Prof.

Marco Castellani
A.Y. 2021-2022

Leadership and
complex organizations
Lecture5 [Marc, 22, 2021] 1
 Enlighted mission / Revolutionary
Leader as God
Early works Inner personal Distance from followers Istitutionalization
(traditional subjective Unreacheableness ? of charisma
sociological features Events and actions as symbols
research)

Charismatic
leadership

Revolutionary
Current works Continuous feedback from
(social-psychology followers as a support and
Subjective
and sociology reinforcement ? Istitutionalization
features
of organizations) Role of speech communication of charisma
Arguing capability
Sentences as symbols
 Charismatic leadership

• THE POSSIBLE DARK SIDE OF THE CHARISM:

• negative consequences of charismatic leadership

Ø Reduces the creative contribution of followers

Ø Inhibits interactions between leader and followers
Ø Create illusions of infallibility (and delusions of fallibility)
Ø Causes disproportionate optimism that diverts
followers from real dangers
Ø Neglects problems and underestimates failures
Ø Reduces potential ambitious followers’ projects
Ø Inhibits the growth of successors.
 Complexity Theory

Complex Adaptive System

Organizations as complex adaptive systems

The role of leadership in organizations as complex adaptive systems

 Complexity
• In the study of physical phenomena we can highlight
two extreme situations.

• In the first one, the system under observation evolves in

a completely predictable way. A well-known example of
this system is the oscillation of a simple pendulum.

• The force that pushes and re-pushes the pendulum to

the equilibrium position is proportional to the
displacement. Since we have complete predictability of
the movement, we can approximate this environment A
B
to a static one (the object moves but it moves always
the same way).

• We could say that given the state A then always the

state B and that B always follows A, i.e. the tie between
the two states is strong.
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 Complexity
• At the opposite extreme are those physical systems
that behave in a completely unpredictable way,
called “chaotic” systems, whose behavior seems
distant to any deterministic basic law. An example of
such system is the chaotic pendulum.
• The pendulum is free to oscillate with arbitrary
amplitude (it is affected both by the action of friction
and the action of a sinusoidal external force,
characterized by a certain amplitude and a given
frequency). In this situation, the force to which the
pendulum is subjected is no longer proportional to
the displacement.
• The evolution of the system is unpredictable: for
example, it is enough to start the pendulum
from imperceptibly different positions to obtain
completely different evolutions over time.
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 Complexity
• In all these cases, we cannot establish a linear, mechanical, or causal
relationship between the two states. In fact, given the state A,
sometimes occurs B, but other times C, D, F etc. Also B, the second
term, is sometimes caused by A, but sometimes by X or by Y.

Y
B

A C

D
 “Clothes don't make the man”

• Switching to the social sphere, think about the

following pairs of terms:

ü clothes / social condition;

ü clothes / behavior;
ü social condition / behavior

• Why don’t the clothes (always) make the man?

• Because A (the tunic) sometimes match with B (a true
monk), but other times to C (a scammer) or to D (a
disguised person).

• Similarly B (a true monk) does not necessarily wear

the tunic (i.e. A).
 Non linearity: emerging properties
• There are systems in a dynamic intermediate situation between
the completely predictable one of the first example and the
chaotic and unpredictable one of the second.

• In this situation the systems behave in an emerging way (hence,

non linear), on the border between order and chaos, often due to
self-organization:

• Complexity refers to a set of interacting parts (through a

network of relationships) that generates an integrated
ensemble, in which the whole is something different from the
sum of its parts.

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 Complexity

DYNAMIC
BUT COMPLETELY
Dynamic UNREDICTABLE
(CHAOTIC)
environment
DYNAMIC
BUT PREDICTABLE
(COMPLETELY
OR PARTIALLY)

STATIC
(COMPLETELY PREDICTABLE)
Static
environment

Well-structured Ill-structured
environment environment
 Features of complexity: 1) networks

• Both in natural and social complex systems,

their major characteristics do not lie in the
single parts but in the relationships between
them.

• If nodes are persons, assume a social tie of two

people, A and B: this means two connections
(A®B; B®A). Now, add a third person.

• Three people will have six possible connections

(A®B; B®A; A®C; C®A; C®B; B®C). With
five people, we will have 20 connections, 56
with 8 people, 9900 with 100 people, and so, in
a non linear but exponential path.

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 Features of complexity: 1) networks

• Graph theory is the base of the mathematical description

of networks. One of the first models of networks dates
back to the 1960s and it is called “the random network”.

• There are types of network describing a system consisting

of a fixed number of nodes that have a particular average
value of connections, or degree.

• In such networks the various nodes are undistinguishable

from each other, since they have the same degree, hence
the term "democratic" networks.

• Democratic networks have the advantage of being simple

in construction, but sometimes are not suitable for
describe real networks.
Features of complexity: 1) networks
• Towards the end of the 1990s an extremely simple
but effective model (“Baràbasi”) was proposed to
understand the networks that we find in nature, in
the social sciences and in biology.

• This model is based on two main assumptions:

(i) Each network is constantly growing;
(ii) Nodes create new connections with other nodes
that already have a high number of connections.

• This last assumption is also known as the Saint

Matthew effect.

• Thanks to these simple assumptions it is possible to

build a network where, unlike the first models of
democratic networks, there are few nodes with a
high number of connections, thus becoming the
heart of the network. Networks with this structure
are called scale-free.
 Features of complexity: 1) networks

• This phenomenon does not change when

the number of nodes in the network
increase, i.e. it is independent of the size or
scale of the network; hence the name scale-
free.
• The first quantitative studies on the social
networks that measure this property date
back to the 1960s, in which the nodes
represent the people and the connection the
reciprocal knowledge.

• In the USA, the sociologist Stanley Milgram

conducted an experiment that would allow
to reveal the network of knowledge
"navigating" between the various nodes.
 Features of complexity: 1) networks

• The result was surprising, as he noticed that

most of the letters went through six people
before reaching the contact . It's what is
called the small world effect.

• Despite being made up of millions of nodes,

the distance between any two nodes is very
small and independent of the size of the
network.

• To give an example, the "distance" between

any Italian citizen and the US president is on
average six handshakes (the famous “six
separation degrees”).
Features of complexity: 1) networks
 Features of complexity: 2) breaking path-dependency

• The evolutionary path of a system can be

marked by other phenomenon like the law of
“increasing returns”: the Sony’s Betamax vs.
JVC’s VHS “format war” in the 1970s-1980s

• Positive feedback loops and self-reinforcing

processes: the more people adopt a
technology, the more it improves and the more
attractive it is for further adoption

• Sometimes, the system’s path dependence

originates from the sunk costs that cannot be
recovered or from the higher alternative costs
that should be borne to start the change (like
for Qwerty standard keyboard)

• Hence, in those cases, the progress of the

system itself is liable to a “lock-in effect”
Features of complexity: 2) breaking path-dependency

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Features of complexity: 3) self-organizing property

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 Features of complexity:
4) Macro sensitivity to micro behavior and interaction

• Individual preferences can induce local behaviors that

are perfectly consistent with the intentions of the
subjects but also generate unexpected outcomes at
the macro level.

• The Schelling model works as follows: there are agents

provided with a simple behavioral rule, i.e. to move if
they are not satisfied. Each agent has a satisfaction
thresholds and is randomly located in the grid. There are
two types of agents and an agent is satisfied if
surrounded (it can sees just 8 cells) by at least a certain
% t of similar (homophily) agents.

• This satisfaction threshold t applies to all agents of the

model, although in reality all of them could have a
different one. Note that the higher the threshold, the
higher the probability that agents will not be satisfied
with their current position.
 Features of complexity:
4) Macro sensitivity to micro behavior and interaction

• For example, if t = 30%, agent X is satisfied if at least 30% of his

neighbors are like him. If the Xs are less than 30%, then the agent is not
satisfied and wants to change its position on the grid. For the remainder
of this explanation, suppose a threshold of 30%. This means that each
agent goes well with being in the minority as long as there are at least
30% of similar agents in adjacent cells.

• The image below (left) shows a satisfied agent because 50% of the
neighbors are like him (50%> t). The next X (right) is not satisfied
because only 25% of his neighbors are like him (25% <t). T Note that in
this example empty cells are not counted in the similarity calculation.

http://nifty.stanford.edu/2014/mccown-schelling-model-segregation/
 Features of complexity:
4) Macro sensitivity to micro behavior and interaction

• When an agent is not satisfied, he can be moved to any vacancy

on the grid. Any algorithm can be used to choose this new
location. For example, you can choose a randomly selected cell, or
the agent may move to the nearest available location.

• In the image below (left), all dissatisfied agents have an asterisk,

while the image on the right shows the new configuration after all
the dissatisfied agents have been moved randomly.

http://nifty.stanford.edu/2014/mccown-schelling-model-segregation/
 Features of complexity:
4) Macro sensitivity to micro behavior and interaction

• Sufficient individual satisfaction

thresholds (32%) are also enough
to produce at an aggregate
(macro) level stable
configurations that tend to
generate involuntary and
unexpected "segregations“.

http://nifty.stanford.edu/2014/mccown-schelling-model-segregation/
 Features of complexity:
4) Macro sensitivity to micro behavior and interaction

• Obviously this emerging

phenomenon (segregation) is
emphasized by the growth of
individual satisfaction
thresholds (55% in the
example on the left), since it
takes more time to reach this
(unexpected) outcome at a
macro level, with all the
agents satisfied.

http://nifty.stanford.edu/2014/mccown-schelling-model-segregation/
 Features of complexity:
4) Macro sensitivity to micro behavior and interaction

• The phenomenon of segregation, as Schelling

shows, can emerge in various forms (sex, age,
income, religion, tastes, etc.) and can derive from
more or less intentional attitudes or even from
norms (in this case segregation is "organized »).

• In most cases, segregation (for example, the ghettos

in the USA discussed by Schelling) is an example of
"self-organization", that is, a dynamic that leads the
system to balance itself unexpectedly thanks to
simple adaptive rules.

• The interesting characteristic of systemic dynamics

is that a movement is enough to undermine the
balance of an environment (whatever it is). In
Schelling's model, each agent who chooses a new
environment influences the environment of those it
leaves and those among whom it goes to live.
 Features of complexity:
4) Macro sensitivity to micro behavior and interaction

• This process, called "unveiling",

triggers a chain reaction that can
stop and, therefore, settle down.

• An interesting application in this

direction is given by Nigel Gilbert,
who used the Schelling model to
demonstrate the emergence of
high prices in the central areas of
English cities.

• The originality did not consist so

much of the final outcome (high
prices in the center), but in the fact
that this outcome derived only
from non-linear interactions
conveyed by preferences.
 Features of complexity: 5) Interdependence

• Many organizational systems are characterized by a

plurality of organizational units. If we take the postal
service, in addition to the specialized central offices for
various functions, we have a few thousand branches
scattered throughout the territory all with the same
brand.

• A medium-large bank, in addition to the central divisions

by type of activity (retail, investment, etc.), has hundreds
of branches in the territory, all with the same brand.

• In all these cases we have a plurality of points of contact

with the user linked to the central structure through
different methods: direct management, franchising,
concession. Always and in any case, an organizational
system is recognizable from the brand, from symbols,
from the corporate image.
 Features of complexity: 5) Interdependence

• Other examples:
•
• 1)University: in addition to the central units, we have the faculties, the
degree courses, the departments, the libraries, the laboratories, the
secretariats, the disciplinary groupings, the academic senates, the
administrative councils and so on.

• 2) The justice system: we find ministry and courts (civil and criminal),
powers of attorney, juvenile courts, surveillance courts, sections,
judicial offices, chancelleries, etc. In representative associations we
find, for example, national, regional, provincial, territorial and
sectorial associations, union offices, service centers, consortia.
 Features of complexity: 5) Interdependence

• In all cases, simplifying as much as possible, we can

distinguish more or less articulated central units and
peripheral units scattered throughout the territory.

• While in the first examples (post offices, banks,

corporations) the peripheral units are substantially
indistinguishable, that is, they have the same brand and
perform the same functions and differ at most in physical
dimensions (post offices and banks), in the other cases
(university, justice, representative association, but also
some firms) the peripheral units are similar, but not
identical, and they show a certain degree of autonomy
from the central units, so a low degree of hierarchical
(vertical) interdependence and a certain degree of
heterarchical (horizontal) interdependence..
Features of complexity: 6) Basically autonomous

• Definition of autonomy of any organizational unit as "the

degree of freedom with which the managing of the
organizational processes works“.

• In all the strong tie systems, the organizational units, in

particular the peripheral ones, do not have any
autonomy, in the sense that each peripheral unit is
required to conform exactly to what is expected by the
hierarchical top-down organization (and autocratic
leadership goes exactly in this direction).

• The managing director of an IKEA store has no margin of

autonomy with respect to the arrangement of the store
which, from the design stage, is built to be exactly identical
to the others.

• The departments, spaces, product range, prices, all

personnel policies (selection, recruitment, training,
schedules, careers, salaries, clothing, etc.) are prearranged.
 Features of complexity: 6) Basically autonomous

• Even in franchising and / or agency relations,

situation is not very different.

• It is true that the shop owner and / or the

dealer have a series of activities to be carried
out in full autonomy (such as the
management of physical space and
personnel), but everything that is closely
related to "characteristic management"
(products, range , prices, image, etc.) is
strictly addressed by (and specified in) the
contractual rules, which replace the partial
autonomy within a classical and traditional
hierarchical dependence.
 Features of complexity: 7) Loosely coupled systems

• If in a complex organizational system many significant variables are

weakly linked, we can say that we are dealing with a loosely coupled
system (Weick, 1976).

• This perspective is not obvious, because the still

dominant idea is that organizations are always
rational and social constructs formally
constituted for the pursuit of a particular end
and seen as the product of a concatenation of
causal links, i.e. of a set of strong ties.
• Few scholars in the past (but still today) have focused on the non-
rational aspects of organizations and above all on the systemic
dimensions of poor rationality. Even where the individual is recognized
as having bounded rationality (Simon, 1947), the organization is seen
as that social mechanism that overcome the boundaries of
individual rationality.
• Only authors like Glassman
and March and Olsen talked
about weak ties systems,
organized anarchies, garbage
can decision models (Cohen,
March, Olsen, 1972), up to the
fundamental essay of Weick
(1976), entitled Educational
Organizations as Loosely
Coupled Systems.
• Weak-ties systems are not better or worse than strong-ties systems, but
simply different. When we speak of a weak (but also strong) system we
always refer to a degree and we should say “basically weak ties" or "tend to
be rigid ties".

• This occurs for a very simple reason: a system

in which all ties were weak would no longer
(by definition) be a system.

• Conversely, an organizational system in

which all ties were absolutely rigid would be
a fragile system, as it is incapable of any
adaptation.

• Using a metaphor: if the skyscrapers did not

sway at least a little in the wind, they would
fall. The question of the degree of weakness
or strength of ties, if it is absolutely
convincing on an abstract level, opens up
many problems on the empirical one.
 • Weick draws attention to the fact that in any organizational system we
will find weakly bound "parts" and rigidly linked "parts", inviting scholars
to concentrate on weak ties precisely because the specialist literature has
always focused on strong ones.

• In the world of complex organizations there are recognizable

organizational systems (basically weak) characterized by operational
arrangements, behavioral regularities and their own logic of action and
different from those of the (basically) bonded systems.
• Also in the light of direct experience, we
can say that the weak ties systems are
those organizational systems
characterized by a plurality of
organizational units, which tend to be
autonomous, with low technological
and / or hierarchical interdependence
and a certain degree of heterarchical
interdependence.