Complexity – Kuncoro

The IEEE TEMS (Technology and Engineering Management Society) is an IEEE society focusing in engineering and technology management. TEMS serves professionals who work at the intersection of technical and managerial roles, providing resources for innovation, leadership, and strategic thinking in technology-focused business. The society’s mission is to enhance knowledge and skills in managing the processes, resources, and challenges of technology-intensive and engineering-centric projects.

For the 1st time, IEEE TEMS carried out one of its flagship conference in Indonesia. The IEEE TEMS Conference Asia-Pacific (TEMSCON ASPAC) took place in Bali from 25 to 26 September, at the Prama Sanur Beach Hotel. The conference theme, “Achieving Competitiveness in the Age of AI,” focused on the transformative role of AI in modern business and engineering management. The top leaders of the IEEE TEMS, accompanied by scholars, industry leaders, and researchers from around world (beyond only Asia-Pacific region) gathered to discuss topics including updated innovations related to competitiveness, sustainable supply chain management, cybersecurity policies, digital healthcare innovations, and entrepreneurship, etc within the digital ecosystem.

Photo session at the TEMSCON opening ceremony

The conference began with a welcome from Conference Chair Prof. Andy Chen (former IEEE TEMS President and current President-Elect of the IEEE Systems Council). The opening session featured introductory remarks from prominent figures, including Prof. Andrea Balz (current President of IEEE TEMS), and Prof. Imam Baihaqi (Vice Rector of ITS Surabaya).

With Prof Benny Tjahjono and the Coventry University Gang at the TEMSCON opening ceremony

The keynote presentations were delivered by distinguished academics: Prof. Richard Dashwood (Vice-Provost for Research and Enterprise and Deputy Vice-Chancellor for Research at Coventry University), Prof. Alexander Brem (Professor and Vice Rector at the University of Stuttgart); and Prof. Anna Tyshetskaya (Vice Rector at Sankt Petersburg University in Russia). After the opening, the conference continued with breaking sessions for research paper presentations.

The second day of the conference was carried out as an Industry Forum with experts highlighted the challenges and opportunities that AI brings to global competitiveness. The speakers, besides Dr Ravikiran Annaswamy (the Past President of the IEEE TEMS) and Dr Sudeendra Koushik (the President-Elect of the IEEE TEMS), was yours truly. It was surely an honour. The title of my presentation was “Towards Complexity-Based Strategic Management.”

Keynote Speech by Yours Truly at TEMSCON Industry Forum

Following the lunch break, the forum resumed with an engaging panel session on “Accelerating Innovation for a Sustainable Future.” Prof. Marc Schlichtner, (Principal Key Expert at Siemens) served as the speaker, with Prof. Robert Bierwolf (TEMS Board of Governors Member) moderating. The panelists included esteemed leaders in technology and engineering management: Prof. Alexander Brem (Professor and Vice Rector at the University of Stuttgart), Prof. Anna Tyshetskaya (Vice Rector at Sankt Petersburg University in Russia), and yours truly. Truly an honour to share the stage with such distinguished figures.

The conference concluded with a gala dinner that offered a warm and lively networking opportunity for all participants. This included the TEMS Executive Committee, Board of Governors members, and leaders from various universities, fostering valuable connections and camaraderie across the academic and professional communities in attendance.

Arthur WB (2021) wrote a paper comparing conventional vs complexity economics.

Conventional neoclassical economics assumes:

Perfect rationality. It assumes agents each solve a well-defined problem using perfectly rational logic to optimize their behaviour.
Representative agents. It assumes, typically, that agents are the same as each other — they are ‘representative’ — and fall into one or a small number (or distribution) of representative types.
Common knowledge. It assumes all agents have exact knowledge of these agent types, that other agents are perfectly rational and that they too share this common knowledge.
Equilibrium. It assumes that the aggregate outcome is consistent with agent behaviour — it gives no incentive for agents to change their actions.

But over the past 120 years, economists such as Thorstein Veblen, Joseph Schumpeter, Friedrich Hayek, Joan Robinson, etc have objected to the equilibrium framework, each for their own reasons. All have thought a different economics was needed.

It was with this background in 1987 that the Santa Fe Institute convened a conference to bring together ten economic theorists and ten physical theorists to explore the economy as an evolving complex system.

Complexity economics sees the economy as not necessarily in equilibrium, its decision makers (or agents) as not superrational, the problems they face as not necessarily well-defined and the economy not as a perfectly humming machine but as an ever-changing ecology of beliefs, organizing principles and behaviours.

Complexity economics assumes that agents differ, that they have imperfect information about other agents and must, therefore, try to make sense of the situation they face. Agents explore, react and constantly change their actions and strategies in response to the outcome they mutually create. The resulting outcome may not be in equilibrium and may display patterns and emergent phenomena not visible to equilibrium analysis. The economy becomes something not given and existing but constantly forming from a developing set of actions, strategies and beliefs — something not mechanistic, static, timeless and perfect but organic, always creating itself, alive and full of messy vitality.

Difference between Neoclassical and Complexity Economics

In a complex system, the actions taken by a player are channelled via a network of connections. Within the economy, networks arise in many ways, such as trading, information transmission, social influence or lending and borrowing. Several aspects of networks are interesting: how their structure of interaction or topology makes a difference; how markets self-organize within them; how risk is transmitted; how events propagate; how they influence power structures.

The topology of a network matters as to whether connectedness enhances its stability or not. Its density of connections matters, too. When a transmissible event happens somewhere in a sparsely connected network, the change will fairly soon die out for lack of onward transmission; if it happens in a densely connected network, the event will spread and continue to spread for long periods. So, if a network were to slowly increase in its degree of connection, the system will go from few, if any, consequences to many, even to consequences that do not die out. It will undergo a phase change. This property is a familiar hallmark of complexity.

Reference:

Arthur, W.B. (2021). Foundations of complexity economics. Nat Rev Phys 3, 136–145 (2021). DOI: 10.1038/s42254-020-00273-3

Tag: Complexity

IEEE TEMSCON 2024

Complexity Economics