“COMPLEXITY”, THE 6th

COMPETITIVE FORCE THAT

SHAPES MANAGEMENT STRATEGY

A CYBERNETIC APPROACH TO “PORTER’S FIVE FORCES THAT

SHAPES INDUSTRY STRATEGY” IN TURBULENT AND COMPLEX

ENVIRONMENTS

Qeis Kamran, BA, MBA-GM, MBA_PPM, MBL-HSG, Germany

(qeiskamran@aol.com, qeiskamran@yahoo.com, Tel. +49-176-66814739)

Abstract The core pillars of the job of the strategist have shifted. This changed has not occurred because of the

foresightedness or farsightedness of the strategist’s shaping our business’ wisdom and fundamentals, but because of

the lack of the strategist’s understanding of doing his job. The job of the strategists must be reinvented and redefined.

The cracks, which are being more and more visible in the world of business’ functioning’s are threatening our card-

houses, we so dearly cherish as stable business’ structures from the meta layer but moreover from its very core

structure. Its high time that a long due revision has to be made to our fundamentals of strategic thinking and mindset,

then the occurring crises, which we are asked to accept as a business as usual endeavor and occurrence, is ought not

to be found in the dictionary of the grand organizational strategist. The purpose of the paper is to embark on a

journey in competitive strategy and revisit Porter’s five forces strategy model. The author will introduce a cybernetic

approach to Porter’s model and coin the 6th

force that shapes management strategy.

Note: The author uses the words strategist and manager as synonyms.

Conceptual Paper I think the next century will be the century of complexity.

(Stephen Hawking 2000)

Introduction

In essence, the essential fundamentals of the job of the strategist have been looked into very narrowly. The

gap of this narrowed view has been to some extend reduced and its spectrum widened by Porter in his

groundbreaking 1979, 2008 Harvard Business Review (HBR) article. However, the job of the strategist is

to look beyond the basic understanding or coping with competition as defined by Porter. The core pillars

on which the strategist so proudly stood are insufficient to deal with “the century of complexity”

(Hawking, 2000).

Fig. 1 The five competitive forces that shape strategy (Source: Porter)

Porter has defined five competitive forces that shape strategy in business and its industry. These forces as

fig. 1 describes, are customers, suppliers, potential entrants, substitute products, and rivalry among

existing businesses. However, designing a competition model for organizations according to Porter’s

definition of ‘competition for profits’, has a systemic flaw. Porter may be to some extend right after we

have respected the factors of government, technology, internet, innovation, and industry growth rate

(Porter, 2008, p.86). “Most of today’s lively discussions of management by objectives is concerned with

the search for the one right objective. This search is not only likely to be as unproductive as the quest for

philosopher’s stone: it is certain to harm and misdirect. To emphasize only on profit, for instance,

misdirects managers to the point where they may endanger the survival of the business. To obtain profit

today they tend to undermine the future”1 (Drucker, 1954, p. 62). According to Drucker, the challenge in

managing business affaires is not setting the objectives; it is moreover the yardstick we use to define

organizations’ objectives in the first place. The author underpins the claim that organizational objectives

must be widened in grasp. His claim goes deeper into the ontological observation and meta-level

transformation of the organization and of the notion of competition itself, but moreover into the heart of

strategic management. Thus the competition of our era goes beyond profits; it requires the strategist to

compete for survival. Reducing survivability of an organization to its short term profitability is the major

flaw in the strategic thinking in the first place. As the depth, the rate, the spectrum, and the width of our

business crises are ubiquitously increasing; a more functioning strategic thinking ought to be invented and

our understanding of the job of the strategist must be redefined and redesigned. The weltanschauung of the

strategist and manager of our zeitgeist is mainly fashioned by the US type business administration’s2

reductionist3 and business school

4 trained lens. This shortsighted and narrow lens coined and observed for

the mass5 as strategic thinking has been chiefly responsible not only for our hard failings as strategists but

it has falsely shaped our main understanding on how we define strategy, organizational and societal fit

(Judt, 2010, p. 2) in general. This misdirection in our thinking and observation that all strategic analogies

in business are rooted in economics and economical success has been one of the most dangerous

inventions in strategic thinking at all. The author understands and his observation goes beyond the notion

of liquidity as essential requirement to do business legally, he moreover emphasizes that the lack of a deep

strategic understanding is lethal (Beer, 1995). Nowhere in the world has this systemic flaw been more

obvious than in the country of the business administration’s invention and its wisdom’s founding fathers,

even more precisely at the inventor of the MBA’s, the Harvard Business School (HBS) itself. The whole

edifice of organizational purpose in share-holder value and economic terms as indoctrinated and

propagated by the leading business schools and consultancies is flawed (cf. Stacy, 2010, p.12). HBS,

which has been hit severely by the 2008 ‘management crises’6 and loosing 30% and more of its

endowments, that adds to its biggest losses in the last 40 years (Hechinger, Karmin, 2008, p2.).

“Ultimately… the control of the economic system by the market is of overwhelming consequences to the

whole organization of society: it means no less than the running of society as an adjunct to the market.

Instead if economics being embedded in social relations, social relations are embedded in the economic

system” (Gray, 1998, p. 12, after Polaniy, K.). Strategist is the holistic juggler of organization’s

intelligence. Organizational intelligence is the total quality of its capabilities. These capabilities are the

1 The cases of WorldCom, Enron, Lehman’s but moreover the whole management crises of the year 2008 are the

results of the contemporary business model 2 Business Administration is not Management , see (Malik, 2007, ff. pp.22-29)

3 To explain holism in terms of reductionism, is impossible and meaningless See (Beer, in conversation.

www.kybernetik.ch) 4 Some Schools call themselves ‘School of Management’ but teach the same methods as ‘Business Schools’,

changing the words does not reflect functionism 5 Observing observers Von Foerster, Maturana, etc.

6 Indeed, the 2008 observed crises had its roots not only in the financial economy, but moreover in the created

management and strategy models by the Ivey League Business Schools, as the only doctrines of navigating a

business

necessary embedded intelligence, outputs, values, eigen-values7, and varieties

8 of the purposive- identity

transforming respectively identity preserving adaptive organization’s ‘requisite variety9 (Ashby, 1958, pp.

1-2). “In other words, Eigenvalues represent equilibria, and depending upon the chosen domain of the

primary argument, these equilibria may be equilibrial values (“Fixed Points”), functional equilibria,

operational equilibria, structural equilibria, etc” (von Foerster, 2001, p. 265). Thus the strategic system

of the organization must be designed for the organization to survive and the necessary sets of equilibria

ought to be predetermined and ubiquitously regulated by the integrated regulator to maintain stability

within the organizations system and subsystems. This paper is starting to look at the viability of the

strategist’s job and to introduce an additional force to Porter’s five forces that shape business strategy

model.

Holistic vs. reductionist According to (Weinberg, 1992, pp. 51–64) “the arrows of explanation point downward”, (Beer, 2002, p.

2) points out, “The paradigm the whole of science has had for the last 200 years has been based on

reductionism”, (Kaufmann, 2008) states, “Beyond that, reductionism, wrought by the successes of

Gallileo, Newton, Einstein, Planck, and Schrodinger, and all that has followed, preeminently in

physics,has, …., left us in world of fact – cold fact with no scientific place for value.” (Weinberg, 1992)

emphasises; “The more we know of the cosmos, the more meaningless it appears.” For example, if we

dismantle a car into many smaller pieces we might know how the engine works, but we will not be able to

find the speed, which is the purpose of the car. To dismantle a radio into very small items may show us

how the speakers function, but we will not be able to find the sound, which is the radio’s purpose. In

addition we are able observe an organism from biological lens into divers’ parts, we may be able to treat

some diseases, but will lack the understanding of that organism’s behaviour. The entrepreneur writing his

business plan may be able to write all the probabilities and the calculations, but how can we find his

creativity, drive, motivation. The Apple, FedEx, Google Microsoft and other successes stories could not

be explained by rational methods, but they have changed the game of business, communication

respectively the quality of our lives. The same goes to the organization’s strategist, who has been able to

dismantle the organizations’ systems into small compartmentalized chunks as HR, Marketing, Finance and

Legal, etc., but to reengineer its behaviour and to pro-actively regulate its variety to dissolve

organizational problems, rather of being occupied by the ever solving them (Beer, 1995, p.10, from Beer

1966), he needs to take the holistic approach to things, causes and matters. The strategist needs to redesign

the meta level of the organization, which according to (Beer, 1995, p. 93) it is the thinking level of

organization’s strategic system. This system must be built into the body of the organization as an

ubiquitous regulator, which may not be totalitarially imposed on the organization as it is found in the

family tree top-down designed organizations structures, but moreover it ought to be a regulating pre-

control and control function of it. (Beer, 1995, p.74) states: “The purpose of a system is what it does.

There is, after all, no point in claiming that the purpose of a system is to do what it consistently fails to

do.” And here the strategist in business administration has surely failed. The number of the organizations

in crises or which have been shaken to demise outnumber the pages the author has at his disposal to fill

them. The ever-occurring crises from the US economy, EU currency crises, which is only being kept alive

by governmental financial surgeries and other divers’ countries as Germany and France fighting for the

Euro zone, reveal the author’s claim. The reasons and causes may defer, but the reality that the strategist

7Eigenbehavior is thus used to define the behavior of autonomous, cognitive systems, which through the closure

(self-referential recursion) of the sensory-motor interactions in their nervous systems, give rise to perceptual

regularities as objects (Varela, 1979, chapter 13). Heinz von Foerster (1965, 1969, 1977) equated the ability of an

organization to classify its environment with the notion of eigenbehavior. (informatics.indiana.edu) 8 Used as a cybernetic term meaning: The number of possible states of the system, also the notion of measuring

complexity 9 the variety in the control system must be equal to or larger than the variety of the perturbations in order to achieve

control" (See: pespmc1.vub.ac.be).

needs to fail always first, so that an organization is dismantled, bankrupted or unable to survive is a

fundamental fact. When organizational crises occur the curve always starts with the meta level of the

organization, see Fig. 1, and goes down wards until the collapse is final. In redesigning the meta level of

the organization, the purpose of survival is the main priority of the strategist, anything else, yes, even the

US designed and spread doctrine of shareholder-value, which is the most falsely observed doctrine of our

era (Malik, 2006, p. 9) or its enhancement is not the primarily purpose or objective of the strategist. The

holistic strategist is occupied by creating favourable conditions in advance for the organization, so it

actually can maintain viability.10

The science of “Cybernetic or the science of control and communication

in the animal and machine” (Wiener, 1948), which was coined by Norbert Wiener, a MIT mathematician,

(Beer, 1959) called it, “cybernetics is the science of effective organization”. (Ashby, 1956, p. 1) defines it

as “the art of steermanship”. “Our science, cybernetics, is not reductionist. It is holistic. The way people

talk is reductionist. Trying to explain holism in terms of reductionism is impossible. If you’re trying to

discuss holism and begin to describe it by looking at it from 2 sides that is reductionist. Therefore it is

meaningless,…, “Real problems do not respect the disciplines of academia. Nor do they respect

commercial attitudes. To a holist, physics and chemistry are all the same thing because you can’t talk

about the real world without the other. You can’t talk about marketing and leadership separately because

they are dependent on each other. You must cover the whole spectrum.” Even most universities are

organized in divers’ institutes and fields; they do not respect that science as a holistic construction of

reality. Therefore they produce insufficiently able managers, whole are merely predictable agents with a

selected academic lens.

Identity

Strategy

Success

Liquidity

Collapse

t

How crises emerge

Figure 2. How crises is fashioned and organizational collapse occurs in business

In essence, co-ordination, communication, cooperation, regulation and control are the main themes of

cybernetics. The author coins the term that: ‘cybernetics is the science of dissolving management and

control problems.’ (Popper, 1952, p.125) states very precisely, “We are not students of a subject matter

but students of problems.” Popper emphasizes that there is no unique or certain methodology specific to

science. He goes further and states that, science, like virtually every other human, and indeed organic,

activity, consists largely of problem-solving. (Cf. http://plato.stanford.edu)

The point on which the author is emphasizing to come across to the reader is that the strategist is a

problem solver, however his problems are mainly in the future, or they have not yet occurred. The

strategist dissolves problems by preparing and controlling organizational capability and environmental

circumstances to cope with the complexity arising. The problem of strategic planning is to take the

appropriate course in advance (cf. Malik, 1993-1999, p. 122). His job is to navigate the organization, via

variety engineering (Beer 1972, 1981, 1985) or designing immunity, also as emphasized by (Beer, 1973)

“designing freedom” for the organization in advance. The author emphasizes that the strategist as a

‘problem dissolver.’ (Ashby, 1957) introduced his fundamental law of management, which states: “variety

can destroy variety” (Ashby, 1956, p.206), Beer the father of management cybernetics, coined the notion

10

Viability is a cybernetic term, meaning the ability to keep an separate, autonomous and self-organized existence

of “to absorb”, and called the law “only variety can absorb variety (Cf. Schwaninger, 2000. p. 210).

Beer applied Ashby’s law to his theory and development of management cybernetics (see also fig. 3).

Figure 3. Variety attenuation according to Ashby’s Law (Source: Schwaninger 2000)

Economistic or survival Strategic rep. managerial problems are not only reduced to liquidity. The same is true that all

organizational problems are not economistic. (Beer, 1985) “As to managerial problems: these are no

respecters of financial boundaries, nor of the territorial preserves of any other professional function or

geographic domain. They grow like cancers; and 'secondaries' may appear anywhere. The organization

as a viable system has to become immune to infection, adaptive to environmental change, and — somehow

— to extirpate its cancers.” The general observation of our reality and the questions we ask, even on our

daily basis are questions trained by the dominated materialistic world view. “We no longer ask of a

judicial ruling or legislative act: is it good? Is it fair? Is it just? Will it help me bring a better society or a

better world?” (Judt, 2010, pp.1-2) Strategists in business do not ask: What will be our legacy? How can

we serve the humanity? How can we contribute to protect the environment? And foremost and above all,

the question: how can we survive for the next 100-200 years? Our contemporary strategist is mostly

focused on quarterly compartments backwards. He manages by looking at the rear-view mirror while

going forward. The questions that we need to pose are beyond the notion of: productivity or are we

productive? Are we sufficient? (cf. Judt, 2010, pp.1-2) Even the idea of considering viable human agents

in an organization-- by reducing them to human resources (HR) (human as resource) is not a question that

embeds ‘requisite variety’ according to Ashby’s law. It reduces creativity to obedience. “As managers we

have to… lern to be what we really are: not doers and commanders, but catalysts and cultivators of a self-

organizing system in an evolving context” (von Foerster, 1984, p.2). “There is no scientific base for the

reality of values in the reductionist world view.” (Kauffman, 2008-2010, p. 11) Moreover, there are no

bases for survivability and long-term values, if our lenses are obscured solely by economistic reality.

Furthermore it violates the law of our very systemic nature, where divers’ agents are more than particles in

space and motion but purposive, social, productive, adaptive, self-referring, self-governing and autopoetic

beings- acting as whole for a larger cause or embedded in a greater system.

If our lens focuses on the notion of survivability (e.g. most family businesses are concerned on passing the

legacy to the next generation as there main strategic objective instead of the enhancement of the quick

profiteering methods), our objectives change and so changes the yardstick by which we calculate and

observe success for the organization in general. Asking for survivability is the ultimate question. It goes

much beyond the wizardry of some contemporary strategists’ shlock found in the shelves of the business

school libraries and bookstores. The same goes to the military oriented strategies imported into the world

of business. Business is an unlimited organizational activity, while warfare is a temporary organization.

Business ought to be based on survival, while warfare and military tactics and objectives are based on

destruction. If we are always fixed on the destroying our rivals in business, it can be responsible for our

own demise. We need to ask, what purpose it will have if our whole organizational intelligence is solely

focused on destroying our rival? The greatest lessons we can gather is from the rivalry of the Soviet

Empire with the US led west’s conquest of the world’s resources and strategic positioning. The soviet

Empire demised and the contemporary US challenges and economical cracks are blowbacks inherited

from the strategies applied during the cold war. What would have the results been, if these both super

powers would have applied the course of cooperation for a better world, instead of the rivalry by which

they were occupied for over 40 years. The greatest services to humanity or in the business world the best

service to customers have resulted by someone thinking on making a difference and seeking different

alternatives than the mere warfare strategic lens, dangerously applied in the world of business. If the

strategist needs really functioning insights to implement into the world of business, than the author

suggests going to the ultimate survival machine, namely the nature. The nature gives the strategist the best

possible alternatives and ideas on how it can be done. The laws of nature have been formed and are in

ubiquitous function for over three billions of years (cf. Malik; Blüchel, 2006, p.13). The basic law of

nature is function. Whatever does not function, will be out manoeuvred and unwearyingly disposed.

Efficiency, leanness, creativity, self-organization and innovation are the themes of nature. Above all

productivity without disposing any waste to the environment is one of nature’s biggest mastery. The

nature always acts and carries the effects of its production on the environment, always in its balance-sheet.

There is no place for propaganda and financial engineering to tell us a different story. It may cause some

serious doubt by the technical or technocratic- freak, to know that all forms of organization have there

form in the living organisms and their actions- by trail- and error the nature has mastered the greatest

complexity of the universe namely to survive (cf. Malik; Blüchel, 2006, p.13). Sustainability is the slogan,

motto or the business mission the nature carries on its forehead. The grand strategist is highly advised to

make this wisdom his own and actually designs an organization, where this intelligence is transferred into

the structure of the organization by implementing it into its DNA.

Structure is strategy “Structure follows strategy” is the term introduced by (Chandler, 1962) after his empirical studies at the

General Motors and DuPont. With this wisdom in mind, strategists are mostly asking, which demands we

can put on the organizational design, and which actions we need to take to meet the stated demands? The

author suggests a better more functioning world view; ’Structure is strategy’. The author’s claim fosters

the debate of strategy as resource-based vs. strategy as a structure- based views. The structure claim

widens the narrowed view of strategy models solely concentrated on a resource-based version of

constructing an environmental reality in which the organization is embedded. The environment poses

additional threats that can not be absorbed by the organization only running to balance between resources

to avoid the resource-based view’s main challenge the stuck in the middle dilemma or giving in to a

stronger force as the Porter’s five forces model suggests. The notion of structure as strategy is not a wide

and contemporary strategic understanding and thinking. “The strategy-structure debate both brings

together, yet highlights the distinction between what is examined/formulated (the strategy-as-content) and

the processes from which strategies arise and are implemented (the structure)” (Harwood, 2011, p. 509).

(Carsten Bresch, 1977) a famous biologist’s words are; “Higher capabilities arise only by more

complexity” (Malik, 2007, p. 39). (Malik, 2007) emphasises that management in essence is handling

complexity. Schwaninger another doyen of system sciences goes further and states; “Coping with

complexity is at the heart of management and leadership in the environments faced by the organizations of

our day Schwaninger, 2000, p.207). In nature the best way to deal with environmental complexity is to

cope and deal with it by being a complex, self- organizing and autonomous agent. Complexity can only be

absorbed by complexity; this means to the manager the same as Newton’s gravitation to the physicist (Cf.

Pfiffner, 2006, p. 24). The control- function of its regulator for ‘coping with complexities’ is designed

within the intelligent structure of the organism/ agent and is a part of the purposive whole. The agent is

always in a state of maintaining the equilibrium of its parts and states within its structure. Every aroused

complexity is merely a disturbance or attenuation of its equilibrium. It deals with complexity while

applying the trial and error also called feedback loops by having an adaptive and learning structure to deal

with the challenges. Therefore strategic function of the organization is a part of the organization’s

structure and it ubiquitously navigates and corrects organizational actions. However the author tends to

introduce in addition to the feedback regulating function the notion of feedfarward function as a

prerequisite of a sustainable equilibria and organization’s system’s stability. (Heylighen, Joslyn, 2001,

p.14) have introduced three mechanism of regulation, which are buffering, feedfarward and feedback. Pre-

regulation, ubiquitous regulation and feedback regulation of a disturbance is the theme of strategic

management. By pre-regulation the author underpins the claim that the organization’s intelligence, which

can be designed and modelled in advance and must maintain all the information or intelligence of the

organization at its disposal while a threat is sensed, which has not occurred, described better in the Ashby-

Conant’s Theorem; “Every good regulator of a system must be a model of that system”…. “The theorem

has the interesting corollary that the living brain, so far as it is to be successful and efficient as a

regulator for survival, must proceed, in learning, by the formation of a model (or models) of its

environment” (Conant; Ashby, 1970, p.1). The ubiquitous regulation ought to be understood by the speed

of information flow and communication, and the systems fast response to the problem. If the body of a

living being is inflected with a disease or a pain, the body ubiquitously sets of an alarm of a disturbance.

This notion is mostly understood under the term of early warning systems. The same applies to the aircraft

–pilot system or a nuclear facility and its safety-controller system. If a disturbance to the system is sensed

it will not be a sound advice to wait for an action’s approval going to all the hierarchies in that

organization and back. The strategy in zero failure tolerance system or organization is having zero failure

option anything else is fatal to survival. The feedback control system maintains the regular and

predetermined state or equilibria state of that system. Feedback is the wider accepted regulator in control

systems. This idea can be better explained by the room’s temperature regulator. As soon as the room’s

predetermined and set temperature is achieved it shuts off the heater or turns it on to maintain the viable

status. This control function in the structure of the observed system maintains the viability of the system.

The notion of ‘viability’ in organizations can be better understood by the groundbreaking works of

Stafford Beer, the father of ‘management cybernetics’. According to (Beer, 1979-1982) “The laws of

viability lie at the heart of any enterprise. So too do human beings.”

Viable system model vs. top down or bottom –up family tree “The hierarchical / family tree / organogram models the formal power structure of the organisation. More

cynically we could say that it models the blame structure. What it doesn’t model is any of the more

fundamental things about the organisation: what it is, what it does, how it does it, its processes, formal

and informal structures, communications and information transfers, or decision making” (Hoverstadt;

Bowling, 2002, p. 3). If we study the organizational structure of most of major organizations of our day,

we will be handed- out their ‘organization charts’ and most of them are idiosyncratic as the ‘family tree’

of some noble lineage, but the missing link that we will always find in them is the notion of viability.

Being ‘viable’11

, is the first pre-requisite of an organizational structure. However, we are used to ask for

organizational charts, instead of inquiring for the organizational structure. Stafford Beer developed the

VSM of an organization based on laws of cybernetics and the human’s nervous system. “The difference is

that the VSM is a "whole systems" theory. Almost all other theories of organisation think in the

billiardballs mode of A leads to B leads to C, and therefore miss the essence of what's really going on.

They forget that A, B and C are inextricably linked with a myriad other factors, and that for any model to

work it must take all of this complexity into account” (Walker, 2002). The contemporary organization

charts do not embed the vital stakeholders and the circumstances of the organization in which it’s

embedded. One will never find customers but moreover the environment is either narrowly integrated or

absolutely absent. It only defines job titles. The VSM, however, as fig. 3, c, and e describe has its main

focus on the ‘organization versus environment’ or vice versa, thus it ensures adaptability based on natural

laws. ‘Struggle for existence and life’, lies at the heart of all natural phenomenon. “In looking at Nature, it

is most necessary to keep the forgoing consideration always in mind- never to forget that every single

organic being around us may be said to be striving to the outmost to increase in numbers: that each lives

by a struggle at some period of its life; that heavy destruction invetibley falls either on the young or old,

during each generation or at current interval” (Darwin, 1859, 66). (Drucker, 1954, p.75) emphasises that

all objectives and decisions ought to aim at providing the supplies needed for market standing

(environment) and innovation (adaptability).

11

‘Viable’ means: being able of maintaining a self-governing and self-organizing separate identity.

Figure 4. The evolution of the VSM (Sources: a, b, c, d, Ward, 1991-1998; e, Hoverstadt;

Bowling, 2002) c- E= Environment, M= Management and O= Organization or operations

‘Complexity’, the 6th

force that shapes management strategy “Science has explored the microcosmos and the macrocosmos; we have a good sense of the lay of the

land. The great unexplored is complexity” (Mitchel, 2009, after Heinz Pagels). Complexity as described

by (Lock, 1690, p.147) is: “Ideas thus made up of several simple ones put together, I call complex;—such

as are beauty, gratitude, a man, an army, the universe; which, though complicated of various simple

ideas, or complex ideas made up of simple ones, yet are, when the mind pleases, considered each by itself,

as one entire thing, and signified by one name.” “…complexity implies significant unpredictability so that

the contribution from the model is a deeper understanding of organizational dynamics which can point to

counterintuitive strategies (Tracy, 2010, p.73). The root of complexity goes back to the Latin ‘complexus’

meaning ‘entwined’ or ‘embraced’, which means two or more distinct parts are joined in such a way that

its difficult to separate them. Therefore, we find here a basic duality, where these parts can not be

explained by analytical methods, since by separating them; we destroy their connection (Gershenson;

Heylighen, 2005, p.49). We can not understand a system by dismantling it. Complexity is not understood

by analytical methods, it’s moreover understood by the notion of ‘ordering systems and its reality’.

“…complexity is situated in between order and disorder” (Heylighen, 2007-2008). Complexity can also

be defined as influencing the emergence of order out of disorder or chaos. Complexity is the interrelation,

cause, root and states of real systems (Malik, 1984- 2008, p.166-168 ff.). However, the most difficult thing

about complexity is its definition, since we tend to think in reductionist way, but to understand complexity

we need to change our mindset that in order for us to understand what complexity is, we need to

understand what complex systems are. The best way to understand complex systems is by understanding

how they are controlled. Strategists in the future ought to focus on how complex systems are kept (in

advance) under control in a chaotic, unpredictable, turbulent and moreover in a complex environment. The

strategist may not be able to predict what precisely may occur and what the system under his control may

react to the situation, but he can capture the underlying characteristics of complex systems and their

dynamics by means of modelling and simulation, in order to understand and control them, thus to enable

the design of measures, actions and policies that the system can foster desirable developments; as well as

to make errors along the way less likely and correction as an ubiquitous interplay between the navigator

the organization and the environment (cf. Schwaninger, Pérez Ríos, 2008, p. 145). The main function of

the manager/strategist is to control complexity. The fundamental and really hard problems of management

arise from the complexity of the systems that one has to construct and steer (cf. Malik, 1999, p.22).

Money, material, machinery and man, wherewith mangers have been busy are only a part of the strategic-

management’s spectrum; the next frontier in addition is best denoted as complexity. (Beer, 1979-1994, p.

31) “The ability to master complexity is the most important skill for organizations in the 21st century”

(Hetztler, 2008, p. XIX). Indeed, order in organizations is well structured manifestation and observation of

absorbed complexity. There are two different arts of complexity to be managed: 1) the technomorphic

variant, and 2) the systemic-evolutionary variant (Malik, 1993-2003, p.13). The former we can observe as

the generally complexity managed which the author would coin as ‘reductionist complexity’. The later is

an ever evolving complexity from the interaction of the organism or organization in its embedded

environment. This complexity the author would coin as the ‘dynamic complexity’. In the cross-link and

inter-connected world of our era, the main theme of strategist is ‘to control’ dynamic complexity. The

strategists challenge is not mere the construction of strategy models as in Porter’s five forces description,

its moreover the generating and creating of favourable circumstances and conditions for the organization

to be managed and controlled. (Malik, 1993-2003) emphasizes that these two variants of complexity may

not be treated as mutual, since the former can only be applied if prior the favourable conditions are set, but

as the ever-evolving evidence of our contemporary crises reveal it always fails when organizations are

confronted with the later namely the dynamic complexity. The revolutionary shift in the strategic thinking

ought to be shifted from the old fetishism of ‘construction via detail’ to moreover the ‘construction of a

favourable reality’ while relying on the eigenbehavior and dynamic of the organization as a regulator (first

order) and an observer (second order). To put it metaphorically for better understanding, flowers evolve

better in sunny places and by watering them (cf. Malik, 1993-2003, p. 44-45 ff.).

Conclusions The Porter’s five forces model has only integrated five forces as the main threats to an organization and

made profits the yardstick wherewith he measures organizational fit, industry competition and strategist’s

success. The reader must have realized that competition requires an additional holistic force wherewith the

strategist can actually start to do his job. A systemic analysis of the environment and organization, and

general management model was introduced and designed by (Ulrich; Krieg, 1972-1974) at the university

of St. Gallen. This model was one of the major reasons for the fame of the University of St. Gallen. It was

the first time that a business school model of organizations’ navigation and steering was developed

according to the laws of systems and cybernetics. Based on this ground-breaking work many additional in

depth works have been developed (Gomez, 1981; Malik, 1984,- 2002; Probst 1981-1987; Ulrich, 1978-

1987, and et al) (cf. Rügg-Stürm, 2002, p.6). However the Porter’s model is still a non-falsified strategy

model. (Porter, 1998, p.3) emphasis that the collective strength of the five forces model determines the

strategic positioning of an organization and potential profit of an industry. In addition Porter claims that

the essence of strategy formulation lies in relating business to its environment. However, the definition of

the environment according Porter is very limited, since the state of competition in an industry must

integrate more than the defined five forces according to Porter. (Karagiannopoulos, Georgopoulos and

Nikolopoulos, 2005) observe the Porter’s model from an expansionistic and innovation based view and

state: “One of the critical comments made of the five forces framework is its static nature, whereas the

competitive environment is changing turbulently.” This view is still narrow, because all business is not

expansionism or blunt innovation. (Wang and Chang, 2009) have examined the Porter’s model from an

entrepreneurial and strategic perspective in China and introduce additional forces as which they observe as

more accurate. These forces are as: business’- purpose-, - climate, - location, - organization and - leader.

According to Wang and Chang’s survey Porter’s five forces, they confirm that Porter’s model had not and

did not play a role in strategy development in China. As strategist we can construct many forces and

deliver some empirical results; however the best way would be to design an organizational structure based

on the laws of viability and self-organization to enable the organization to pro-actively absorb complexity

as a next force. “…. there is no such thing as “profit”; there are only “costs of staying in business”

Drucker, 1954, p.77) …. Von Forster famously said: “…to navigate is to construct…” …. Amen to that

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