Bioform Models: So, what?
Part Three: Organizational digital twins transform strategy and decision-making by grounding management techniques in reality.
- Part One: Understand Uncertainty: From simple models to complex systems
- Part Two: Navigating Complexity: Unraveling the causal structure of real-world systems
Introduction
What if we could navigate the complexities of our companies, markets, and communities with the same intuitive understanding that a sailor navigates the sea, or a gardener tends to their garden? What if we could anticipate the ebbs and flows of the market like a sailor reads the tides and the winds, or cultivate growth in our organizations like a gardener nurtures their plants?
In the first two parts of our series, we introduced Bioform models (part one) and demonstrated their power in unraveling the intricate causal structures (part two) of complex systems.
Now, we turn our attention to the practical implications of these models, and how they comprise an organizational digital twin.
How can they transform the way we devise strategies, make decisions, and create impact? How can they help us not just survive, but thrive amidst the uncertainty and constant change of the 21st-century business* landscape?
Here, we explore how Bioform models can serve as the compass for your business, guiding you toward growth and resilience in an ever-changing world. By grounding management techniques in the reality of system dynamics we offer a novel approach to strategy formulation and execution that can drive meaningful outcomes for companies, communities, and more.
*It’s important to note: We at Bioform Labs are working on a broad tapestry of applications of these models: ecosystem stewardship, nature-backed currencies, economic development, public health, organizational resilience, product strategy and growth, and others. We use the example of a company to illustrate the potential and near-term applications of our toolkit in a familiar context. If you are interested in how these can apply to your organization or field of study — reach out!
Crafting and Executing Evidence-Based Strategy
In the complex and dynamic landscape of business, markets, and economies, crafting strategies that effectively achieve goals can be a daunting task. Traditional approaches and analytics often fall short, as they tend to oversimplify the intricate dynamics of these systems. This is where Bioform models come into play, offering a novel approach to strategy formulation and execution that is grounded in the reality of system dynamics.
To illustrate this, let’s consider an agent-based simulation. These simulations are adept at representing complex systems, such as businesses, markets, and economies. In these systems, individual agents (e.g., businesses, residents, capital allocators, policymakers, etc.) interact, leading to emergent behaviors at the system level. Prices fluctuate, buying behaviors evolve, and companies are born, grow, and fail.
Imagine you’re a group of capital allocators, such as small business lenders, with a mission to create jobs and increase wealth for the local community. The first outcome you seek is to drive the growth of the local economy. You have a range of tools at your disposal — loans, grants, investments, coaching, incubators, and more. But the challenge lies in understanding how to best utilize these tools.
How can you predict the impact of your strategy and actions on the complex, interdependent system that is your local economy? It’s akin to a gardener knowing when to water, when to prune, and when to plant, or a sailor adjusting sails to the changing winds. Each action has a ripple effect, and understanding these dynamics is key to effective decision-making.
In our simulated market, we used Bioform models to guide us toward two significant causal factors that could impact the size of the market: the pricing of items and the failure rate of businesses.
Armed with this evidence and insight, we adjusted the parameters of the simulation, lowering prices to stimulate sales. This represents a type of incentive program for community members to receive discounts when they shop locally. We also decreased the chance of a business closing if it didn’t have any recent sales, reflecting a form of backup capital or loan concessions or modifications for businesses going through a slow period.
After re-running the agent-based simulation a number of times with these adjustments, the results were striking. We observed a range of 27%-30% increase in the number of purchases and a 5%-8% increase in overall revenue from the stores, indicating a significant expansion in the size of the economy.
This example underscores the unique value of Bioform models. They allow us to hypothesize, test, and observe the effects of changes on a complex system, providing insights that can guide real-world strategies and decisions.
Unlike traditional techniques that often rely on abstract assumptions, Bioform models are rooted in evidence of the actual dynamics of the system. They infer the causal structure from the system’s behavior, providing a realistic and actionable understanding of the system. (For more on this, revisit parts one and two.) This grounding in reality is what enables Bioform models to emulate markets, companies, and other complex systems, providing a powerful tool for decision-making in an uncertain world.
Consider a CEO aiming to reach profitability, a VP of Product developing and launching new products, or an equity analyst providing investors with success factors to watch for a company. In each of these scenarios, Bioform models can emulate different strategies and scenarios, providing insights that guide decision-making.
For the CEO, it might be understanding not just the direct impact of customer retention on revenue growth, but also the ripple effects it could have on other aspects of the business. For instance, how does improved customer retention influence the company’s reputation, and how might that, in turn, affect the ability to attract new customers or negotiate better terms with suppliers?
For the VP of Product, Bioform models could help predict not only the initial market response to a new product, but also the longer-term implications. How might the new product affect the sales of existing products? How could it change the company’s competitive positioning, and what might be the subsequent responses from competitors?
And for the analyst, Bioform models could help uncover not just the immediate impact of interest rate changes on a company’s financial health, but also the less obvious, downstream effects. For instance, how might changes in interest rates influence the company’s ability to invest in research and development? And how could this, in turn, affect the company’s innovation pipeline, its competitive positioning in the market, and ultimately, its long-term growth prospects? Furthermore, how might these changes impact the broader industry dynamics and market sentiment, and what implications could this have for the company’s stock performance?
In essence, Bioform models offer a new approach to strategy formulation and execution. They enable us to understand the intricate dynamics of complex systems, identify key causal factors, and make informed decisions that effectively achieve our goals. This is the power of Bioform models, and it’s a game-changer for strategy in the 21st century.
The Underlying “Code” of Reality
This simulation also serves as a useful illustration of how Bioform models function. In the agent-based simulation, we have access to the underlying code, which defines the system’s functioning and structure. This gives us a sort of “god’s eye view” of the system’s workings.
However, in the real world, we (obviously) don’t have the luxury of directly accessing the underlying “code” of how systems function. We need to infer our way to an understanding, which is precisely what Bioform models do. They infer the causal structure of the system, discerning the rules and relationships that govern the system’s behavior.
But this is where Bioform models excel. They are designed to infer the causal structure of complex systems, to understand the “code” that governs their behavior. And with this understanding, we can interact with these systems in a more informed and effective way.
In other words, Bioforms enable us to understand their inner workings and navigate their complexities with greater confidence and precision. This ability to infer the underlying “code” of reality is what sets Bioform models apart, and it’s what makes them such a powerful tool for making smarter, more informed decisions.
To Improve the World, Emulate It
“There is no better way to understand ourselves than to emulate ourselves.”
– Judea Pearl, AI Pioneer, Author of the Book of Why
The power of Bioform models lies not just in their ability to simulate complex systems, but to emulate them. While a simulation creates a model to represent a system, emulation goes a step further. It not only represents the system but also reproduces its behaviors under different conditions. In our case, the model successfully predicted purchase behaviors in a simulated market based on its underlying dynamics. And with this understanding, we were able to “act” on it, just like a business leader or a policy maker would.
This capability is transformative. Imagine having a digital twin of your organization or market that you can experiment with, learn from, and use to inform your decisions–and even to predict the impact of your strategy. It’s a level of understanding and control that was previously out of reach for most businesses, and it’s all made possible by Bioform models.
Consider the role of a business leader. You have goals for your organization, such as growing your business, improving customer satisfaction, or driving innovation. Bioform models allow you to understand the causal structure of your organization and its environment, identify the key factors that can drive your desired outcomes, and then “act” on your system to achieve your goals.
This approach mirrors how every living organism operates. They constantly adapt to and act upon their environment, learning from their experiences and making decisions that enhance their survival and growth. Bioform models bring this same adaptive, learning-oriented approach to the business world, enabling companies to navigate their complex, ever-changing environments with unprecedented agility and insight.
In essence, Bioform models equip you with a gardener’s understanding of your business. Just as a master gardener builds up an understanding of the interconnectedness and intricate relationships between the soil, the weather, and the plants in their garden, Bioform models help you understand the intricate relationships within your business and its environment. With this understanding, you can cultivate growth and resilience in your organization, just like a gardener cultivates growth in their garden.
Embracing Complexity
What sets Bioform models apart from traditional business tools and techniques? The key difference lies in how they approach complexity.
Traditional management techniques, rooted in Taylorism, have often treated complex systems as if they were deterministic models, like a pendulum swinging predictably back and forth. But as we navigate the 21st century, one thing is becoming increasingly clear: the world is not a pendulum. The systems that are top of mind for us, collectively — markets, organizations, and communities — are much more like living systems that interact with their surroundings than simple machines. They’re complex, uncertain, and always changing. And if we want to thrive in this world, we need tools that can handle this complexity and uncertainty.
Bioform models, by continuously adapting to new information, offer a more sophisticated approach. They allow us to ask and answer new types of questions that delve into the causal structure of systems. This capability stems from their grounding in reality, and their ability to reflect the true functioning and operation of a system.
Consider the following business-related questions:
- What actions and policies are most likely to achieve our goals?
- How would a change in our pricing strategy affect our market share?
- What impact would a new marketing campaign have on our customer acquisition rate?
- We aim to grow our Annual Recurring Revenue (ARR) by 20% — what steps should we take to achieve this?
- How would a redesign of our product affect our supply chain?
- Where does the most uncertainty lie within our organization, and how does it propagate through our operations?
- Is our current strategy still effective in the face of new market conditions, or do we need to adapt?
Bioform models can help answer these questions–and do so with a level of certainty, to boot. They go beyond mere pattern recognition, enabling us to explore potential cause-and-effect relationships, understand the behavior of the company, and make evidence-based decisions.
The Future is Bioform(ation)
But perhaps most importantly, Bioform models offer a new way of thinking about and interacting with the world. They encourage us to embrace complexity rather than shy away from it, to seek understanding rather than certainty, and to adapt and learn rather than control and predict. They remind us that, like the systems we seek to understand, we too are part of the complex, ever-changing tapestry of life.
The future of business is not deterministic, but adaptive. It’s not about controlling the pendulum, but navigating the sea and the garden. And with Bioform models as our compass and our gardening tools, we are well-equipped to flourish in this new era.
And this is just the beginning. As we look to the horizon, we see the emergence of a new concept — an Emergent Operating System (eOS) for companies, born from Bioform models, that equips companies with the ability to adapt, evolve, and prosper amidst the ever-changing business landscape.
Stay tuned as we continue to explore the vast potential of the Bioform model, and how they can revolutionize the way we understand and interact with the world. The future is not just about predicting, but about adapting and evolving.
Sign-up for Early Access
We invite you to join us on this exciting journey. By signing up for early access to our platform, you’ll be among the first to experience the power of Bioform models and their transformative potential.
Getting started with Bioform models is easier than you might think. You don’t need a team of data scientists or a massive dataset. All you need is a willingness to embrace complexity and uncertainty, and a desire to make better, evidence-based decisions.
Whether you’re looking to uncover unexpected causal relationships to drive growth or something else, we’re here to help. Reach out to us at joshua@bioformlabs.org or cory@bioformlabs.org. Let’s explore together how Bioform models can provide the insights you need to tackle your unique challenges and opportunities.
Onwards and upwards 🙏
