Di Nauta P., Polese F., Saviano M., Complexity and decision making. Implications for marketing

Panel III - Systemic Approaches in Business Management

COMPLEXITY AND DECISION MAKING.

IMPLICATIONS FOR MARKETING

Primiano Di Nauta, University of Foggia, Italy, [email protected]

Francesco Polese, University of Cassino, Italy, [email protected]

Marialuisa Saviano, University of Salerno, Italy, [email protected]

Panel III - Systemic Approaches in Business Management

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Agenda

1. Purpose

2. Methodology: the Viable Systems Approach (vSa)

Part A. vSa as an interpretative approach

Part B. vSa as a governance approach

3. First insights: complexity and decision making

Di Nauta P., [email protected], Polese F., [email protected]; Saviano M., [email protected]

3. First insights: complexity and decision making

4. Implications for the marketing approach

1. Purpose

� To propose the (vSa)methodological approach to interpret complexity and its implication for decision making.

� To evidence how marketing approach is changing and should change as a consequence of conditions of growing complexity that characterize decision making contexts. change as a consequence of conditions of growing complexity that characterize decision making contexts.

� To highlight a growing convergence of thought of Scholars in the new developments of the:� Systems theories (Viable Systems Approach)� Network theories (Relationship Approach and Many-to-Many Logic)

� Service Dominant Logic

� Service Science Management and Engineering

3 Di Nauta P., [email protected], Polese F., [email protected]; Saviano M., [email protected]

2. Methodology

� The Viable Systems Approach (VSA) (Golinelli, 2000, 2005, 2010,

2011; Barile, 2000, 2008, 2009, 2011) is both a research and agovernance methodology rooted in systems thinking (VonBertalanffy L. , 1950).

We adopt (VSA)� We adopt (VSA)

- as an interpretative approach to qualify the concept ofcomplexity, highlighting its systemic nature

- as a governance approach for investigating the generalimplications of complexity for decision making and thespecific implications for themarketing approach

4 Di Nauta P., [email protected], Polese F., [email protected]; Saviano M., [email protected]

PART A.

VSA as an interpretative approach

� a systems qualification ofcomplexity


PART A: VSA as an interpretative approach

� organizations as viable systems (Beer, 1972) aiming at surviving in theircontext� the context conditions in which they act are relevant for the system’s outcome

� the structure-system paradigm, a dual perspective to investigate aphenomenon by focusing on (Barile and Saviano, 2008, 2011):

� how it is made (Structure Based View – StBV)


� how it is made (Structure Based View – StBV)static and objective view

a perspective that focuses on objects, parts, components (analytical reductionistapproach) and on the relations (relationship view)

� how it functions (Systems Based View – SyBV)dynamic and subjective view

a perspective that extends the view from the parts and relations (static) to thewhole interaction (dynamic) process (systems view)

PART A: A VSA interpretation of complexity

From an objective to a subjectivequalification of complexity:

� complexity does not characterize thecontext/phenomenon in itself, but thesubjective conditions of the cognitiveprocess on the part of the decision

, that is influenced by his/her


process on the part of the decisionmaker, that is influenced by his/herinterpretation schemes and affected byemotional feelings emerging from theperception of the context.

� complexity manifests itself when theinteraction emerging from relations in aspecific process does not follow clear cutbehavioral rules.

PART A: A vSa interpretation of complexity

Complexity dimensions (Rullani, 1989; Golinelli, 2000, 2005, 2010; Barile, 2000, 2009, 2011):

VariabilityVariety Indeterminacy


From an objective to a subjective view

From a static to a dynamic view

Complication Complexity

PART B.

VSA as a governance approach� interpretation of decision making

Supra-systemsSystem


Context

Environment

systemsSystem

PART B: VSA as a governance approach

� Fundamental role of the governing subject

Key governance processes:

1. abstraction of the context from the environment


2. definition of goals

3. identification of the relevant internal andexternal components of the system

4. involvement of relevant components into theachievement of a shared goal

PART B: The VSA governance drivers

� The governance decisions are the outcome of theaction of two complementary and co-essential drivers(Golinelli, 2011):

� the competitiveness, that qualifies an effort to the


� the competitiveness, that qualifies an effort to thecontinuous improvement of the system’s performances.

� the consonance, that qualifies an aspiration to harmonicrelationships with sub and supra-systems to achieve a collectivepotential, an ideal sense of belonging to the system aiming atachieving a shared goal.

PART B: The VSA governance drivers

- Competitiveness follows a classical causality logic

- Consonance seems to follow a reverse-causality

The result of a virtuous interaction (harmonizing) between the


The result of a virtuous interaction (harmonizing) between the

two drivers is the resonance.

The resonance makes possible the existence of a collectiveconsciousness, that (in turn) makes the desired future scenariocome true (Barile, 2011).

3. First insights:

complexity and decision making

How do decision makers manage to achieve resonance incomplexity conditions?

Decision makers are forced to abandon the “certainty” of theobjective and static structural perspective and face the “uncertainty” ofthe subjective and dynamic systems perspective.


According to Barile (2011):� they have “visions” of future scenarios, not as linearly determinedoutcomes of past facts (causality), but as emotionally anticipateddesired future events (reverse-causality).

� then, by acting upon common feeling and desiderata, they createconditions of consonance, so being able to involve all relevantcomponents and stakeholders into the achievement of a sharedgoal.

3. First insights:


Organizations choices are of two kinds, depending on the contextconditions that characterize the decision process:

� management decisions – complication/certainty contexts – availability oflaws, rules and customs and of interpretation schemes - decisions made onthe basis of experienced models(problem solving realm)


� governance decisions – chaos/complexity contexts - unavailability of sharedlaws, rules and customs and of interpretation schemes - decisions made onthe basis of feelings, values and desiderata(decision making realm)

Management tends to believe that there is an optimal solution for every problem, ending up adopting a problem-solving approach in dealing with

governance issues, that relate to the realm of decision making (Barile, 2009), noting the growing inadequacy of technical tools already at their disposal.

3. First insights:


The system’s governing subject, in conditions of complexity, mustaccomplish a shift in perspective:

� from a traditional Structural Dominant View (StDV) to a Systems Dominant View(SyDV), that means� from static to dynamic

� from objective to subjective

� from parts/relations to interaction� from parts/relations to interaction

� from a “problem solving” to a “decision making” approach, that means

� from the certainty of quantities and figures to the uncertainty of emerging proprieties,qualities and feelings

and in the marketing context:

� from a Goods-Dominant to a Service-Dominant Logic

Source: Capra, F. (1996). Capra, F. (1996). The web of lifeThe web of life. Doubleday. Doubleday--Anchir Book, New York, p.50.Anchir Book, New York, p.50.

4. Implications for marketing

� These shifts in focus correspond to the evolution of the marketing approach over time:� Focus on production

� Focus on product

� Focus on customer

� Focus on relation


� Focus on relation

Marketing is focused to concretize the best relation between firms and their market:

but markets have changed!

Implications for marketing

� Marketing Mix (4P) doesn’t grant enough importance to clients and to stable relationships with them, thus missing to consider clients as a strategic resource for competitive advantage

� Firms are ever more stimulated to relationships managementwithin networks of actors (suppliers, partners, co-producers, clients, etc.)


� Business is hence represented by networks of Actors interacting with Actors

� In these networks firms try to promote service exchanges

� It is only through the service exchange (and consequent satisfaction) that firms share resources with other actors)

The Service revolution

� This evolution has led to the Relationship Marketing approach (Gummesson, 2004) recently extended to a wider Many to Many perspective (Gummesson, 2006) on the basis of a Network view.

� Recent marketing research is based upon Service-Dominant Logic � Recent marketing research is based upon Service-Dominant Logic (Vargo and Lusch, 2004; 2006), whose key concepts are:

� service, rather than goods, as the focus of economic and social exchange

� customer is always a co-creator of value

� all social and economic actors are resource integrators

� from “market to” to “market with”

• Service is related to value co-creationamong actors.

• Adopting a Service view improvespositive interaction between entities in

Service is considered an ever complex issue to deal with.

Service & Complexity

positive interaction between entities inreticular systems.

• Service co-creation involves manyactors within a dynamic process.

• Service is based upon Complex ServiceSystems

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A global Player Complex Service System

Regulators Supply

network B2A/A2B

Complex Service Systems are re-shapingbusiness & marketing practices

Complex Service Systems

a)A global playerdesigning and assemblingan airplane engine coordinating aninternational network of actors

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Regulators

Pressure Groups

Global Player

Clients

End Users

International

Partner

network

B2B

B2C

B2A/A2B

B2A/A2B

b)A client trying to book his honeymoon

Complex Service Systems are re-shapingbusiness & marketing practices

Complex Service Systems

his honeymoon through an ICT tourims platform.

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…Instrumented, Interconnected, Intelligent(More measurement data, More networks, More learning and adaptation)

Service exchanges & Complex Service Systems

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Smart traffic

systems

Smart water

management

Smart energy

grids

Smart

healthcare

Smart food

systems

Intelligent

oil field

technologies

Smart regions

Smart

weather

Smart

countries

Smart supply

chains Smart cities

Smart retail

Source: www.ibm.com/think

There are numerous Systems Theories’ key principles useful to marketing management

1. Through ST we can investigate organization behavior.

2. ST allow the analysis of links, nets, balances, processes. dynamics

3. With ST various standpoints can be chosen to underpin resources, goals,

needs/expectations.

4. ST support the interpretation of complex phenomena both from a holistic

Comlexity theories in Marketing

4. ST support the interpretation of complex phenomena both from a holistic

perspective and from a reductionist view.

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References

AA.VV. (2011), Contributions to theoretical and practical advances in management. A Viable Systems Approach (VSA), ASVSA Associazione per la ricerca sui Sistemi Vitali,International Printing, Avellino.

BARILE, S. (2000), Contributi sul pensiero sistemico in economia d’impresa, Arnia.

BARILE, S. (2009), Management sistemico vitale, Giappichelli, Torino,.

BARILE, S. (2011), “A viable system conceived as a universal decision maker”, in AA.VV., Contributions to theoretical and practical advances in management. A ViableSystems Approach (VSA), International Printing Editore, Avellino.

BARILE, S. , POLESE, F. (2010), “Linking Viable Systems Approach and Many-to-Many Network Approach to Service-Dominant Logic and Service Science”, inInternational Journal of Quality and Service Science, vol.2, n.1.

BARILE, S., POLESE, F., (2011) “The Viable Systems Approach and its potential contribution to marlketing theory”, in AA.VV., Contributions to theoretical and practicaladvances in management. A Viable Systems Approach (VSA), International Printing Editore, Avellino.

BARILE, S., SAVIANO, M. (2011), “Foundations of systems thinking: the structure-system paradigm”, in AA.VV., Contributions to theoretical and practical advances inmanagement. A Viable Systems Approach (VSA), International Printing Editore, Avellino.

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management. A Viable Systems Approach (VSA), International Printing Editore, Avellino.

BARILE, S., SAVIANO, M., (2010) “A New Perspective of Systems Complexity in Service Science”, in coll. with BARILE S., in Impresa, Ambiente, Management, vol.3, n.3.

BEER, S. (1972), Brain of the Firm, The Penguin Press, London.

DI CORPO, U., VANNINI A., (2011), Supercausality and complexity. Changing the rules in the study of causality. (Syntropy) [Kindle Edition], Amazon Digital Service.

GOLINELLI, G.M. (2005, 20001), L’approccio sistemico al governo dell’impresa. L’impresa sistema vitale, Vol. I, Cedam, Padova.

GOLINELLI, G.M., (2010) Viable Systems Approach. Governing Business dynamics, Cedam, Kluwer, 2010.

GOLINELLI, G.M. (2011), L’Approccio Sistemico Vitale (ASV) al governo dell’impresa. Verso la scientificazione dell’azione di governo, Cedam, Padova.

NG, I., BADINELLI, R., POLESE, F., DI NAUTA, P., LÖBLER, H. AND HALLIDAY, S. (2012), "S-D Logic Research Directions and Opportunities: The Perspective ofSystems, Complexity and Engineering", Journal of Marketing Theory and Practice, forthcoming.

RULLANI, E., (1989), "La teoria dell’impresa", in Rispoli M (ed.), 1989, L’impresa industriale. Economia, tecnologia, management, Il Mulino, Bologna.

SAVIANO, M., Di NAUTA, P., (2011) “Project Management as a compass in complex decison making . A Viable Sstems Approach, in Proceedings 1st InternationalWorkshop on Project and Knowledge Management Trends-PKMT2011, Co-located with the 12th International Conference on Product Focused SoftwareDevelopment and Process Improvement, PROFES 2011, Torre Canne (Br), 21 June 2011.

VON BERTALANFFY, L. (1950), “The theory of open systems in physics and biology”, Science, vol. III.

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