About 20 years ago, Craig Reynolds developed an artificial life program entitled Boids (see video at bottom of article) which simulates the flocking patterns of birds. One of the compelling features of Boids is that despite random starting points and infinite range of action enjoyed by each boid, through adherence to three simple rules a consistent behavior pattern among the boids is quickly established and maintained.

Boids exemplifies a principle in complex adaptive systems termed “emergence.” Emergence is a key concept in organization design. It has particular relevance when the issues of control, dependence, and autonomy in centralized and decentralized structures are recast into integrated structures such as networks, communities, and teams.

My previous posting, “Lessons from the Grid,” focuses on distribution of responsibility and authority to generate electricity, by whatever type of renewable energy source, to individual homeowners and business owners. Net metering connections to the grid enable owners to sell excess electricity generated to the utility company and draw from the grid as necessary during times of insufficient electricity generated locally. This is a win-win solution: an expanding network of home and business owners, representing multiple families, neighborhoods, and communities, are actively involved; participants meet their individual and local needs, first, then, sell their surplus to meet regional and global demand; and, the localization of electric power generation through “green energy” is more efficient and consumes less “brown energy.”

Distribution of electricity generation among the masses and the resulting win-win solution for the majority is an example of emergent behavior and the formation of integrated structures. Like “Boids,” this phenomenon is driven by three simple “rules” that define the social system in which emergence and integrated structures occur:

1) Universal participation.

The point of rapid development and deployment of information and communication technology (ICT) capabilities is to get everyone connected at a basic level. One need look no further than the geometric increase in the number of cell phones, Internet service providers, email addresses, blogs, videos, web-based services, etc. to see that the world is getting “wired!”

Every uptick in participation only heightens the number of advocates, providers, customers, buyers, and sellers available. Each has different experiences, perspectives, and ways of describing and meeting needs and wants. It is beyond the capability of highly centralized organizations to respond to the needs of so many independent agents. And it is beyond the capability of any one, “decentralized” individual to be both autonomous AND disconnected and expect to have needs and wants met while enjoying a respectable quality of life.

2) Meet individual and local needs, first; then, sell any surplus.

On its way to “human equivalence,” technology gets faster, smaller, stronger, more embedded, more integrated, and more intelligent with each turn in development. This has the effect of putting capabilities and capacities into the hands of the individual what was heretofore only available to the wealthiest or those with the largest assets to underwrite substantial ventures. The entirety of the Industrial Age is characterized by “managing” monopolistic interests dictating what was in vogue, what was available, and what was affordable. Now, with the Information (Digital) Age evolving into the Knowledge Economy and the “Relationship Age,” it is increasingly possible to dismantle the hulking centralized structures in the public and private sectors and distribute their power and authority to individuals and groups working in concert with one another at the grassroots. People at the local level can pull from vast global networks of “virtualized” information, knowledge, and resources and “materialize” them in local applications.

The result is people now have the means to meet their needs for fundamentals like food, energy, clothing, shelter, and safety without having to depend on others. It also creates the opportunity for them to produce MORE than they need so that the excess can be sold in further markets. This challenges the authority of comparative advantage when it comes to life-sustaining basics. Each day, advances in technology give more people the opportunity to produce sufficient renewable energy to feed, clothe, and house themselves–to meet their basic needs. And when people have their basic needs met, challenges to their security and safety are reduced; they can speculate, take risks, learn, and contribute their learning more broadly into global networks.

3) Consume what is produced locally, convert / process excess to standardized / higher value form, and ship to nearest point of use.

Unchecked globalization encourages people at local levels to compromise their buying power by sending raw or first-stage processed materials to worldwide destinations or further value-add processing. Because materials at this stage have their lowest value, the compensation for them is least. However, when finished products return from where further value is added their prices are out of reach. The net effect is the local economy is depleted of its resources and the people are unable to care for themselves. Of course, some corporations invest in facilities located closer to the raw or rough finished materials to take advantage of lower cost labor in subsequent value-add processes and stages. The finished goods are priced beyond the reach of employees and their compensation is insufficient to afford necessities. Once again, they are unable to care for themselves at a local level. Worse yet, the cost in use of fossil fuels to transport raw materials, work-in-process, and finished inventory from one part of the world to another only exacerbates the problems besetting local economies mentioned previously.

The “localization-to-globalization” model operates in reverse. It encourages people to consume what they produce rather than sending it elsewhere only to have to buy it back later. Also, it fosters the conversion of excess into standardized form of higher value in order to have a broader market which is easily accessed. Using renewable energy sources like solar, wind, biogas, etc, to generate electricity has more efficiency than the individual sources of energy because the energy is converted from a more difficult to use form to a standardized form. As an example, everyone can use electricity pulled from the power grid. Not everyone can use DC current from a photovoltaic array or a tank of biogas, although each can be used to generate electrical power for the grid.

These three “rules” drive the formation of many different integrated structures as localization takes root and globalization builds from it. How well these rules are followed in the development of business cases and plans is an indicator of the viability of the business under consideration.

For example, earlier this month, Biopact announced the headline, “Green giant Russia to produce 1 billion tons of biomass for exports.” That’s a lot of raw material! Now, will Russia process it into fuel or ship it elsewhere for processing? The article is unclear which direction this will go. However, it would seem that the environmental advantage of growing biomass material for fuel would be offset by the amount of fuel required to transport the raw material to a remote point for processing. In addition to the logistics issues, a business plan built on the comparative advantage Russia apparently has to grow biomass but not to process it into usable fuel is risky. Expecting another region or country to invest in the processing facilities yet not have control over the flow of raw material from considerable distance away is…well…dicey.

In contrast, Iowa grows more corn than any other state. It could ship corn to other states to process ethanol. However, the approach is to localize ethanol production from corn and keep the value in the hands of the producer while reducing transportation costs. Maybe there’s another lesson in here from the Iowan farmers?!

More business possibilities will be analyzed according to these three rules in subsequent postings–stay tuned!

Originally posted by Steve Bosserman on Monday February 12 2007 on Diary of a Knowledge Broker as Boids, Integrated Structures, and Renewable Energy