So, some bad news. I’ve been having chest pains. Although (hopefully) nothing serious as 4 doctors ASSURED me that it’s “only” inflammation, I decided to clean up my diet.

This means I can’t indulge in my favorite food… Matcha Green Tea Ice Cream (I know). 

There are nights I’ll wake up in cold sweats thinking about my favorite tasty treat. I have dreams of full fat cream being poured into a sugary vat and mixed with powdery matcha and xanthan gum… this stuff gets churned for hours and then thrown into an icy tomb.

It’s amazing how it turns out and it is hard to believe it tastes so good (as I don’t particularly enjoy eating spoonfuls of xanthan gum by itself). And that’s just it – ice cream is emergent.

So, what’s emergence?

Well, it’s when complexity arises from simplicity. In this case, the ultimate date food emerges from sugar, fat, time, and temperature. But for many companies, emergence manifests through the complex actions of agents under simple rules. 

When individuals within a system act in their own self-interest and follow basic rules, complex patterns and behavior emerge. Something greater than the sum of its constituent parts manifests and…

an Emergent Phenomenon occurs!

As xanthan gum will tell you, emergence allows you to punch above your weight class as things otherwise out of the bounds of possibility become possible thanks to the interconnectedness of the system. 

Basically, 1+1=3

but 1+1+1 can also =30

 ad infinitum (or until diminishing returns).

This thinking is useful for evaluating companies for investment or when thinking of the structure of the company itself. Too much top-down bureaucratic complexity will lead to diminishing returns and eventually result in the collapse of any system.

Simple rules allow self organization to occur resulting from upholding the integrity of an agent’s freedom within a structure. 

To take full advantage of the power of emergence, companies must create an environment where individuals are empowered to act in their self-interest while adhering to basic rules and principles.

This means nourishing a culture of trust, where individuals feel valued and are free to experiment and take risks. Clear and simple rules must also be established to guide individuals’ actions. There needs to be independent action while still maintaining (or getting as close as you can to) full shareholder-governance-management-organizational-consumer alignment… if it wasn’t for that pesky principle agent problem, .

Keep emergence in mind the next time you are building or evaluating your next company for investment… Or maybe just the next time you eat ice cream. 

Quick– sign up for the newsletter or you’ll melt!