Australia prides itself on being a multicultural nation of diverse people. Tasmania, as part of Australia, supposedly aspires to the same multicultural ideals, but just how diverse is diverse enough and what implications does this have for our economy?

Diversity can consist of difference of ages, gender, national cultures, race, political opinions, educational backgrounds, sexual orientation – any adjective that you care to imagine that can be used to describe people.

Looking at the field of Complex Adaptive Systems Thinking, invented by extraordinary research scientist John Holland, it would appear that the more diverse our society is – the better off we are from a number of perspectives.

The world’s most successful businesses have recognised that diversity is the key to innovation and success and make it policy to encourage difference as a strategy to achieving future success.

Indeed, it has been acknowledged that the great economic strength of the US in the past, is due to it’s truly diverse society of people. It is a cultural melting pot that has absorbed, embraced and encouraged all types of people regardless of what adjectives can be used to describe them as individuals. Try to answer the question of ‘what defines a person as American?’, and you’ll see what I mean.

One could argue that part of the reason that the US economy is facing challenges at present, is that the original diversity that was present in the system, is no longer represented by economic leaders and decision makers at the top level in the system.

Scientifically, there is evidence that shows diversity is a requirement of the natural world to exist healthily, not just the business world. The more diverse an ecosystem is, the more resilience it has. It is able to handle shocks and disturbances well.

The opposite of resilience has widely-recognised negative implications for organizations, such as groupthink and an inability to recognise when things are headed in the wrong direction.

Much work has gone into looking at the effects of diversity on complex adaptive systems (CAS); indeed it is diversity that is one of the intrinsic components of a system in order for it to be considered
a CAS.

The human body, human society, ecosystems and the workplace are all examples of complex adaptive systems.

This term might be new to readers, so here follows a simple definition; A CAS is a complex system made up of multiple and interconnected units, which, when functioning as a whole, have the capacity to adapt and change.

CASs are non-linear, are never in a state of equilibrium (they are constantly changing) and the present state of a system is a direct result of passed events, so there is connectivity across time.

The human body is an excellent example. It is made up of billions of individual cells. Individually these cells do not have conscience. These cells are collected together to make up organs, tissues and the bigger visible parts of the human body. Together as an entire system, the human body has a conscience and functions as an overall single entity. The conscience that can develop from a complex adaptive system is known as ‘emergence’.

The system as a whole is constantly adapting to change, learning and developing.

As the system changes it moves through 4 phases:

• The first phase is of rapid growth, change and expansion. It is a phase where different components of the system are trying to establish themselves and the rules of interaction are being laid down. This phase is the ‘exploitation phase’.

• The second phase is the longest phase in the system’s cycle. It is where the system is most stable and where the processes in the system are refining and becoming more and more efficient. This phase is ‘the conservation phase’. There is an interesting trade off that arises with increased efficiency in a CAS and that is weakened resilience. As efficiency increases, it takes a smaller disturbance to unbalance the entire system.

• Such a disturbance throws the system into the 3rd phase: the ‘release’ or ‘collapse phase’ consists of a chaotic change, where the resilience of the system is broken and so are the interactions between various components. There is a loss of structure and chaos prevails.

• The 4th and last phase is called the ‘reorganisation phase’ where the system tries to reorganise itself after the shock of the collapse phase. The system seeks to re-sort components, rules of interaction and dynamics.

After this phase the cycle is completed and moves into the next cycle ready to start the whole process over.

Complex Adaptive System Model:
image
Diagram from:
http://news.noahraford.com/wp-content/uploads/2010/06/Slide41.jpg

For an economy CAS thinking has several interesting implications, especially in terms of what diversity can offer.

Professor Scott E Page from the University of Michigan, published a book this year, that investigates what effects diversity has on a complex adaptive system.

He notes that, diversity makes fundamentally important contributions to a system’s performance. ‘Diversity underpins systems level robustness allowing for multiple responses to external shocks and internal adaptation. It creates the seeds for large events….diversity drives novelty and innovation.’

Diversity strengthens the resilience of a system. We live in times of increasing economic uncertainty and will be facing challenges brought about by scarcity of resources as our world population grows.

Economies that recognise the importance of diversity and the need to innovate will be the ones that create the ability of the system to respond to shocks, increasing it’s strength and ability to bounce
back from unforseen events.

There is no need to be scared or critical of difference. The secret is to recognise it’s potential, absorb all the different units and allow them to flourish. There is a place for everyone in a diverse complex adaptive system. People make up the individual economic units that power the over all economy of a region, so diversity of individuals is the key to development.

The question needs to be asked, is Tasmania diverse enough? Does the business community and the units that drive Tasmania’s economy posses enough diversity to create innovation that combats challenges of all types? If not, what can we do to foster a culture that encourages and maximises the potential of a diverse society?

When answering these questions, we need to compare ourselves to successful economies in other places and look at the units that make up a healthy complex adaptive economic system and how
they have achieved success.

Bibilography:

Holland, J., (1992), Complex Adaptive Systems, Daedalus, Vol 121, No 1, p 17-30

Holland, J., Miller, J., (1991) Artificial Adaptive Agents in Economic Theory, The American Economic Review, Vol 81, No 2, p 365-370 Prof. Page, S., (2010), Diversity and Complexity, Princeton University Press, USA