Emergence and Organizations

1. Introduction

The sciences that study physical, chemical, and biological reality are advancing rapidly in their understanding of the laws of nature, their components, and their interactions.

Today, the vast edifice of modern science demands that those who devote themselves to it specialize deeply in order to make meaningful contributions at the frontiers of knowledge. Yet such specialization makes it harder to study and understand complex phenomena, which require multidisciplinary and holistic approaches, as reality is far more than the sum of individual elements and their immediate interactions.

There is now so much science within humanity that the age of the polymath has passed. Each person can only contribute effectively by positioning themselves at the forefront of a narrow field and keeping up to date with developments in that area. Fortunately, science continues to maintain high levels of collaboration and transparency, rare in other areas of human activity.

Science is largely a global endeavor with global consequences. It is humanity’s greatest intellectual undertaking and the one with the most far-reaching impact.

Throughout history, science has emerged whenever humans believed it possible to discover true causes, not just apparent ones, sometimes even contradicting the immediate evidence of the senses, and when they committed to experimentation and trusted their capacity to advance both knowledge and its applications. The shift from scholasticism and from subordination to Aristotle and Theology, toward the Renaissance, changed humanity forever. Printing spread knowledge like never before, while the discovery of the Americas and Portuguese explorations expanded the known world in Europe, enabling trade and the exchange of ideas to flourish.

Yet it was the courageous, optimistic attitude of pioneers that gave rise to the scientific spirit. Copernicus, Kepler, Bacon, Galileo, Descartes et al. had faith in the progress of knowledge and dared to challenge dogmas, placing theoretical and experimental inquiry above them.

After this initial impulse, the immense benefits of technological applications stemming from scientific discoveries progressively strengthened social support for research, allowing it to overcome the resistance of classes, ideologies, and religions threatened by change.

Science’s ultimate ambition is to push the limits of our understanding of an exceedingly complex reality, which demands approaches suited to its nature. The sciences must make a transversal, holistic effort if we are to advance our comprehension of complexity.

The social sciences face the same challenges, and in some cases even greater difficulties in study and prediction, than physics, chemistry, or biology. Psychology, human biases, and individual decision-making make it difficult to understand, and, to a large extent, impossible to predict the evolution and behavior of people individually or in groups.

When the human factor is involved, new realities and properties emerge that cannot be explained by studying the components alone. These emergent phenomena create new levels of reality with profound significance for both individuals and society.

Humans inevitably relate to one another due to individual vulnerability, forming groups. In every group of people engaged in frequent or stable interaction, an intangible entity emerges, a “we”, whether formalized or not, that develops its own personality, creativity, goals, and more. Individual behavior both adapts to and influences the group. Groups tend to align opinions, goals, and behaviors among members, with an impressive power of alignment driven by the desire to belong and by the fear of isolation or confrontation, so common in people, as behavioral psychology has shown. We are gregarious animals because this trait has historically supported survival at both the individual and species level. Today, however, submission to the group can fuel ideological polarization in closed online circles and facilitate population manipulation.

Society is immensely complex, but it reached its current level of sophistication in developed countries gradually over thousands of years. Some aspects of social evolution have been intentionally guided, but this alone does not explain its course.

In nature, we encounter extremely complex realities that often seem intelligently designed, though they may arise from only a few organizing rules and countless iterations. It has been shown that just a few dots on a screen, following a small set of rules, can generate extraordinarily complex figures with the appearance of intentional design, whether trees, intricate drawings, or other attractive forms (Ricard Solé, Redes complejas,2009, Del genoma a Internet, Metatemas, Tusquets Editores SA). These bottom-up self-organizing phenomena produce emergent realities. Ant colonies and beehives provide examples: they function as purposeful wholes even though individual members follow only a few simple behavioral rules repeated a sufficient number of times.

Just as the human mind struggles to grasp exponential growth, it also struggles with this type of complexity; phenomena generated by a few components and rules that produce intricate results after countless iterations. Faced with such complexity, our minds simplify and seek shortcuts, often settling quickly on an initial real or imaginary explanation and avoiding further questioning. Humans crave understanding, and we readily accept interpretations of phenomena that pique our curiosity, whether mythical or scientific, as soon as they seem to provide a sufficient answer.

2. The Emergence of Organizations

A wider world with growing interaction among different cultures has become more complex, creating a need for more and better organizations. Organizations have been essential tools for managing complexity. The specialization of labor and the consequent boom in trade made them indispensable. They make it possible to achieve common goals while increasing both efficiency and creativity. Their presence generates mutual competition and conflict, but they also represent a flourishing of social life that is highly productive and indispensable as social complexity grows.

The human species has spread and thrived thanks to its need and capacity to cooperate, which was made possible by language and the ability to share beliefs. These tools allowed the “we” of family or tribe to expand to large human collectives. Religion, language, city life, race, shared traditions, homeland, and common interests have all driven association and dissent, solidarity and conflict.

The growing complexity required to build cities gave rise to writing and organizations. As people clustered in fertile agricultural areas, specialization and trade increased, and political, religious, and economic organizations and rules became necessary. Cities emerged as organizations of organizations, increasingly complex, highly successful, and drivers of the political and social change needed for their survival. Bureaucracy and laws, armies and cults, guilds and markets, roads and city walls all arose. The resulting culture marked a radical departure from nomadic life. Cities both demanded and were capable of continuous change and growing complexity. Their success generated material progress, opportunity, collective identity, and defense.

The emerging city is itself an organization and, by virtue of its size and complexity, fertile ground for the creation of countless other organizations. These organizations appear continually. Like living beings, cities are born, develop, and foster other organizations that grow and exert influence until they disappear due to lack of adaptation or absorption. Organizations often arise from necessity or convenience, either from the bottom up or the top down, the latter through political initiative or previous organizations. For example, neighborhoods exist and foster identity and cooperation even without official recognition. Such “virtual organizations” often precede the emergence of formal organizations created to achieve specific goals. Neighbourhood festivals, their associations and their own social activities are a consequence of the existence of that virtual reality that is the neighbourhood even when it lacks legal recognition. If groups of sufficiently numerous or active people share the belief in its existence, the neighborhood emerges and bears fruit and reinforces its virtual existence that can achieve legal status and growing social influence.

Organizations are human creations, and the human factor plays a decisive role. Its influence is often insufficiently perceived because it is intangible, and insufficiently valued due to the predominance of other motivations and conditions, especially economic ones. The strengths and limitations of the people within an organization shape its development. Ambitions, envy, prejudice, motivations, desires for fulfillment, rivalry, and more all influence the culture of the group and its capacity to create and collaborate.

The organization shapes the people who are part of it or interact with it, and they in turn influence the organization. This interaction is reciprocal. Both benefit from the organization’s success and from mutual effort to align interests.

The prevailing culture, the perceived environment, available resources, the apparent and actual actions of clients and competitors, technological advances, geo-strategic changes, chance, public opinion, and current or anticipated regulations all create a highly complex web of actions and reactions that cannot be fully systematized or predicted. A complex organizational reality emerges, combining formal and informal structures and, in many ways, resembling a living being, with its continual entropy and negentropy, as well as its own recognition and survival beyond that of its members.

An organization requires leadership to be efficient. Leadership first requires internal and external recognition of its role. Once in charge, the leader is responsible for the organization’s strategy and design. A decisive factor for success is their ability to diagnose and influence the human factor, reducing friction, motivating, and uniting the group while fostering a culture of trust to build the organization’s future.

An organization is itself an emergent phenomenon, within which new forms of social emergence arise and beyond it, through interactions with its environment. Emergence represents a higher level of complexity, in which a new reality is “created”, with properties not explainable by the components alone. An organization may have different individual members over time, yet it continues to exist as an internally and externally perceived entity. Concrete individuals create and drive the organization, but it develops a life of its own beyond any particular member. People are more than the organization because their lives contain and contribute much more than their relationship to it. Yet the organization is more than the sum of its people, as its stakeholders also shape its existence. Social relationships form a highly complex network, with organizations acting as active nodes.

The individual is the fundamental constituent of organizations, and respect for the individual, alongside respect for society as a whole, must be the raison d’être, or at least the conditio sine qua non, of every organization.

In the early stages of industrialization, the human factor was seen as a mere cost to minimize, and labor was abundant. Viewed from today’s perspective, those times appear repugnant due to extreme lack of respect and inhumane working conditions. The rise of mass political movements and unions gradually improved the situation, but even at the beginning of the 20th century, Taylorism still treated humans as machines in the service of production. As society evolved, people began to be seen as biological beings, and later their psychological needs were also recognized.

In this century, technological change has allowed work to be offshored, giving individuals greater flexibility to live where they choose and schedule work according to their preferences. These possibilities, however, reduce face-to-face interaction with other members of the organization. Videoconferencing alleviates, but does not fully solve, this problem. Motivation, rivalry, and team spirit decline, while creativity and positive drive toward goals are diminished.

The human mind is complex, and so are human relationships. Moreover, we overestimate our reasoning and logical capacities (efecto Dunning-Kruger). As I noted at the beginning of my book A Matter of Trust, humans are more emotion than reason. Scholars such as Kahneman, Amos Tversky, Richard Thaler, Serge Cicotti, Dan Ariely, Mateo Motterlini, and others, have identified numerous cognitive biases in reasoning and decision-making. While these biases have been essential for survival, they reveal the limits of our ability to reason precisely and grasp complexity.

Humans long for fulfillment and achievement, and many goals require alliances with others. Organizations provide a stable and effective means of achieving common goals. Yet the alliance must benefit both sides. Individuals must collaborate with the organization, or at least respect its rules, to remain part of it. The organization must respect its members for legal, ethical, and practical reasons.

The individual gains much from full collaboration with their organization. Economic and professional status, opportunities for personal fulfillment, and satisfaction during the majority of life spent at work all depend on their attitude toward the organization. As Baltasar Gracián observed, “Only a fool does grudgingly what he could do gladly.”

The organization requires a culture of trust to optimize alignment, motivation, and team capacity, and to contribute to social well-being through conduct and example. At the same time, a culture of trust is the best way to ensure satisfaction among members, fostering openness to change and encouraging collaboration.

Organizations exist to make certain goals feasible with greater efficiency. They consist of people and resources oriented toward a purpose, governed by internal rules, and operating within the legal framework of society. Purpose, size, legal status, and environment create a near-infinite variety of organizations. From their creation, formal structures emerge alongside culture and internal and external images, often unplanned, constantly evolving and interacting with the environment.

Living beings appear designed but are products of evolution. Organizations are intentionally designed, yet their reality rarely aligns perfectly with that design and is constantly evolving due to deliberate changes, environmental influence, and intangible internal and external forces. Just as the environment shapes genetic patterns in nature, their success or failure determining the selection of survivors, tangible and intangible changes in organizations affect the probabilities of survival in a complex, ever-changing environment.

The legal and competitive environment, internal culture, perceived image, alignment with prevailing values and trends, accidents such as quality failures, timing of market entry, unpredictable competitor actions, shifts in tastes, and geopolitics all shape an organization’s evolution, survival, and success.

Organizations are permanently oriented toward the future, preparing for it despite its unpredictable nature. Early warning, openness to change, flexibility, and rapid implementation characterize successful organizations. While the future cannot be chosen or predicted, preparation maximizes the chances that it will be favorable, or at least minimally unfavorable.

3. The Creation of a Business

When a small group of people decides to create a business, they imagine its activities and purpose, give it a name and legal form, and endow it with financial resources. From the moment it is created, the business begins to exist with growing independence from its founders as it operates, grows, and develops a culture and an image that will rarely be uniform among internal collaborators, and even less so among its many stakeholders. The image of the emerging Organization will inexorably exist and the Organization must be aware of this and actively influence it in order to achieve as much as possible its uniformity and conformity with the characteristics desirable for its success. In my experience I have observed that there is always a great deficit and an inconvenient distortion between the notoriety, precision and level of knowledge that stakeholders, and even employees, associates or shareholders have of an Organization and its desirable image and even its reality.

The legal form of the business influences its objectives, methods, and image. An NGO, foundation, nonprofit association, cooperative, worker-owned company, limited liability company, or corporation each has distinct goals and modes of operation. Depending on the intended objectives, one legal form may be more suitable than another. The image of each one internally and externally is influenced from the start by that legal form, leading to practical consequences. For example, altruistic collaborations are easier to secure for the first three, worker solidarity in cooperatives or worker-owned companies, and access to financial resources is generally easier for limited liability or corporations.

The first steps of a business are extremely difficult and risky. Success in a newly emerging project requires a good idea, courage, resources, and perseverance.

The value of the offering must be tested as objectively as possible. It is common and understandable for the promoter to have an idealized view of the idea, exaggerate its advantages, and underestimate the powerful force of habit among potential clients, the relative importance of the problem being solved, or the capacity of competitors to respond. Promoters are often strong-willed, highly convinced individuals, more inclined to speak, persuade themselves, and persuade others than to listen, acknowledge, and adapt. Vital energy and enthusiasm are indispensable for pioneers, habit-changers, and risk-takers, but without careful listening and self-criticism, these traits can lead in the wrong direction.

Market interest depends on the timing of the new offer and on the suitability and effectiveness of the communication system used. Many ideas reach the market too soon, at an inopportune stage of the cycle, promoted by people lacking the commercial or financial capacity to succeed, or presented in inadequate ways. Securing a client who can serve as a reference provides sales and, more importantly, credibility to the project. Clients, being the humans they are, tend toward herd behavior and innovate only under necessity, taking the least possible financial and personal risks. Large companies exemplify this caution: executives prioritize avoiding mistakes or exposure, as failures can reflect poorly on them if perceived as preventable or if competitors gain an advantage. Demonstrating low risk while subtly signaling that competitors are progressing can often be as decisive as the actual merits of the project in winning major clients.

Financing is often the greatest difficulty, and insufficient attention is given to promoting the entrepreneurial spirit, which is vital for society. Until this sensitivity improves, novice entrepreneurs must be cautious when estimating the time needed for their idea to become self-financing. In nearly all cases, I dare say that this period is underestimated, with serious consequences. Working capital needs are also frequently underestimated, even by large, experienced companies. While immense attention is often given to fixed investment, the need for working capital is often equal or greater. For a new business, this is compounded by the fact that current liabilities are low, as suppliers remain cautious without a track record or guarantees.

As a company grows, it acquires its own personality, and turnover among leaders has little lasting influence on its image. A leading company in its sector has a reputation for quality and reliability independent of its key executives. Acquiring another company often results in the latter disappearing like prey swallowed by a predator, leaving the acquiring company with greater visibility and potential.

Within a newly created organization, an initial formal organization chart emerges, which evolves over time and merges with the informal organization that naturally develops. The chart is an intellectual creation that reflects how those in power understand the intended activity, yet in any human group, behind and beyond it, an intangible informal organization emerges. This informal structure is difficult to understand or control but can decisively influence the organization’s functioning.

The people contributing to the organization have different personal motivations and often different ideas about the organization’s goals. These motivations evolve over time due to personal circumstances, team dynamics, and environmental factors.

Even in an NGO, the initial “revolutionary” spirit of idealism and altruism becomes mixed with operational realities and difficulties: fundraising, workload, sustaining the budget, and supporting employees. As the organization grows, it faces risks of bureaucratization, loss of sensitivity to founding objectives, and commercialization. Leaders must constantly counteract the ever-present force of entropy. Large NGOs are entities of great human and financial size and with multiple highly bureaucratized headquarters in which their members share the objectives to varying degrees.

Entropy is inherent in organizational life and requires counteracting forces and actions. Inertia is also ever-present, a silent brake rooted in fear of change and error. It can prevent adaptive change, keeping the organization from evolving sufficiently.

Inertia is psychologically comfortable and often unnoticed, reinforced by the priority of urgent matters, which demand action but not change, risk, and discomfort in the face of the need to alter the status quo and assume responsibilities. Important decisions can be postponed indefinitely, as the temptation to leave them for later is strong.

Decision-making sets the course of the organization, shaping its internal order, culture, proposals, and responses to the environment. From 50 years of experience in managing organizations, I can affirm that difficult decisions are almost always made too late. There always seems to be a little more time, and we rarely have all the information we consider relevant, justifying delay beyond reason. Costs are usually certain and quantifiable, while results are distant, hidden in uncertainty and subject to chance.

The desire for additional information often serves as an excuse to postpone difficult or risky decisions. We can never have all the information we would like. Gathering it costs time and money, and its marginal return diminishes. What matters is reaching a sufficient level of certainty in strategically relevant aspects of a decision. The ability to detect what is relevant, understand the time cost, and accept the risk inherent in every decision is a hallmark of the best leaders.

An organization, like any living entity, constantly faces risk and requires change. Leadership involves promoting change, detecting and overcoming inertia, balancing information needs against their cost and the time required to attain them, and the degree of profitability, through risk reduction and improvement of the design that is reasonably expected from attaining them. Decisions may be mistaken, requiring vigilance and rapid response, but failing to decide guarantees failure through lack of adaptation. Systematic slowness in decision-making gives a competitive advantage to rivals.

4. The Environment

An organization exists in symbiosis with its environment, which both enables and largely determines its modes of operation through laws and customs it must respect. The law is publicly known, and numerous specialists can advise on its implications for the organization. Custom, however, requires greater perceptiveness, as it is intangible, has vague boundaries that vary depending on social circumstances and the organization itself, and may be necessary to understand in order to grasp the scope and manner of legal enforcement, which often varies by culture.

Laws and the degree of respect for them in the organization’s specific location of activity establish minimum constraints. In well-established societies, social customs also strongly shape organizational culture. Certain behaviors are assumed by social custom to be self-evident and therefore are not described in legislation.

Despite that, organizations also generate externalities through their effects in unregulated or socially insensitive areas of the society where they operate. These externalities are greater in less formalized societies or in those with weaker capacity to enforce norms. Global standards concerning the environment and human rights are converging, but enormous differences remain, which are difficult to eradicate.

An organization also influences its environment, particularly when its size and impact are large relative to its surroundings, creating a situation of dependency. Such circumstances limit social control and can have dramatic consequences if the organization fails.

The emergence of clusters is of special interest. They usually emerge unintentionally but possess great capacity for development and longevity. Once favorable conditions for competitiveness exist, clusters tend to attract new organizations of the same type or related services, supplies, and demand, expanding the cluster’s size and overall competitiveness. For example, the vegetable canning and frozen vegetable industries in Navarra in northern Spain emerged from the initiatives of a few pioneers. These industries grew through imitation by other entrepreneurs, sometimes former employees of the pioneering companies. New ventures in machinery, maintenance, and other services accumulated in the area, eventually creating locational advantages that encouraged newcomers to settle nearby. Within the cluster, conditions develop that foster specialization, easy access to services, competitive advantages, spin-offs, and a concentration of supply that facilitates interaction with demand.

Clusters have clear advantages in durability but carry the risk of excessive dependency if their type of offering rapidly becomes obsolete, a situation increasingly frequent due to technological revolutions and globalization, which bring once-distant competitors close.

The environment also influences the feasibility of creating a business. Industrial settings, for example, offer trained personnel, suppliers, services, and clients, making the establishment of new ventures more likely.

I have personally observed this phenomenon in Germany, Navarra, Cáceres, Brazil, and Peru, and it appears that industry attracts industry. While it may be logical to produce olives where they are grown or asparagus where the harvest lasts 10 months instead of four, the advantages of an industrial environment, despite higher labor costs, are often decisive. Only political will to develop non-industrialized regions typically explains the establishment of major industries in such areas. Large cities are particularly attractive, combining broad markets with greater access to production and decision-making resources. Finally, certain locations, dictated by mineral resources or major ports, are strategically unavoidable, as logistics determine competitiveness, as seen with refineries.

Large cities concentrate people, facilitating talent recruitment. They are centers of services, international transport, and political and financial power, attracting economic activity and drawing resources from surrounding areas. Economic activity, population, wealth, and power all display a strong tendency toward concentration.

Emerging changes are generally of little importance at the outset and the Organization for which they may become a threat is often slow to appreciate their relevance. The natural reaction is usually an effort to increase the competitive advantage of the product that led them to success, which extends their life but leads to their disappearance when the new change becomes known and achieves advantages unattainable for the previous solution. Such was the case of the classic locomotives replaced by electric ones; of obsolete Kodak cameras compared to those of mobile phones, or of the Espasa Encyclopedia or the Encyclopedia Britannica useless compared to the advantages of Wikipedia or AI.

A notable example is the dispersed yet highly industrialized region of Gipuzkoa, in the Basque Country, in northern Spain,  and its unique cooperative development, which is unmatched anywhere in the world. This outcome appears to stem from a culture of solidarity, tenacity, and ambitious pragmatism that characterize that society, creating fertile ground for the emergence of a broad and diversified industrial complex born primarily from the ground up. Shared cultural predispositions favoring entrepreneurship, combined with nearby examples of success, create ideal conditions for new ventures.

The guiding spirit of the exceptional Mondragón cooperative group was José María Arizmendiarrieta. The world owes much to José María Arizmendiarrieta. He knew how to turn spiritual concerns into concrete action,  an extraordinarily fertile invitation in a world so in need of collaboration. He demonstrated that human beings are not inevitably selfish entities who can only create wealth through competition for individual interests, guided by the invisible hand of the markets. The management techniques of his time were profoundly authoritarian, but they have since evolved to prove him right. With a delay of 60 years, so-called “modern” management techniques now present us with the key to organizational success: people, their motivation, and their integration. Arizmendiarrieta knew it before the rest of us.

To build businesses in the 1950s with a social and humanist philosophy that valued the individual, maintaining absolute faith in people’s extraordinary ability to achieve great things through collaboration, wasn’t just a question of hitting the mark – it also anticipated, by decades, the people-centered management of organizations. Indeed, current people management practices still have work to do to incorporate all of the thoughts that Arizmendiarrieta considered as fundamental:

• institutionalize honesty
• true wealth lies in the full development of our personality
• people come first, then cooperatives
• the position of women is, in every society, the exact measure of its level of development
• there are no useless people, only misused ones
• to progress is not to acquire more, but to be more, to act better, and to give more
• socialize knowledge to democratize power
• forming a community that is convinced of being one will imbue it with immense strength
• ownership does not confer the right to abuse goods
• man is human to the extent that he is social

Obviously, the Mondragon group has progressively adapted its modes of organization to the circumstances of the environment it faces. The presence in foreign markets, the extension of the strict limitation of wage levels and many other aspects have required adaptation to social developments and globalisation, but they remain, in my opinion, an invaluable proposal for demonstrating that there is no single answer to the organisation of work and property and that values can be made compatible with efficiency.

5. The Image of Organizations

Seen from the outside, an organization presents an emergent image in the eyes of its various stakeholders and the general public. An extremely important consideration, in my view, for those in charge is that each stakeholder inevitably always has a particular image of the organization in their mind, and this perception evolves over time, and it is crucial to know what this perception is and to try to align it with the organization’s objectives. There are always gaps between the existing image and the one most beneficial for the organization, and it is essential to understand this and work toward optimal alignment.

Furthermore, the level of knowledge about what an organization is and offers is always, to some degree, inaccurate and inferior to what would serve its interests. For this reason, every organization must make a continuous effort to shape its image so that the emergent reality that its existence represents is perceived correctly. From within the organization, the amount and quality of knowledge the outside world has of what the company is about and what it offers tends to be overestimated. Closing that gap is an ongoing task, since image also suffers from entropy, through forgetfulness or erosion.

In the same way, the upper levels of organizations tend to overestimate their subordinates’ knowledge of the organization and its objectives. This results in increased costs due to poor coordination and undermines goal alignment and motivation. Detecting, diagnosing, and correcting these knowledge asymmetries is a key factor in improving organizations. The emergent entity is perceived differently from every angle, at every historical moment, and by each stakeholder, and this affects the quality of the organization’s relationships and its chances of reaching its objectives.

Leaders, for their part, often have a distorted view of their organization, since the flow of information reaching them is blocked or altered by team members’ desire for recognition, concealment of errors, mistrust, ignorance, incompetence, fear, or bad faith. There are many things a leader never learns, and their vision is usually at least partially inaccurate and delayed. A good leader must act with intelligent humility to make it easier for information to reach them across all levels and to improve their capacity for psychological influence within the organization.

A distant, arrogant leader minimizes and distorts their informational inputs, hindering motivation and alignment among collaborators. A tyrannical leader suppresses creativity and proposals for change, achieves order but destroys initiative, demotivates, and undermines the sense of identity that belonging to a team could provide. The tyrannical leader enjoys a sugarcoated view, hearing no criticism and perceiving order all around them.

Leaders also typically suffer from loneliness, unable to communicate fully openly, either upward or downward the chain of command. All communication at high levels inside and outside organizations involves a great deal of theater. It becomes necessary to read between the lines, gauge the degree of openness, and understand the lines of power. Competition for power, prestige, and resources is always on the table, and it is essential to understand the game, the positioning, and the current balance of negotiating power, especially in the early stages of an organization, as in those of any living being.

Entrepreneurship and the leaderships of organizations have major social repercussions. As such, every effort should be made to ensure that these positions are held by people with the technical and human capacity to carry them out effectively, and that they can do so in an atmosphere built on transparency and control.

Because of their relevance for society, entrepreneurs and leaders should be socially valued. The image of a profession is a key ingredient in attracting those capable of practicing it. The job of a cleaner may be better paid than that of a department store clerk, yet the latter enjoys a better image. For university graduates, a medium-sized company usually provides a more enriching professional life, at least in the initial phase, yet socially it seems more prestigious to start a career at the bottom of the ladder in a large corporation. This is even more evident when the choice is to be an entrepreneur. But is it worth taking risks only to be seen as either a failure or an exploiter, depending on how things turn out, instead of as someone to be emulated or who is regarded as a valuable contributor to society’s progress?

That which society esteems receives a powerful boost, as if through a generous subsidy. What is poorly regarded will hardly attract anyone, unless other extremely strong incentives are present.

If we confer prestige on what we want to see flourish, we will see it blossom. Beyond being fair, it is effective and free, though it does require the psychological generosity to speak well of and support those who undertake initiatives, whether they fail or succeed, even if deep down we feel a twinge of envy.

The study of organizational management places heavy emphasis on quantitative aspects and, like economics in general, aspires to mathematize its research. In reality, the decisive and hardest-to-perceive aspects are intangibles such as informal culture, motivations, lack of intellectual and psychological alignment, inertia, closed circles, fear, and so on.

An organization may have material resources at its disposal, but above all it is a collection of people with histories and objectives that do not fully overlap, in constant interaction, whose harmony is key to optimal efficiency. The personal and professional interaction among members of the organization determines the quality of its culture of trust, its level of alignment and positive tension, its openness to change, and its speed of execution. In short, these interactions determine its chances of success and satisfaction.

Social emergence, therefore, is extremely difficult to measure. An organization resembles a living being, subject to forces of entropy and negentropy in constant motion, unpredictable because they depend on a changing environment and on the ongoing action or inaction of people and organizations made up of people whose perceptions and motivations are in continual flux.

The early detection of social emergencies is a source of opportunities for activity aimed at their satisfaction and promotion, as well as of great value for redirecting in time the activities currently aimed at the forms of satisfaction of needs that will become obsolete. The speed of change in today's world is accelerating and this makes it more relevant than ever to detect them early and improve the propensity for change within the Organization by improving its culture of trust that decreases our natural fear of change and tendency to the comfort of the status quo and inertia.

6. Business Organizations and Complexity

IBM conducted a study summarizing the responses of 1,500 senior executives around the world to the question of what their most pressing concerns were. By a wide margin, complexity emerged as the most troubling issue in both the immediate environment and the near future. To make matters worse, most of them admitted to feeling overwhelmed by the level of complexity.

The proposed courses of action from these leaders of the economy also showed a high degree of consensus. They recommended strengthening creativity, flexibility, speed in decision-making and execution, continuous review of the business model, and closeness to clients, in order to optimize responsiveness and the chances of success.

Indeed, complexity is the defining feature of the future faced by businesses, institutions, and individuals alike. It has always existed, but today the number of variables affecting us has multiplied, the pace of change has accelerated, and the geographic scope of our ambitions and concerns has expanded to encompass the entire world.

7. The Emergence of Networks

The economy is a network, made up of an enormous number of nodes acting in all directions. Within the network there is no hierarchy, but there are dominant nodes that enjoy special dynamism and possess strong innovative and driving capacity. These include large cities, international organizations, certain states, and a select group of financial institutions, universities, and corporations. These nodes increasingly guide the evolution of the whole system, and proximity to them, whether geographical, or through alliances, communication channels, access to information, or presence, becomes decisive for not being left behind. Spain lies on the periphery and must therefore pay special attention to maintaining all kinds of connections with the nodes of knowledge, finance, and the economy at global level. The network has become larger, denser, and more autonomous, which translates into complexity and risk for its participants.

Networks have a life of their own, and it has been shown that they suffer from “congestion storms.” A clear example is the recent, and likely future, financial upheavals. The system itself generates them; the only options are to improve forecasting of their occurrence, penalize behaviors that favor them, and correct the damage they cause as much as possible.

Networks also give rise to “emergent properties” that transform the system without any of its components consciously intending it. A new economic system will gradually emerge out of the current “phase transition” in which we are living, though its parentage cannot be attributed to any one actor within the system. It is clear, however, that its birth is being obstructed, delayed, and distorted by the major states. In my view, they are the reason for the slow creation of the European Union and of coordinated global governance, even though, after enough disasters, they will present themselves as the architects when they finally agree to promote a fragment of the obviously necessary coordination of interests.

Complexity, then, is the fog we live in, and in which we will remain for a long time. Let us hope that an increasingly proactive European Union and the emerging, though now endangered, structures of global governance will gradually reduce the level of uncertainty. In the meantime, the company, like the human being, is both itself and its circumstance. But given the rapid shifts in circumstance, we must foster creativity in every area, improve early warning systems and decision-making speed, increase flexibility, and sustain a continuous strategic debate on which businesses we should be in and which business model best suits each situation.

8. The End of the Organization

Everything that emerges eventually has an end. For organizations, this may come from the obsolescence of their goals, from sudden and unforeseen changes in environmental conditions, or from their own inefficiencies if they commit errors with severe economic and/or legal consequences, or if they exhaust their resources. In a rapidly changing environment, early warning is essential to minimize the risk of obsolescence or collapse due to lack of foresight, as well as the ability to respond quickly to threats and opportunities.

Maintaining a culture of trust, positive tension, and alignment that streamlines internal functioning and fosters openness to change is the key to minimizing risks, sharing objectives, and moving faster than the environment and competitors. This provides the organization with its greatest probabilities of success, probabilities, but not guarantees, given the growing importance of chance and of factors beyond one’s influence, even unforeseeable ones.

When facing a likely end, it is common to make the mistake of prolonging the struggle and agony beyond what is rational. Often this stems from the personal interests of leaders, but also from a well-documented psychological bias: out of a misplaced sense of tenacity, we tend to persist in error, driven by pride and self-deception about our true chances of success. Robert-Vicent Joule and Jean Léon Beauvois, in Petit traité de manipulation à l’usage des honnêtes gens (Brief Treatise on Manipulation for Honest People, La Bouilloire Aux Livres ), cite a business school simulation in which students had to allocate funds to one of two companies based on business plans they were given. Later, they were informed of each company’s results, which turned out to be worse, in every case, for the company they had initially funded. Even so, when given a second opportunity to allocate funds, they showed a clear tendency to favor the same company they had chosen first. Thus, there is a danger of clinging to an initial decision, leading to a chain of errors that is difficult to escape, since doing so requires acknowledging the mistake, something psychologically hard to accept.

Brockner J. 1983. Low self-esteem and behavioral plasticity, and others found that by setting in advance a maximum acceptable loss, it becomes easier to avoid an escalation of losses. This is the rationale behind stop-loss rules in financial investment systems: they force us to make a decision and remind us of the position we held before becoming victims of our passion for consistency, which can lead to overcommitment (Brockner J., Shaw M.C., Rubin J.Z., Factors affecting withdrawal from an escalating conflict: quitting before it’s too late, Journal of Experimental Psychology, 1979). Tejer A.I., in Too Much Invested to Quit (Pergamon, New York, 1979), reaches the same conclusion.

As with human beings, only a minority of organizations reach 100 years of life, and even fewer likely will in the future. The pace of emergence, growth, and disappearance of new organizations is accelerating rapidly due to the technological explosion and globalization (now in partial and temporary crisis), both commercial and especially financial. 

Times of rapid change generate sudden obsolescence for organizations that once satisfied needs in other ways. At the same time, they generate opportunities for new organizations that apply new technologies, and those that succeed gain high visibility, creating the illusion that success is easy. The more than 95 percent of start-ups that fail remain invisible.

For society, the sheer volume of initiatives, generally destined to fail, ends up being positive, because those that succeed contribute advances to society as a whole. For entrepreneurs who do not succeed, what remains is the value of experience, the wear and tear of the struggle, and the pain and loss of confidence caused by defeat.

A foreseeable end provides the opportunity to design an orderly closure and to minimize the costs in resources, human and social, of the disappearance of a project that emerged, prospered, and ended — as usually happens in reality, even if theoretically an organization could last indefinitely.

Ethics must play a central role in the final stage of an organization, because what emerges afterward is the image of what the project was — an image especially shaped by its last actions and behaviors.

Society also inherits spin-offs, companies, or services that emerged through the influence of the vanished organization, as well as people trained by the work and experience gained there, and the cultural and economic influence left in its environment by its ways of operating, especially if the organization was large and enjoyed longevity. These legacies, in people and in emergent entities derived from the organization, will be the means to ensure the fertile blossoming of new emerging organizations continues, which in turn will help sustain and improve the overarching Organization of organizations, cultures, and people that make up each society and the global human society we all constitute together.

9. Episodes of speculative euphoria as emergent phenomena

Human beings seek security above all else and therefore tend to follow the herd of their fellow human beings, especially if their behavior seems to be obtaining good results of any kind.

Speculative euphoria has historically given rise to the emergence of massive movements of behavioral change that overflowed any level of irrationality, (Galbraith 1991, A Brief History of Financial Speculation. Robert Shiller 2015, Irrational Exuberance, Editorial Deusto.

Speculative bubbles feed on themselves and their own dynamic of rapid growth in the prices of the products subject to speculation creates additional demand for them. Quick enrichment is a difficult dream to appease by reason when the facts prove that it is feasible to achieve it, that others are achieving it.

In the case of the huge Spanish real estate bubble at the beginning of this century, its existence was evident since Spain built more homes than France, Germany and Italy combined. The Bank of Spain denied the existence of a bubble for fear of its bursting and wanted to achieve a soft landing, but maintained the financial conditions that fueled the bubble. Banks lent 100% of the value of the house for up to 40 years, which resulted in moderate monthly payments that made housing accessible to the majority, with which demand skyrocketed and as there was not enough supply, prices rose rapidly. Off-plan flats were bought and sold before their first occupation with significant revaluations. Each decision-maker did what seemed right, but group behavior led to disaster once demand for rising supply and prices began to run out. When doubts arose about the continuity of the phenomenon because the first difficulties appeared in placing the supply of homes, prices plummeted because everyone wanted to sell and there were no buyers.

10. Reflection on Organizations and the Future of Humanity

Social organizations are the fruit of civilization. They have facilitated progress in every area, though to a lesser extent they have also been sources of conflict. A dense network of efficient organizations grounded in values is typical of societies with a strong culture of trust. Such societies usually also enjoy high levels of social and economic development, because culture and development tend to be both cause and effect of a society’s success.

Nations do not achieve a high level of development based on the natural wealth available to them, but on the quality of their social organization and the level of trust in their system of relationships. If natural wealth were the determining factor, Nigeria and Argentina would permanently top the rankings of the most developed countries, while Scandinavia and Japan would be among the poorest. In fact, Japan was poorer than India at the end of the nineteenth century.

The social and economic development of countries will increasingly depend on how well their societies and organizations can adapt to technological changes and the social changes these in turn provoke. New technologies will alter how we relate and collaborate, as well as the economy, especially in terms of labor. Work has been the broadest system for distributing wealth, but the impact of new technologies on both the quantity and the nature of work will be revolutionary and very rapid. This will put to the test each society’s capacity to adapt, with results that will differ greatly from one to another.

The efficiency of organizational activities, the quality and strength of their values, and their alignment with society’s interests determine the quality and progress of that society.

At present, we are witnessing the emergence of an entire internet technology sector, concentrated in a handful of immensely powerful corporations that, naturally, pursue their financial profit goals and the power ambitions of their leaders. They have formed a cluster almost entirely in the United States, holding a near-monopoly in this crucial area of activity in the West and in particular in Europe that has abandoned activities that are changing our society towards individualism, superficiality, polarization and aggressiveness.

At the same time, financial activities have created a space outside the banking system, producing sophisticated, insufficiently regulated financial “products”. Their impact on the economic system is disruptive, and they float above the authority of states, with little control, thanks to their power and their agility in moving globally and reshaping their products. In this field too, there is a group of corporations, larger than in technology, and mostly, though not exclusively, American.

Both groups, the technological and the financial corporations, are being actively supported by the current U.S. government, with full political intent, and their power has grown to deeply concerning levels.

In a world that is poorly organized at global level, the emergence of these groups has tremendous destabilizing power, economically, in the case of the financial sector, and politically and socially, in the case of the technological sector.

Humanity faces enormous geopolitical and financial risks in the coming years, along with a deterioration in the quality of citizenship due to the impact of social media.

What we need, in our case, is the emergence of a Europe with long-term ambitions, capable of leading its progress decisively and commanding respect, instead of behaving like a mere colony of the United States. Our European society lacks leadership, long-term vision, self-confidence, and dignity. We are currently living through an intense acceleration of scientific and technological development, affecting people and society to such an extent that it is provoking a wave of fear of change, leading to policies of self-sufficiency, militarization, and widespread deterioration in democratic quality. The growing asymmetry between rapidly evolving means of destruction and control, on the one hand, and human adaptability and the slow (if not regressing) pace of improvement in our social and political organizations, on the other, raises fears of crises, conflicts, and serious risks to freedom.

Throughout most of human history, tyranny was the dominant form of political organization. Democracy is a delicate balancing act, hard to sustain — especially now, as fear of change and the irrational herd instincts and polarization fostered by social networks fertilize the ground for enemies of social progress and mutual respect. These forces seek to impose order above all other values, uniformity of thought through fear of diversity. This trend also favors the interests of alienated, atomized, and submissive masses, which facilitate the expansion and dominance of neoliberalism.

The ongoing social transformation is profound and troubling for those who value respect, freedom, solidarity, and democracy. Fear of change, opinion polarization driven by networks, individualism, and consumerism are leading us toward social degradation and tyrannies, which often drag their societies into confrontation, this time with weapons of ultimate destruction. Climate change may not be the only existential risk we face.

What we urgently need is the emergence of global organizations that can coordinate efforts and policies and limit the powers driven by political and economic domination that could endanger humanity’s progress.