Why Organizations Should Embrace Randomness Like Ant Colonies; Why are ant colonies so much better than the sum of their parts, while governments and companies are so often much worse?

Why Organizations Should Embrace Randomness Like Ant Colonies

by Andrew J. Smart  |   10:00 AM September 13, 2013

Consider the common ant. Each one is by genetic design capable of only a few simple behaviors and binary choices, making it a pretty dumb, rigid, inflexible being. Yet the collective behavior of an ant colony is adaptive, flexible and even creative; it’s a highly structured social organization. Now consider your average human. Most of us are individually adaptive, flexible and very creative. Yet the large organizations in which we work are often inflexible and incapable of adaptation and true innovation. Why are ant colonies so much better than the sum of their parts, while governments and companies are so often much worse?I think it’s because of the different ways in which ant and human organizations deal with uncertainty. In my new book, I talk a lot about how ant societies exploit randomness and “leaderlessness” to learn and flourish. As a colony is exploring a new environment (such as your house), forager ants walk around aimlessly until they find something surprising, say a piece of fruit on the floor. Through random interactions, the location of this new information spreads quickly Very soon, thousands of ants converge on this food source and begin transporting bits of it back to the colony. When ants don’t find food, they increase the randomness of their searching. As Deborah Gordon, an ant biologist at Stanford, points out, “Elegant top-down designs are appealing, but the robustness of ant algorithms shows that tolerating imperfection sometimes leads to better solutions.” Without any central control, “food acquisition strategy” or risk management, ants are one of the most successful species on the planet, 10 million billion strong, giving them roughly the same global biomass as humans.

Human organizations tend to take a completely different approach to exploration and have the opposite response to setbacks. Most try to decrease randomness, with executives conducting feasibility studies and risk analyses or tightening budgets, introducing more processes, standardizing operations. When projects come in late or over budget, as so many inevitably do, the result is “deep-dives” and lengthy PowerPoint presentations about “lessons learned” so everyone can plan better next time (even though the situation will undoubtedly have changed by then). Even successful companies have trouble resisting the temptation to reduce uncertainty and fight noise.

What would happen if we stopped resisting, and instead took the terrifying step of embracing randomness? Organizations would start to learn, just as individuals do when they are surprised. Scientists have explained it to me like this: When something unexpected happens, the human brain reacts by focusing attention and increasing stress. A driver swerves in front of you, and for a few seconds when you’re consumed by avoiding that car, all other thoughts disappear from your consciousness. The more unexpected the event, the better you will remember, and the more you will learn from, it.

Surprise is information. So an organization that puts all its effort into planning, tracking, monitoring and documenting to minimize surprise and the chance of failure prevents itself from acquiring and spreading information, and consequently from learning. Innovation slows, and the company either atrophies or gets superseded by more agile organizations.

Some entrepreneurial companies, such as Valve, the entertainment software and technology maker, and Netflix, the video-streaming service, have obviously learned to relax controls to increase randomness and make the most of their flexible, creative individual contributors. The rest should aspire to act more like those ant colonies.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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