A recent article in the Harvard Business Review, which purported to tell us “when individuals don’t matter”, stated that under the right conditions, groups — whether ant colonies, markets, or corporations — can be smarter than any of their members in an effort to apply swarm theory to corporate performance. This is because, in complex adaptive systems, hard-to-predict behaviors emerge from the interaction of the individuals.

The article says that executives make three common mistakes to demonstrate that they don’t grasp how complex systems work. A complex system cannot be understood or managed with a focus on a few key parts, or individuals. It needs to be analyzed as a whole, and this is where many people executives fall short and, according to the author, make the following errors:

1. They extrapolate individual behaviour to explain collective behaviour.
   Wall street believed that EPS was key to a stock price, but then financial economists concluded that cash flow drove the stock price. The economists, who focussed on how the market behaved, turned out to be more accurate.
2. They don’t understand that changing one component of a system may have unintended consequences for the whole.
   For example, the collapse of Lehman Brothers, which had losses larger than expected, roiled global financial markets, increased risk aversion, and even parts of the market that were supposed to be unrelated, like money market funds, were jolted.
3. They prize standout individuals while ignoring how much they draw on their surroundings for support.
   The example given is how many sports teams will hire a star in an effort to quickly improve team results but then see little or no improvement because the newly transplanted star is separated from the people, structures, and norms that made her great in the first place.As someone who has worked primarily with smaller business and start-ups in my career, I have seen this way too many times. “We’re going to hire Mr. Big Shot because he ran the top performing team at Great Success Co. that generated 10M in annual savings” even though he’s never worked at a small company, never sold point solutions, never worked in the vertical, and we have a candidate who used to sell a similar solution for a similar sized competitor who is well educated, experienced, sociable, hard working, and comes with a go-getter attitude. As (I) expected, it turns out Mr. Big Shot was actually Mr. Hot Air who only succeeded in alienating the good people the company already had, who then took other jobs at their first opportunity, because Mr. Big Shot couldn’t survive without a hard-working team who did all his work for him and made him look good in exchange for the little rewards he would throw their way from the big discretionary budget he kept to keep his team happy.

This last point brings me to my main point. Even though, as the author notes, wrong assumptions about the relevance of individual agents to the behaviour of a complex adaptive system will kill your corporate performance, it’s also true that the wrong individual can significantly disrupt the system you have in place and have an effect that is more detrimental on your system than you might think any single individual could. Which is why individuals do matter. Even though it is collective effort from a focussed team that mutually trusts each other that builds an organization, it only takes a single individual to tear it apart. Remember that the next time you get all hot and bothered for an organizational superstar.

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