decision-making], in terms of speed and people not necessarily knowing where they go to ask questions.” His elevation to CEO, he says, “is really a clarification of our roles. I think it will help with our speed.”

The article highlights the company with a series of profiles on individuals- emphasizing a shift in the organization of the company,

Page says one of his goals is to take the decisive leadership style they have shown within their product groups, spread it across the company, and apply it to major decisions. “We’ve been inspired by a lot of the people who have been operating with more autonomy and clear decision-making authority,” he says.

Its hard to exactly predict what changes may come in such a volatile industry, but what is clear is that given the wide range of technologies Google invests its time in, there is no way a single individual inhabits the capacity to effectively manage all of them.  Instead, now the focus is on cultivating masters in a particular sector, and giving these people autonomy within the organization.  From reading the profiles, it is clear that the individuals are some of the most capable in the world for their sector, and being in an environment to cultivate their freedom within their sector is what will ultimately lead to the success of the organization as a whole.  As West describes with cities, innovation is key, and creative freedom can cultivate innovation.

From recent developments in understanding cities and corporations, results have yielded the inevitable failure of both from growth- but there is a potential from collaboration that is unpredictable even with the best models. There will be ways to design cities and organizations effectively, but such designs will need to empower individuals– be it citizens, or consumers- in a way that allows them to be creative individually and collectively.