Open Boundaries:
Creating Business Innovation through Complexity

Howard Sherman and Ron Schultz (Perseus, 1998)

The purpose of Open Boundaries is to bring the philosophical principles of complexity thinking to bear on modern-day problems of business management. The authors claim that a shift in thinking about principles, models, rules and behaviors is necessary so that we no longer think in terms of the producer— consumer or subject-object duality. Their premise is that we need to communicate information to be successful, since most business failures are cognitive. I believe that the authors achieve their goal in illustrating a new way of thinking about business management. The text is an easy, but very thought-provoking read that cannot help but influence how one thinks about management and business.

Before receiving my copy of the book, I was expecting to read a tex t filled with the details of complexity theory—the mathematical models and equations. I was pleasantly surprised to see that instead of a mathematically turgid book, Open Boundaries is about the philosophy of management and business and it is in this context that complexity is introduced. Instead of being faced with difficult models and equations, we are presented with an easy-to-follow introduction to the philosophy of complexity science.

The authors first introduce their general framework of principles, models, rules and behaviors, showing how current business models fit into this framework. Sherman and Schultz then present their framework of information and infrastructure and their underlying premise that we need to communicate information to be successful. Achieving this goal has been the problem of management, and here is where the principles of complexity are brought to bear: to solve the problem of how to communicate information. I find that the authors have done a nice job of introducing complexity theory and that they have completely integrated the philosophical basis of complexity into a new model of management.

I very much enjoyed the authors’ presentation of complexity. While I have worked with the mathematics for some time, it is my opinion that this text contains one of the finest presentations of the philosophy of complexity that I have seen. Their interpretation is sound, the presentation is lucid, and the application of complexity to management is complete. One of my main research interests is the relationship between eastern and western systems of thought and that between different systems of thought more generally. It is rare to find a text that has such a seamless transition between different systems of thought as this book, which integrates philosophies from the objective natural sciences and the social sciences (management). The connection between the two formerly disparate worlds is the bridge built from the philosophy of complexity.

The book is ostensibly about principles of management in a postmodern age. The authors place a large emphasis on initiating and managing change, with the thesis that change will be the vehicle that brings success in the future. While on the surface the authors focus on change, I find that the authors also address issues of leadership and planning especially in the context of managing change. They do this effectively through their use of a large number of case studies of well-known companies in today’s society.

It is natural to use complexity theory as a framework for discussing issues of change in general. I don’t mean to belittle the contribution that the authors have made, for I am sure that there are many attempts to make the connection that have not worked. Sherman and Schultz have been very effective at using complexity theory to explain issues of change in management because they made the connection at the right level—the principles—rather than at the level of models or rules.

Even more challenging than integrating two disparate fields is the problem of finding a common language of discourse where neither field loses its philosophical basis and identity. The authors have done this very well; their interpretation of complexity science is not altered to fit the problems of management and vice versa. This is one key point that makes this book so appealing: one can read this book purely to grasp a philosophical basis of complexity theory, since little has been lost in its integration with management. Indeed, it would be beneficial for my students to read this book to really understand that there is more to complexity theory than manipulating algebraic equations.

There are a number of relevant and important examples given in the book from such notable companies as Patagonia, Midas, Xerox, Dupont and MITRE. The use of examples is very effective: they are short and to the point, with sufficient detail given to help the reader see how the principle being presented is illustrated.

There is very little that I would suggest that the authors change. The text is well written, easy to read, even for a nonmanagement person like myself. I did have difficulty at the beginning, since it was hard to see where the authors were going at first. It might have been helpful if the preface had been strengthened to clearly bring out the salient points that the authors hoped to make. Instead, in the preface, the authors discussed their philosophy that the book is a “how to think” book and they say that it describes some of their ideas about complexity and management. It would have been helpful to me to see in the preface some preliminary discussion of those ideas.

Also, the authors have included, at the end of each chapter, a set of questions called nonlinear investigations. These exercises are designed to force the reader to think critically about his/her organization’s ideas and their formulations. I think this is a very important part of the book, but the authors do not refer to these exercises enough in the text . Consequently, the reader will likely gloss over the questions and not give the exercises the attention they deserve to reinforce the theme of the text.

One line of inquiry in the text that I find very important in any management situation is the role of language. I applaud the authors for bringing this out in the open for discussion, as the importance of language is often missed. They address issues of philosophy, epistemology, and the origin and roles of theories. Their points are that the story is not always the message and that the real issue of importance is the speaker-listener relationship or, in other words, making sure that the process is in place.

I also find the discussion of subject-object duality very interesting. I was surprised to see this subject brought up in this context; it is much more common to see it discussed in texts on the relationships between science and religion, and very often in the context of quantum mechanics. Seeing it reappear in relation to business and management reinforces the universal nature of this philosophical problem. We see this is not just a problem of science, but as a more global problem of how people think about interacting with the world around them; not just the natural world, but the social world as well.

I started reading this book knowing something about complexity and little about organizations. It never would have occurred to me without reading it that I could apply some of the principles from my research area to my position as an academic administrator. This book has convinced me that I can do just that—manage based on principles of complexity. I think it is valuable for anyone in business, management or academia, for that matter. I have finished reading the book with a new appreciation for management, and my own particular needs in academic management. I fully expect to read it at least once again.


This book concentrates on the important issue of revising the philosophical axioms behind our approach to business. Corporate success is now said to require cognitive success, with information replacing infrastructure in the transition from Industrial Age business thinking to what is called postindustrial or post-modern. The book starts with the impact of Newtonian thinking on company structure, showing that inbuilt assumptions of a static external environment, fixed rules, deterministic action and centralized control lead to failure in today’s changing environment. Complexity thinking replaces such closed views with open, adaptive and distributed control systems (complex adaptive systems or CAS) that can encourage the emergence of new solutions, at a cost of abandoning those outdated abstractions inherent in conventional thought. Recognition that the market always adapts u n expectedly to company activity allows a coevolutionary, nonlinear paradigm to supersede linear and rigid models—replacing clear, static targets with ambiguous, moving ones, and going beyond a unidimensional measure of “profit” to include other, more relevant, values.

Business is said to consist of four elements: principles, models, rules and behaviors. The first constrains the company’s scope and the third its procedures, both being static elements. The interplay (feedback) between changing models and behaviors, however, is what drives innovation—the exploration of adjacent new possibilities. This is a “step at a time” mode of innovation, yet rules can actually prevent these improvements that, it is shown, derive largely from the staff breaking rules. After looking more closely at complexity concepts, the importance of language and metaphor is considered, especially the need for free-format communications (stories) between employees. The knowledge and ideas thus exchanged are considered far more valuable to the company, in the new thinking, than any time wasted.

This leads on to applications of the co-evolution metaphor central to complexity thinking, stressing that the future is no longer predictable from the past. The importance of ideas in defining company possibilities, and the need for a high ratio of information (ideas) to infrastructure (events), brings us to the successful franchise system, said to be the current best model of CAS thinking in action. This highlights the importance of independent feedback between control levels in achieving adaptation, plus the superiority of information flow over infrastructure change. The book ends with information on selling the new paradigm to management, plus a useful appendix summarizing the philosophical contrasts between modern and postmodern thinking. Each chapter also ends with a nonlinear investigation, suggesting questions that will help a company in relating its current operations to the complexity ideas presented.

The ramifications of understanding and challenging our basic assumptions (including principles) in order to make the necessary paradigm shift cannot be stressed enough, otherwise we merely tinker with the parts. This is the strength of this book, and much attention is rightly given to this aspect, both theoretically (in the metaphysics) and practically (in the investigations). A number of case studies are presented throughout the book, but disappointingly these are fairly weak, with complexity ideas seemingly tagged on retrospectively, rather than themselves being the instigating force for change. Nethertheless, these serve to illustrate the benefits of devolving power and decision making to individuals or groups in the company (who form purposeful agents in the CAS). The self-organization that then occurs allows the rule transcendence (going beyond routine) necessary to generate the flexibility crucial to success in a modern co-evolutionary environment.

The point that such emergence takes time is well made, and highlights one possible problem in the management of such complexity-based systems—impatience. Another problem (not covered) is the ability of staff to adopt such lateral, divergent thinking (the creative basis of adjacent innovation), and this requires that employees also change their mindset, to embrace and not abuse the new freedoms. This both necessitates and will drive a society-wide change, following the same devolution of power; complexity thinking isn’t a change just to company behavior, but to overall lifestyle.

Many of the concepts introduced (not all complexity based) are presented in a guru style as claimed “truths,” without justification. This lack of depth means that inadequate background is given to many of the complexity terms used (e.g., attractor, fractal, fitness), so much so that their true rel-evance could be missed by the intended business audience. For example, the important idea of crossover, the recombination of old ideas in new ways to cause step jumps in performance, is missing here, with stress being placed instead on mutation-style evolution (a move to an adjacent point on the fitness landscape). Additionally, the emphasis on breaking down barriers, as well as on the resultant freedom and unpredictability, neglects the spontaneous appearance of new dynamic barriers by self-organization effects. These can prevent the chaos from dissolving the business.

On a more detailed level, there is inadequate mention of the many computer programs using complexity techniques available (e.g., using genetic algorithms, neural networks, fuzzy logic, artificial life and cellular automata techniques) that could help businesses gradually introduce this style of thinking and target specific existing problems. Those seeking a more in-depth knowledge of general complexity ideas should therefore look elsewhere, but considerable scope is still provided here for the remodeling of overall business structures along the lines of the organic complexity paradigms recommended.

It would have been nice to have seen simulations used to give quantitative comparisons between the new, complexity assumptions and the old—in the style of Epstein and Axtell’s Growing Artificial Societies (Brookings Institute Press, 1996)—but such data is sadly missing here. The overall writing style is lively, if unstructured and unclear in places, but nevertheless the book is a useful introduction to this new mode of thinking for those already considering a need for change. It is not specific enough however, in my opinion, to convince old-style managers to alter their ways. The implications that they must give up power, status and possibly reward for unpredictable “cognitive” gains are unlikely to appeal to closed minds, unless a suitable “bottom-line,” accountant focus is given, emphasizing a point that the book itself makes: new thinking must be phrased in terms of old concepts to make an impact.