Organizations as Ecosystems — Understanding Complexity, Innovation, and the Three-Body Problem at Work With Simon Holzapfel

BONUS: Organizations as Ecosystems — Understanding Complexity, Innovation, and the Three-Body Problem at Work

In this fascinating conversation about complex adaptive systems, Simon Holzapfel helps us understand why traditional planning and control methods fail in knowledge work — and what we can do instead.

Understanding Ecosystems vs. Systems

"Complex adaptive systems are complex in nature and adaptive in that they evolve over time. That's different from a static system." — Simon Holzapfel

Simon introduces the crucial distinction between mechanical systems and ecosystems. While mechanical systems are predictable and static, ecosystems — like teams and organizations — are complex, adaptive, and constantly evolving. The key difference lies in the interactions among team members, which create emergent properties that cannot be predicted by analyzing individuals separately. Managers often fall into the trap of focusing on individuals rather than the interactions between them, missing where the real magic happens. This is why understanding your organization as an ecosystem, not a machine, fundamentally changes how you lead.

In this segment, we refer to the Stella systems modeling application.

The Journey from Planning to Emergence

"I used to come into class with a lesson plan — doop, doop, doop, minute by minute agenda. And then what I realized is that I would just completely squash those questions that would often emerge from the class." — Simon Holzapfel

Simon shares his transformation from rigid classroom planning to embracing emergence. As a history and economics teacher for 10 years, he learned that over-planning kills the spontaneous insights that make learning powerful. The same principle applies to leadership: planning is essential, but over-planning wastes time and prevents novelty from emerging. The key is separating strategic planning (the "where" and "why") from tactical execution (the "how"), letting teams make local decisions while leaders focus on alignment with the bigger picture.

"Innovation Arrives Stochastically"

"Simply by noticing the locations where you've had your best ideas, we notice the stochasticness of arrival. Might be the shower, might be on a bike ride, might be sitting in traffic, might be at your desk — but often not." — Simon Holzapfel

Simon unpacks the concept of stochastic emergence — the idea that innovation cannot be scheduled or predicted in advance. Stochastic means something is predictable over large datasets but not in any given moment. You know you'll have ideas if you give yourself time and space, but you can't predict when or where they'll arrive. This has profound implications for managers who try to control when and how innovation happens. Knowledge work is about creating things that haven't existed before, so emergence is what we rely on. Try to squash it with too much control, and it simply won't happen.

In this segment, we refer to the Systems Innovation YouTube channel.

The Three-Body Problem: A Metaphor for Teams

"When you have three nonlinear functions working at the same time within a system, you have almost no ability to predict its future state beyond just some of the shortest time series data." — Simon Holzapfel

Simon uses the three-body problem from physics as a powerful metaphor for organizational complexity. In physics, when you have three bodies (like planets) influencing each other, prediction becomes nearly impossible. The same is true in business — think of R&D, manufacturing, and sales as three interacting forces. The lesson: don't think you can master this complexity. Work with it. Understand it's a system. Most variability comes from the system itself, not from any individual person. This allows us to depersonalize problems — people aren't good or bad, systems can be improved. When teams understand this, they can relax and stop treating every unpredictable moment as an emergency.

Coaching Leaders to Embrace Uncertainty

"I'll start by trying to read their comfort level. I'll ask about their favorite teachers, their most hated teachers, and I'll really try to bring them back to moments in time that were pivotal in their own development." — Simon Holzapfel

How do you help analytical, control-oriented leaders embrace complexity and emergence? Simon's approach is to build rapport first, then gently introduce concepts based on each leader's background. For technical people who prefer math, he'll discuss narrow tail distributions and fat tails. For humanities-oriented leaders, he uses narrative and storytelling. The goal is to get leaders to open up to possibilities without feeling diminished. He might suggest small experiments: "Hold your tongue once in a meeting" or "Ask questions instead of making statements." These incremental changes help managers realize they don't have to be superhuman problem-solvers who control everything.

Giving the Board a Number: The Paradox of Prediction

"Managers say we want scientific management, but they don't actually want that. They want predictive management." — Simon Holzapfel

Simon addresses one of the biggest tensions in agile adoption: leaders who say "I just need to give the board a number" while also wanting innovation and adaptability. The paradox is clear — you cannot simultaneously be open to innovation and emergent possibilities while executing a predetermined plan with perfect accuracy. This is an artifact of management literature that promoted the "philosopher king" manager who knows everything. But markets are too movable, consumer tastes vary too much, and knowledge work is too complex for any single person to control. The burnout we see in leaders often comes from trying to achieve an impossible standard.
In this segment, we refer to the episodes with David Marquet.

Resources for Understanding Complexity

"Eric Beinhocker's book called 'The Origin of Wealth' is wonderful. It's a very approachable and well-researched piece that shows where we've been and where we're going in this area." — Simon Holzapfel

Simon recommends two key resources for anyone wanting to understand complexity and ecosystems. First, Eric Beinhocker's "The Origin of Wealth" explains how we developed flawed economic assumptions based on 19th-century Newtonian physics, and why we need to evolve our understanding. Second, the Systems Innovation YouTube channel offers brilliant short videos perfect for curious, open-minded managers. Simon suggests a practical approach: have someone on your team watch a video and share what they learned. This creates shared language around complexity and makes the concepts less personal and less threatening.

The Path Forward: Systems Over Individuals

"As a manager, our goal is to constantly evaluate the performance of the system, not the people. We can always put better systems in place. We can always improve existing systems. But you can't tell people what to do — it's not possible." — Simon Holzapfel

The conversation concludes with a powerful insight from Deming's work: about 95% of a system's productivity is linked to the system itself, not individual performance. This reframes the manager's role entirely. Instead of trying to control people, focus on improving systems. Instead of treating burnout as individual failure, see it as information that something in the system isn't working. Organizations are ever-changing ecosystems with dynamic properties that can only be observed, never fully predicted. This requires a completely different way of thinking about management — one that embraces uncertainty, values emergence, and trusts teams to figure things out within clear strategic boundaries.

Recommended Resources

As recommended resources for further reading, Simon suggests:

• The Origin of Wealth, by Eric Beinhocker

• The Systems Innovation YouTube channel

About Simon Holzapfel

Simon Holzapfel is an educator, coach, and learning innovator who helps teams work with greater clarity, speed, and purpose. He specializes in separating strategy from tactics, enabling short-cycle decision-making and higher-value workflows. Simon has spent his career coaching individuals and teams to achieve performance with deeper meaning and joy. Simon is also the author of the Equonomist newsletter on Substack, where he explores the intersection of economics, equality, and equanimity in the workplace.

You can link with Simon Holzapfel on LinkedIn.