German Character and Complexity

In a new Vanity Fair article on the role of the Germans in the international financial crisis, Michael Lewis, the author of the trenchant Big Short, reports on an interview road trip he takes to try to understand the character of the people who were on the other side of the Wall Street bets that sent the world economy into crisis. His portrait describes the Bankers at state owed banks, who bought huge quantities of junk financial products from Wall Street, as loyal, bureaucratic, and unbelievably trusting and naive. He characterizes the fault which lead to the disastrous international investment policies of the Landesbanken in a scatological metaphor which is supposed to show up a general German psychological and cultural orientation to rules-based thinking.

Lewis’ metaphor explains certain failures, especially in the political and state bureaucracies, but also misses most of what makes Germany successful (and makes clear how removed Anglo-Saxon instincts are from German attitudes to business). Germans would not have achieved what they in the last decades if they were just a nation of anal-retentive control freaks. But his story also hits a nerve. As my colleague and I are in the middle of designing a company to bring SenseMaker and complexity approaches to Germany in an innovation context, Lewis’ insight into the ordered systems tendency of German culture poses an interesting challenge.

As a rules-based society, Germany has a genuine meritocracy in which good ideas float to the top and people take genuine pleasure in mastering complex challenges to create quality in what they do. For those of us, for example, who have experienced incompetent bureaucracies in other countries, the attention to effectiveness of the German system is a great relief (not to mention the joys provided us by the automobile engineers and the hope created by advanced environmental policy and technology). At the same time, our love of order tends to work against complex decision-making in many contexts. In my experience, rule-based thinking does tend to act as a kind of default preference in the event of crises, even in the face of challenges which are not amenable to optimization approaches.

There is great opportunity in this combination of successful rule-based thinking and the complexity of current challenges. We need only to overcome the bottlenecks in thinking and strategy created by excessive adherence to rules in order to develop the next level of solutions. Our bet is that there are many decision makers who share this insight and are looking for effective methods to help them to proceed. We don’t think that this involves a cultural revolution (witness the large number of top level innovators coming out of Germany). Rather, certain levels of complexity first become possible when one has done one’s homework on the rules-based levels. In any case, we are very much looking forward to consulting projects we are developing using the insights of complexity theory and methods we have learned at Cognitive Edge.