Report LIU-IEI-RR--18/00307--SE
A Manifesto for
Management in Future
Industrial Ecosystems for
Complex Intelligent
Systems
Nicolette Lakemond, Professor Industrial Management, Linköping University, Sweden
E-post: nicolette.lakemond@liu.se
Gunnar Holmberg, Adjunct Professor Linköping University and Saab, Sweden
E-post: gunnar.holmberg@liu.se
A digital version of this report can be downloaded from: http://urn.kb.se/resolve?urn=urn:nbn:se:liu:diva-152660
Titel: A Manifesto for Management in Future Industrial Ecosystems for Complex Intelligent Systems
Authors: Nicolette Lakemond and Gunnar Holmberg Series: IEI-report series, Linköping University
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A Manifesto for Management in Future Industrial Ecosystems for
Complex Intelligent Systems
THE CHALLENGE: Extensive research efforts are ongoing to ensure long-term competitiveness
for Swedish system building industry, such as WASP1 (Wallenberg AI, Autonomous Systems
and Software Program), where technology development, including software development, for future intelligent systems is addressed. This development has potentially major consequences for organizations that develop, provide, and utilize future complex and intelligent systems. Maintaining some of these systems’ functions will be crucial to many functions in society, such as various infrastructure like transport systems, communications systems, and healthcare. The development is disruptive in character and changes the conditions for the actors in the system-building industry (see WASP’s Technology Foresight 2018). Closely related to this technology development, a number of management challenges are emerging, such as:
The emergence of ecosystems for dynamic and intelligent platform-based systems. This overthrows traditional principles of organizational design that are often based on direct mirroring of the system architecture (also referred to as "mirroring hypothesis" / Conway's law), where a typical situation is that there is a responsible organizational unit for each subsystem in the system. In the face current developments, new perspectives on the links between the system architecture and the organization need to be developed as a result of the emergence of ecosystems, new types of layered system architectures, the intelligent evolution of systems, the creation of training data, and the emergence of new types of actors such as data factories.
Complexity beyond human cognitive understanding creates a need to re-evaluate existing insights into bounded rationality (Simon, 1972) into a new understanding of rationality that recognizes that human cognition and the intelligence of systems are strongly interwoven. Such rationality may be understood as generative and open and potentially culminates in a paradigm shift in management knowledge. Based on this, new management approaches need to be developed, e.g. how emerging complexity can be embraced (Garud et al., 2013).
CURRENT STATE-OF-THE ART IN MANAGEMENT RESEARCH: Currently, there is limited
knowledge on how existing management logic changes as systems become increasingly complex, intelligent and when management takes place in the context of ecosystems that consist of different types of actors. Existing management research often has a retrospective perspective by studying one or more successful companies, historical patent databases or survey studies. The fast pace of technology developments urges management research to address the future related management challenges more proactively to ensure the creation of future successful intelligent system-building industrial ecosystems. This requires a
1 Wallenberg AI, Autonomous Systems and Software Program (WASP) is Sweden’s largest individual research
program ever, a major national initiative for strategically motivated basic research, education and faculty recruitment. The program addresses research on artificial intelligence and autonomous systems acting in collaboration with humans, adapting to their environment through sensors, information and knowledge, and forming intelligent systems-of-systems. Software is the main enabler in these systems, and is an integrated research theme of the program (see http://wasp-sweden.org)
combined focus on technology-oriented and management research for complex intelligent systems, i.e. capturing the blind spot that is hardly addressed currently (see Figure 1).
Figure 1 Combining technology-oriented research with management research for complex intelligent systems- capturing the blind spot
INITIAL RESEARCH QUESTIONS:
- How can mirroring be understood in the context of intelligent system architectures
and dynamic and partially self-organizing ecosystems? When traditional principles of
organizational design based on direct mirroring of system architecture no longer apply, new insights are required about how complex architectures for intelligent systems affect organizations and vice versa. For example, scholars have argued that that direct reflection can be a trap that prevents disruptive innovation and suggest approaches that build on partial mirroring or “breaking the mirror” (Colfer and Baldwin, 2016). Here research can contribute with new principles for mirroring at different levels, such as within organizations, between organizations, and in ecosystems.
- How can the emergence of a more generative rationality in which human understanding and intelligence of the system are strongly intertwined be understood and how is management affected? The ongoing developments result in a new
perspective on rationality, defined by the interplay between human understanding and systems intelligence and learning. Tools such as model-based system development (MBSE) play a central role in integrating individuals’ understanding into a comprehensive understanding of complex systems and their ecosystem. This can be considered as a paradigm shift in management, as existing management principles, methods, processes and decision making are based on bounded rationality (Simon, 1972). Research that addresses a new understanding of rationality can help redefine management and prepare organizations and individuals to take advantage of the new opportunities.
- How can innovation be management and innovation processes be designed to meet
the challenges of increasingly individualized systems? As a result of the increased
intelligence and emergence of learning systems, systems become increasingly individualized as an effect of their training and use. Innovation in these systems is ongoing and is generative in nature (Nambisan et al., 2017). Innovation processes in ecosystems are by definition difficult to design and manage as they are partly self-organizing, adaptive, and dynamic. Research in this area can provide insights into how
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future innovation management principles and innovation processes in ecosystems can be formulated.
- How can simultaneous demands on generativity and criticality be handled? Much of
the ongoing developments indicate that additional innovation opportunities can be created enabling and creating prerequisites for conceptualizing and creating non-existent alternatives, i.e. generativity (Hatchuel, 2018). This can for instance be achieved by stimulating other actors in the ecosystem to continuously contribute with innovations to the system, e.g. by providing interfaces to the system platform to external actors and by that expanding opportunities for generativity. However, at the same time, the safety and reliability of many of these systems’ functions are crucial, especially when they have critical functions in society (criticality). This creates an important management challenge, as generativity many times relies on more difficult-controlled and fuzzy innovation processes, while criticality requires control in the innovation process (Lakemond and Holmberg, 2018). Research in this area can contribute to the successful combination of these two contrasting logics.
WAY FORWARD: The ongoing extensive research on systems and technologies for complex
intelligent systems creates a unique possibility to proactively address the management challenges that are created by the rapid technology development in intelligent system-building industrial ecosystems. We intend to complement the extensive research in this area with research that addresses the prerequisites for management of these systems and ecosystems.
The research intends to build on the following principles:
- Combine existing technology-oriented research with future-oriented management research
- Build on the tight connection between technology and management
- Address challenges at different levels; existing firms and organizations, new actors, and the eco-system
- Use research methods for the creation of future-oriented knowledge (rather than retrospective studies) by for instance studying demonstration projects, industrial demonstrators, future-oriented interviews and relevant key individuals from participating firms, concept workshops, and reference fora with globally leading experts.
References:
Colfer, L.J. and Baldwin, C.Y. (2016). The mirroring hypothesis: theory, evidence, and exceptions, Industrial and Corporate Change, pp. 709-738.
Garud, R., Tuertscher, P. and Van de Ven, A.H. (2013), Perspectives on innovation processes, The Academy of Management Annals, Vol. 7 No. 1, pp. 775-819.
Hatchuel, A., Le Masson, P. Reich, Y., Subrahmanian, E., Design Theory: a foundation of a new paradigm for design science and engineering (2018). Research in Engineering Design, Vol. 29 No. 1, pp. 5-21.
Lakemond, N., Holmberg, G. (2018). Digital Innovation in Complex Systems - Managing Critical Applications and Generativity, 31st Congress of the International Council of the Aeronautical Sciences, Belo Horizonte, Brazil, 9-14 September. Nambisan S, Lyytinen K, Majchrzak A and Song M (2017). Digital innovation management: Reinventing innovation
management research in a digital world. MIS Quarterly, Vol. 41 No. 1, pp. 223-38.
Simon, H. A. (1972). Theories of Bounded Rationality: in McGuire, C.B. and Radner (eds), R., Decision and Organization, North-Holland Publishing C
Technology Foresight 2018 (2018), WASP’s anthological assessment of upcoming technologies and their relevance for Swedish research and development, WASP publication, www.wasp-sweden.org/custom/uploads/2015/11/WASP-Foresight-2018.pdf.
