Ingenuity Theory:Ingenuity Theory:

Adapting to ComplexityAdapting to Complexity

H.G. WellsH.G. Wells

““Hard imaginative thinking has Hard imaginative thinking has not increased so as to keep pace not increased so as to keep pace with the expansion and with the expansion and complications of human societies complications of human societies and organizations.” This is “the and organizations.” This is “the darkest shadow upon the hopes darkest shadow upon the hopes of mankind.”of mankind.”

Are the problems we’reAre the problems we’reconfronting becoming harder?confronting becoming harder?

Two Questions

If so, can we solve them?If so, can we solve them?

Most definitely

Too often not

Are there ultimate constraints Are there ultimate constraints on human development?on human development?

Larger Question

It depends on how we define “development.” But, by the currentdefinition, yes.

Economic paradigmHuman beings are:Human beings are:““Rational ConsumersRational Consumers”

Key concepts:Key concepts:Consumption/production;Consumption/production;Investment/savingInvestment/saving

Factors of production (or system inputs):Factors of production (or system inputs):Capital and labor Capital and labor Sometimes land and ideasSometimes land and ideas

Ingenuity paradigm

Human beings are:Human beings are:““Pragmatic Problem-Solvers”Pragmatic Problem-Solvers”

Key concepts:Key concepts:Ingenuity Ingenuity requirementrequirement and and supplysupply

Factors of problem-solvingFactors of problem-solving(or system inputs):(or system inputs):Matter, energy (work), and Matter, energy (work), and ingenuityingenuity

Sets of instructions (SOIs) that Sets of instructions (SOIs) that tell us how to arrange the tell us how to arrange the constituent parts of our physical constituent parts of our physical and social worlds in ways that and social worlds in ways that help us achieve our goals.help us achieve our goals.

Ingenuity

Length of SOIsLength of SOIs

or, more specificallyor, more specifically

Algorithmic complexity (with Algorithmic complexity (with if/then gates)if/then gates)

Measure of Ingenuity

Human beings useHuman beings use ingenuity ingenuity

To guide the application ofTo guide the application of energy energy

To arrange theTo arrange the matter matter around themaround them(including materials and people)(including materials and people)

In ways that they hope will solveIn ways that they hope will solvetheir problemstheir problems

Two types of ingenuity

TechnicalTechnicalSocialSocial

Ingenuity Ingenuity GapGap

Time

Supply

Requirement

Value added of Ingenuity Theory:Value added of Ingenuity Theory:Gives us a metric to operationalize theGives us a metric to operationalize the““difficulty” of a problem. This allows us to:difficulty” of a problem. This allows us to:

• Compare the difficulty of diverse problems Compare the difficulty of diverse problems across spaceacross space

• Track the change in difficulty of a single Track the change in difficulty of a single problem across timeproblem across time

• Separate the issue of rising problem Separate the issue of rising problem difficulty from the issue of our capacity to difficulty from the issue of our capacity to “keep up” (the two sides of the ingenuity “keep up” (the two sides of the ingenuity gap).gap).

Once we separate the two sides of the gap,Once we separate the two sides of the gap,we can:we can:

• Analyze the factors making our Analyze the factors making our problems more difficultproblems more difficult

• Analyze the factors determining Analyze the factors determining whether we can keep up.whether we can keep up.

Is our requirement Is our requirement for ingenuity rising?for ingenuity rising?

Six Factors Driving up our Ingenuity Requirement

1.1. Changing valuesChanging values

2.2. Extended time horizonExtended time horizon

3.3. Decreasing resourcesDecreasing resources

4.4. Rising complexityRising complexity

5.5. Increasing paceIncreasing pace

6.6. More surprisesMore surprises

1.1. Changing Changing valuesvalues

2.2. Extended Extended time time horizonhorizon

3.3. Decreasing Decreasing resourcesresources

4.4. Rising Rising complexitycomplexity

5.5. Increasing Increasing pacepace

6.6. More More surprisessurprises

Factor:Factor: Relates to: Relates to: Assumes: Assumes: Affects: Affects:

DefinitionDefinitionofofproblemproblem

Inputs toInputs toproblemproblemsolvingsolving

IntrinsicIntrinsicfeaturesfeaturesofofproblemproblem

ConstrainedConstrainedSubstitutabilitySubstitutability

Law ofLaw ofrequisiterequisitevarietyvariety

MaintenanceMaintenancerequirementrequirement

ExtraordinaryExtraordinaryrequirementrequirement

Can we always supply the Can we always supply the ingenuity we need?ingenuity we need?

The ingenuity supply chain

BrainsBrains

ScienceScience

PoliticsPolitics

MarketsMarkets

In this new In this new world, what world, what

should we do?should we do?

Four things to do in this new world

1.1. Recognize complexity of problemsRecognize complexity of problems andand solutions solutions

3. Focus on increasing resilience3. Focus on increasing resilience

2. Use decentralized experimentation2. Use decentralized experimentation to search for possible solutions to search for possible solutions

4. Front load ingenuity supply4. Front load ingenuity supply

Four-Fold Recommendation:

1.Complex problems require complex solutions

Helps to think in terms Helps to think in terms of “fitness landscapes”of “fitness landscapes”

Need to be aware of “law of Need to be aware of “law of requisite varietyrequisite variety

Engaged in constant experimentationEngaged in constant experimentation

And willing to learn fromAnd willing to learn fromfailurefailure

Four-Fold Recommendation:

2. Decentralized Response

Multiple “agents” with diverse strategiesMultiple “agents” with diverse strategies

Problem Types

ProblemProblem Solution Solution Locus of Locus of DefinitionDefinition Problem- Problem-

SolvingSolving

Type IType I

Type IIType II

Type IIIType III

ClearClear

ClearClear

UnclearUnclear

ClearClear

UnclearUnclear

UnclearUnclear

CentralizedCentralized

MixedMixed

DecentralizedDecentralized

Allow them to search for solutions with Allow them to search for solutions with as much autonomy as possibleas much autonomy as possible

Link them together within a loose Link them together within a loose information networkinformation network

Create multiple problem-solving Create multiple problem-solving “entities”“entities”

Iteratively reward successes;Iteratively reward successes;penalize failurespenalize failures

A pragmatic approach

Loosen couplingLoosen coupling

Increase bufferingIncrease buffering

Increase redundancy Increase redundancy

Install circuit breakersInstall circuit breakers

Four-Fold Recommendation:

3. Increase system resilience

TimeTime

Inge

nuity

Req

uire

men

tIn

genu

ity R

equi

rem

ent Distant time-horizon,

Sustainable policies

Proximatetime-horizon,Unsustainablepolicies

4. Front-load ingenuity supply