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The Euro Mediterranean Management Approach 4.
Complexity theory and the quantum
interpretation of business
Walter Baets, PhD, HDR Associate Dean for
Research MBA Director Professor Complexity ,
Knowledge and Innovation Euromed Marseille
Ecole de Management
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Euromeds Management Approachour specificity
Individual

• Personal development
• Emotional development
• Leadership
• Making a difference
• Self motivation
• Joy
• Involvement
• Responsibility
• Respect

• Quantitative approaches
• Control/performance
• Management by
• objectives
• Models
• Financial orientation
• Short term efficiency
• Production management

Mechanistic management approach
Personal Development (Learner centered)
Interior
Exterior

• Dynamic system behavior
• Management in complexity
• Management in diversity
• Knowledge management
• Community of practices
• Ecological management
• Ethics in management
• Social corporate responsibility
• Sustainable development
• The networked economy
• Emergence, innovation

Holistic management approach
Euro- Mediterranean beliefs, values
culture (identity)

• Historic legitimacy
• Diversity
• Sociology
• Humanism
• Relativism
• Complexity
• Social responsibility
• Euro-Mediterranean
• (long term perspective)
• Sustainable development

Collective/Networked
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Flatland Edwin Abbott, 1884 A. Square meets
the third dimension
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Taylors view on the brain
The computer attempt to automate human thinking
Manipulating symbols Modeling the
brain Represent the world
Simulate interaction of neurons Intelligence
problem solving Intelligence learning 0-1
Logic and mathematics Approximations,
statistics Rationalist, reductionist Idealized,
holistic Became the way of building computers
Became the way of looking at minds
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Sometimes small differences in the
initial conditions generate very large
differences in the final phenomena. A slight
error in the former could produce a tremendous
error in the latter. Prediction becomes
impossible we have accidental phenomena.
Poincaré in 1903
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Sensitivity to initial conditions (Lorenz)
Xn1 a Xn (1 - Xn)
0.294 1.4 0.3 0.7
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Cobweb Diagrams (Attractors/Period Doubling)
Xn1 ? Xn (1 - Xn) (stepfunction) dX
/ dt ? X (1 - X) (continuous function)

• On the diagrams one gets
• Parabolic curve
• Diagonal line Xn1 Xn
• Line connecting iterations

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Lorenz curve (Butterfly effect)
Lorenz (1964) was finally able to materialize
Poincarés claim Lorenz weather forecasting
model dX / dt B ( Y - X ) dY / dt -
XZ rX - Y dZ / dt XY - bZ
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Hénon Attractor
X n1 1 - a X 2 n Y n Y n1 b X n
Again, different attractors are shown Other
examples Pendulum of Poincaré, Horse Shoe
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Why can chaos not be avoided ?

• Social systems are always dynamic and
• non-linear
• Measurement can never be correct
• Management is always a discontinuous
• approximation of a continuous
• phenomenon

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Ilya Prigogine

• Non-linear dynamic models (initial state,
• period doubling,.)
• Irreversibility of time principle
• The constructive role of time
• Behavior far away from equilibrium (entropy)
• A complex system chaos order
• Knowledge is built from the
• bottom up

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Entropy
Measure for the amount of disorder When entropy
is 0, no further information is
necessary (interpretation is that no information
is missing There is a maximum entropy in each
system (in the bifurcation diagram, this is
4) Connection between statistical mechanics and
chaos is applying entropy to a chaotic system in
order to compare with an associated statistical
system
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Francesco Varela

• Self-creation and self-organization of systems
  and structures (autopoièse)
• Organization as a neural network
• The embodied mind
• Enacted cognition
• Subject-object division is clearly artificial
• How do artificial networks operate (Holland)
• Morphic fields and morphic resonance (Sheldrake)

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Chris Langton

• Artificial life research
• Genetic programming/algorithms
• Self-organization (the bee colony)
• Interacting (negotiating) agents

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Conways game of life

• One of the earlier artificial life simulations
• Simulates behavior of single cells
• Rules
• Any live cell with fewer than two neighbors dies
  of loneliness
• Any live cell with more than three neighbors dies
  of crowding
• Any dead cell with exactly three neighbors comes
  to life
• Any cell with two or three neighbors lives,
  unchanged to the
• next generation
• Plife.exe (windows)

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John Holland

• Father of genetic programming
• Agent-based systems (network)
• Individuals have limited characteristics
• Individuals optimize their goals
• Limited interaction (communication) rules

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Law of increasing returns (Brian Arthur)

• Characteristics of the information economy
• (a non-linear dynamic system)
• Phenomenon of increasing returns
• Positive feed-back
• No equilibrium
• Quantum structure of business
• (WB)

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Summary (until now)

• Non - linearity
• Dynamic behavior
• Dependence on initial conditions
• Period doubling
• Existence of attractors
• Determinism
• Emergence at the edge of chaos

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The Euro Mediterranean Management Approach 4.
Complexity theory and the quantum
interpretation of business
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Une interprétation quantique des processus
organisationnels dinnovation Walter Baets Thèse
HDR, Université Paul Cezanne, Aix-Marseille
III http//euromed.blogs.com Complexity,
organisations and learning a quantum interpretati
on of business Walter Baets, Routledge, 2006
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Fractals
The (mis)behaviour of markets A fractal view of
risk, ruin and reward Benoit Mandelbrot and
Richard Hudson Profile Books, 2004 A fractal
is a pattern or object whose parts echo
the whole, only scaled down By contrast, a
multifractal has more than one scaling ratio in
the same object some parts of the object shrink
quickly, others slowly
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Fractals (Mandelbrot set)
Self-similarity on different levels of
detail Coastline Cody Flower Branches of a
tree Those forms cannot be reduced to any
geometrical figure (Mandelbrot) It is a set of
attractors (gingerbread-man) for a set of
different equations
Julia set Z ? Z 2 C (C is constant Z is
complex)
Dependence on starting values of z Mandelbrot
set is a fractal (needs a computer)
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Fractals (examples)
Economics, finance, anthropology, history,
musicology, Architecture, etc (social
sciences) A fractal site Some fractal
pictures Wikipedia about fractals
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More experiments
A new kind of science, Wolfram S, General
Science, 2002 The site that goes with the book
(Mathematica) With some examples
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Poincaré 1903
Logical empiricism Logical positivism (Wiener
Kreis)
Around 1920-1930 Built it on a rockbottom of
science (what is empirical) Construct it with
logic (axiomatic systems)
Popper 1902 1994 Causality is a consequence of
the methodology, not a concept in itself (in
line with logical empiricism)
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Gödels theorem 1931 No absolute axiomatic
system is possible Relativity theory (Einstein)
first part of the 20st century No absolute
measurement is possible Quantum mechanics first
part of the 20st century Observation is
interpretation Complexity theory (Prigogine)
second part of 20st century Emergence,
bifurcations, strange attractors
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Once holism and complexity accepted we
cannot avoid a fundamental question
PAULI complementary physics Synchroni
city (occurringtogether-in-time) From
causal coherence Coincidence (from
cause to effect) (occurring
together) A-causal
links hence.
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A quantum interpretation non-locality
synchronicity entanglement
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Mechanistic versus organic The
evolution in business
Product oriented Unique
distribution channels Control Stability Management
by objective Processes are the
assets Hierarchical organization
Machine thinking (symbolic) Industrial era
The client co-creates Multiple channels Emergent
processes Change (learning) is the
goal Management in change and complexity Learning
is the asset Human networks Human thinking
(fuzzy) Knowledge era
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Some quantum stories
Maxwell, Planck and Bohr introduced criteria
such as fertility, beauty and coherence Einstein,
de Broglie and Schrödinger shared a commitment
to a continuous wave as a basic physical entity
subject to a causal description Heisenberg,
Pauli, Jordan and Dirac we no longer have
event-by-event causality and particles do not
follow well-defined trajectories in a
space-time background In 1935, Schrödinger
formulated his famous cat paradox Pauli
Background physics has an archetypal origin and
that leads to a natural science which will work
just as well with matter as with consciousness
Pauli accepted that physical values, as much as
archetypes, change in the eyes of the
observer. Observation is the result of human
consciousness
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Some quantum stories (2)
Polkinghorne The implication of these
observations is that the phenomenon of
entanglement (non-locality) includes a real
remote activity, not simply epistemological,
but in fact ontological in nature Polkinghorne
(1990) The greater the experience of
satisfaction, the more the consciousness of
each cell in the body will resonate with the
holographic information engraved in the
"quantum zero point" (the lowest possible state
of energy, in an almost resting, but not quite,
situation) of the energy field
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So, on the Copenhagen interpretation of quantum
mechanics, physical processes are, at the most
fundamental level, both inherently
indeterministic and non-local. The ontology of
classical physics is dead. The heart of the
problem is the entanglement (or
non-separability) of quantum states that gives
rise to the measurement problem. This
entanglement makes it impossible to assign
independent properties to an arbitrary isolated
physical system once it has interacted with
another system in the past even though these
two systems are no longer interacting. The
non-separability characteristic of quantum
systems can be seen as an indication of the
holistic character of such systems.
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A quantum interpretation
In the arts Cara et Murphy In linguistics Dalla
Chiarra et Giuntini In the physical sciences
Pauli In biology Sheldrake (morphogenetic fields
and resonance) In medicine Chopra, the Ayurveda,
but also increasingly in regular medicine
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The Bogdanov Singularity
The Wall of Planck (physical limit) 10-43 3
space and 1 time dimension Are space and time
so neatly divided ? (Prigogine the
DVD) Synchronicity in quantumphysics Bogdanovs
(physics and mathematics) Avant le big bang
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The Bogdanov Singularity (2)
Beyond the  Wall of Planck  ? Before the big
bang ? There is a fifth dimension, being a
fourth of space expressed in imaginary
time Time-space really becomes a continuum That
singularity has no classical movement anymore
(what is)
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Entrainment (Institute of Heart Math
www.heartmath.org)
Physiology of emotions How emotions influence
cognition, behavior and health The heart is a
highly complex system a sensory organ, a heart
brain (nervous center) That heart brain
allows us to learn and takes decisions
independent from the brains cerebral cortex
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Entrainment (2)
There is a strong interaction through the body
via an electromagnetic field Rythms should
naturally synchronize on that heart rhythm The
same happens between people (pendulum clocks
Huygens) Socio-emotional interaction between
mother and child Heart coherence
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A beginning of evidence Some research projects
Complexity and emergent learning in innovation
projects Agents, Sara Lee/DE Innovation in
SMEs a network structure ANNs, brainstorm
sessions Telemedecin a systemic research into
the ICT innovations in the medical care market
Agents Knowledge management at Akzo Nobel
improving the knowledge creation ability
ANNs, Akzo Nobel Information ecology For the
moment a conceptual model Agents Conflict
management Agents Knowledge management at Bison
contribution to innovation Agents
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Research agenda In search of  synchronicity 
Expected contributions

• Can we visualize synchronicity in management
• What are the organizing principles and what is
  precisely
• emergence
• Emergent concepts in management
•  Complex Adaptive Systems  as research tools
• Agents, Neural Networks, Learning systems
• The contribution of this paradigm for knowledge,
  learning and
• innovation in companies
• Another understanding of innovation