Fractal Dynamics and CSR By Pravir Malik Managing Director, Advisory…

Fractal Dynamics and
CSR

By Pravir Malik
Managing Director, Advisory Services
Business for Social Responsibility




Prepared
January 2007
About Business for Social Responsibility
Since 1992, non-profit Business for Social Responsibility (BSR) has been a leading provider
of innovative business solutions to many of the world's leading corporations. Headquartered
in San Francisco and with offices in Paris and Guangzhou, China, BSR is a nonprofit
business association that serves its 250 member companies and other Global 1000
enterprises. Through advisory services, convening and research, BSR works with corporations
and their stakeholders to create a more just and sustainable global economy. For more
information, visit www.bsr.org.


About the Author
Pravir Malik is Managing Director of Advisory Services at BSR. He is also the founder of
Aurosoorya (www.aurosoorya.com) and the architect behind fractal dynamics as applied to
complex organizational entities. Please contact him at pmalik@bsr.org for more details on
applying fractal dynamics to address CSR problems or to organize a fractal dynamics
workshop. You may also begin to explore CSR aspects of fractal dynamics to a greater extent
on the BSR website at www.bsr.org/fractaldynamics.

The author welcomes you to explore related online tools from Aurosoorya at
www.fractalkey.com.


Note:
BSR publishes occasional papers as a contribution to the understanding of the role of
business in society and the trends related to corporate social responsibility and responsible
business practices. The views expressed in this publication are those of its author and do not
necessarily represent the views of BSR or its member companies.

BSR maintains a policy of not acting as a representative of its membership, nor does it
endorse specific policies or standards.

Copyright © 2007 by Business for Social Responsibility (www.bsr.org). This publication
may be used for educational or not-for-profit purposes with attribution; all other rights
reserved. For permissions inquiries, please visit www.bsr.org/meta/about/contactus.cfm.

BSR is a not-for-profit membership organization that seeks to create a more just and
sustainable global economy by working with the business community.




Business for Social Responsibility | Fractal Dynamics and CSR                                    1
Fractal Dynamics and CSR
By Pravir Malik, Managing Director, Advisory Services at Business for Social Responsibility


Albert Einstein remarked, "The world we have created is a product of our thinking; it cannot be
changed without changing our thinking." What is notable about this statement, besides the
implication that solving dilemmas requires a different framing, is that there is a fractal
embedded in it. The world is linked to our thinking--two different layers of reality are
connected together by a common pattern. This article probes the use of fractals in "changing
our thinking" and begins to apply fractals to some of the dilemmas we face in the field of
corporate social responsibility (CSR).


Why Fractals?
Fractals are patterns that repeat themselves on different scales. A common example is
broccoli, where the base-pattern (floret) repeats itself to determine each subsequent level and
the final shape of the broccoli. The discovery that Nature has designed many structures,
including the most trivial, across physical reality with such economy and foresight has placed
significant shaping power into the hands of engineers and scientists.

Recent research conducted by systems-based solution center Aurosoorya (summarized in my
"An Introduction to Fractal Dynamics" in the October 2004 issue of the Journal of Human
Values), indicates that a vast range of dynamic phenomena in life, including individual
behavior, functioning of teams and organizations, market dynamics, movement in economies
and even movement of encompassing systems such as the environment and society similarly
display fractal dynamics.

Do complex organizational structures also exhibit fractal properties? If so, there are a couple
of significant implications.

First, study of fractals in organizations involves self-similar patterns across different scale.
Here, scale can be thought of as the different layers that comprise an organization, including
the individual, the team, the corporation itself, the markets in which the corporation
operates, the environment and the societies in which the corporation is involved. Examining
self-similar patterns in these layers inevitably thrusts us into the heart of CSR, which focuses
on the practical interaction between these layers.

Second, since a fractal is perhaps Nature's most efficient manifestation of a system, fractal
representation of organizations could provide a powerful and efficient systems framework to
represent and address complex organizational problems that are common in the field of CSR.




Business for Social Responsibility | Fractal Dynamics and CSR                                      2
Applying Fractal Dynamics to CSR
What is unique about a fractal system is that the base-pattern (such as the floret of broccoli)
determines the structure of the entire system. Discover and change the base-pattern, and the
entire system can change as a result. In Aurosoorya's research, an organizational base-pattern
that determines the nature of an organizational system has been identified. This pattern,
referred to as the organizational-fractal, is characterized by progression through three phases:

     ·     The physical phase can be thought of as a range of experience where organizations,
           individuals and markets are viewed as unchangeable.
     ·     The vital phase can be thought of as a range of experience where experiment, often of
           an assertive nature and involving diverse flows (even flows of emotion), is the most
           important motive.
     ·     The mental phase can be thought of as a range of experience where organization
           around ideas and by the intellect is the most important motive.

Each subsequent phase provides the controlling entity with greater degrees of freedom to
shape reality. If the base-pattern of an organization exists at the physical level, then the entire
resulting system will also tend to exist at the physical level; circumstances may not be viewed
holistically, and externalities and hidden costs to the organization will be high. As the base-
pattern progresses through the vital and the mental phases, the entire system progresses, and
externalities and hidden costs are reduced. This is significant given that a major thrust in
CSR is about reducing externalities and hidden costs.

As an example, in the energy industry there are three primary strategies: extraction, efficiency
and development of alternatives. It is easy to think of these strategies as unrelated, but on
closer examination they map onto the organizational-fractal: "extraction" (maximizing
energy from a "fixed" world) maps onto the physical phase, "efficiency" (optimizing the
"flow" of extracted energy) maps to the vital phase and "development of alternatives" ("out
of the box thinking") maps to the mental phase.

Some insights derived from the realization that these strategies are part of a single fractal-
system include:
    · There is a sequential reality to the emergence of the fundamental strategies. The most
        active strategy may today be extraction, but it will tend towards efficiency and then
        on to development of alternatives.
    · To continue with a strategy that is at a lower level creates externalities that will
        become the force that propels the industry to a higher level.
    · Failure to act on externalities not only blocks but, in the longer term, substantially
        retards progress. To go against the nature of the seed (or the progression through the
        three phases) is to destroy the springs of vitality.
    · What is at the physical level represents the past; what is at the mental level represents
        the future.
    · The parts of an industry or organization that have created progressive strategies have
        likely done so by creating conditions that have allowed the base-pattern to shift from
        physical to vital to mental.



Business for Social Responsibility | Fractal Dynamics and CSR                                      3
     ·     The base-pattern is the most important element in proactively shifting an
           organization or industry toward the higher levels. The key problem is how to
           facilitate the movement of the base-pattern from physical to vital to mental.
     ·     Thought at the individual level must change. There is an infinite amount of energy
           all around us--in the atom, from the sun. The scarcity is in our thoughts, which may
           be stuck at a physical or vital level and are unable to envision possibilities that lie
           beyond these levels.
     ·     Subsequent layers (for example, teams, organizational culture or approach to market)
           should be designed to encourage movement from physical to vital to mental at that
           layer. But of critical importance is the design of those layers to facilitate base-pattern
           movement and to become more receptive to shifts that occur at the base-level.
     ·     Unlike the base-pattern that is found in fractal systems across physical Nature,
           organizational base-patterns, and thus the entire organizational-system, can be
           changed.


What Is Next?
Fractal dynamics provides insight into some fundamental questions about the future of CSR.
How might the field of CSR evolve? Will there be a need for CSR? How can a progressive
and sustainable economy be established? How can corporate attention shift from current
compliance-based practices of establishing codes of conduct to a fundamental corporate
repurposing based on truly addressing human, social and environmental needs?

It is perhaps of little surprise that fractal dynamics was intuitively grasped by such effective
individuals as Gandhi and Einstein many decades ago. Gandhi is known to have stated,
"Become the change that you wish to see in the world." This statement is imbued with fractal
reality: by changing the base-pattern ("Become the change..."), the subsequent levels of an
organization, and its entire interaction and approach to the market, environment and
society, are also fundamentally changed.




Business for Social Responsibility | Fractal Dynamics and CSR                                       4