Welcome to my blog on strategic leadership.
Complexity economics is a term that Eric Beinhocker uses in his book “The Origin of Wealth” to identify the new paradigm emerging from the application of evolutionary systems theory to the study of economics. In his book Beinhocker uses Complexity Economics to explain how wealth is created by the expansion of “econsystems”, the economic equivalent of ecosystems, through competition. He illustrates how organizations that are best able to adapt to the constant changes found in econsystems grow and survive.
The concepts presented in “The Origin of Wealth” have major implications for developing new dynamic models for strategic management and strategic leadership. The key feature of Complexity Economics is the replacement of the closed linear “clockwork” model of classical economics that constantly seeks equilibrium with an open, dynamic nonlinear model where ‘equilibrium” is irrelevant. This has major implications for the traditional concept of corporate behavior where the focus has been on profit maximization by replacing it with a new focus on maximizing the probability of corporate survival.
Since economics provides the foundation that underlay many of the basic concepts of strategic management, marketing and decision making the shift to a new paradigm has major implications for those interested in leading organizations. In this blog I plan to explore the implications of the emerging paradigm of Complexity Economics for corporate leadership, the formation of corporate strategies, organizational design and the crafting of business models.
Beinhocker, Eric D. (2006). “The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics” Harvard Business Press: Cambridge, MA.