Author: Karthik Suresh

We’ve all seen a flock of birds wheeling and swooping as if it were a single, giant organism.

The same thing happens with shoals of fish, or even people trying to leave a train station at rush hour.

Why and how does this happen, and what does it mean for us?

The term emergence is used to describe complex phenomena or behaviour that emerges from the interaction of simpler elements – often in a way that can’t be predicted from the features of the simpler element.

We can simulate flocking behaviour by setting up a system that follows three rules:

1. Don’t crowd neighbours
2. Move in the average direction of where neighbours are moving
3. Move in the average direction of where neighbours are

These three rules result in a swarm – see here for example.

In organisations, emergence can happen in two ways.

In a hierarchy, the rules are set by those in charge.

People are given jobs, roles and responsibilities. In most organisations now, they have latitude and discretion in how they do their roles but have rules to follow.

Take the flocking rules, for example, and recast them for a job role. This might say:

1. Avoid doing the same work as someone else – create your own niche.
2. Try and make sure what you do is aligned with the vision and mission of the organisation.
3. Do work that feeds into and works with what others in the organisation are doing.

If company had a number of people who organised their work in line with these rules it’s very likely that they will do some very interesting things.

It’s that balance between individuals and the collective that creates the conditions for innovation and creativity to emerge.

It’s also why micromanagement doesn’t work.

We need freedom and control – too much of either results in very simple or chaotic behaviour, neither of which are useful.

The second way in which emergence happens is through markets

Take Ebay, for example.

By creating a platform where people can exchange things, they created a thriving ecosystem of buyers and sellers.

Products from bicycles to floor mats flow through the system, in bursts of transactions that spill out into the real world – triggering a flow of packages in white vans that then creates emergent behaviour in the flow of traffic.

On a macro-level, the most successful economies are those that let markets form – allowing people to freely exchange goods and services.

We are surrounded by emergence – and what it reminds us is that we cannot control everything.

The best stuff happens when find the space between simplicity and chaos.

It’s conference season in the energy sector – and it’s a good chance to look around and see what companies are doing to position themselves as the industry and markets change around them.

For over 20 years now, we have seen battles between incumbents and innovators.

Innovators come along and try to get market share

The innovators – let’s call them the Red Team – see a market and believe they can do better.

They come along with a cheaper substitute and capture new, low-end customers.

For example, domestic users now have a choice of switching portals that make it much easier to compare offerings from suppliers and switch.

The portals are moving upmarket, targeting increasingly larger users and higher end customers – and compete with a number of other software and portal based systems that address the same market.

They also compete with various framework type structures that try to make it easier for users to decide between options.

This happens at every level of the market – in energy it’s being seen from how we buy energy, to how we use it and check the bills are right, and how we use our assets to make money.

The incumbents are slow to recognise how things are changing

Incumbent companies – the Blue Team – with market share and good profits don’t really want things to change.

They can ignore the innovators, but the ones that do that tend to find that by the time they are awake to the danger it’s too late.

A Blue Team that is on the lookout for this kind of competition has to either acquire the innovator or invest time and resource into creating a competing business that tackles the innovator head on.

In today’s digitalised markets, however, this article from the Harvard Business Review by Larry Downes and Paul Nunes says that things are a little different.

The fight just turned unfair

Downes and Nunes point to the emergence companies that land with a Big Bang and take market share suddenly and completely, with no warning – let’s call them Green Teams.

The military like this approach – the old adage says if you find yourself in a fair fight, then you didn’t plan your mission properly.

The big example here is how smartphones with free maps have upset the market for navigation devices.

The Green Teams, however, don’t operate like a military unit.

Instead, they’re often a group of people working on cool stuff that unexpectedly takes over a completely different industry from the one they’re in.

Products that come out of hackathons and experimental product launches have an effect beyond expectations because they turn out to be cheaper, more inventive and better integrated than the stuff that is out there right now.

Products like Twitter, Whatsap and WordPress changed the way we communicate and build stuff on the internet all at once – people signed up in massive numbers very quickly, leaving no time for incumbents to react.

Which team are you on?

In the energy business, the Blue Teams include traditional suppliers who are dealing with a changing energy system that is decarbonising.

Some are getting rid of traditional generation and becoming completely green generators.

The Red Teams include a host of new suppliers and players in the supply chain – from developers of platforms to technology.

The energy industry is notoriously slow to change – and this time around no company jumps out as being a clear Green Team leader, although many are trying to position themselves in this space.

The game goes on – the essence of strategy is knowing which team and play we’re going with.