Science Lessons in the Mountains of New Mexico

[se7en <se7en@dis.org>]

Cryptography may not academic science's only contribution to making 
business work in an unpredictable, technology-driven world. If a growing 
community of natural scientists, social scientists, and business 
theorists are right, then the cryptographic algorithms taht make 
electronic transactions secure will soon seem downright prosaic.

This unusual admixture of pure researchers and real-world practitioners 
tends to congregate around research institutions in New Mexico, which has 
been a scientific hotbed ever since the atomic bomb project of the 1940s.

The current thinkers are looking into not just mathematical complexity, 
but complexity itself. Complexity theory. Complex systems of any 
definition--the weather, perhaps, or the human immune system, or the 
organizational behavior of insects--and how their workings and 
adaptations might hold lessons for other fields, not least business.
 
It all comes together at the Santa Fe Institute, at a hilltop cul de sac 
just far enough removed from the New Mexico tourist mecca to give a small 
community of visiting researchers the distance and quiet they need to 
contemplate anything from the microbial to the cosmic.

The Santa Fe Institute was founded in 1984 on the idea that molecular 
biologists, cosmologists, and virtually any other specialists could make 
interdisciplinary breakthroughs through shared perspectives. 

"Putting people together from different fields is what we do," said 
institute vice president L.M. "Mike" Simmons. "The theme is 
multidisciplinary research on complex systems."

"This is a place where people can get away, exchange ideas, and learn 
from each other--to harness creativity at the boundries between fields."

In a classic example, immune-system research cross-pollinated with 
computer science and produced a computer security technique that protects 
against viruses and other attacks.

Business and economics are very much in the mix with earth sciences, 
genetics, and advanced products of computer science like adaptive 
computation, machine learning, and artificial life. Software guru Esther 
Dyson, retired BankAmerica Corp. chairman Leland Prussia, and Stewart 
Brand of Whole Earth Catalog fame are institute trustees.
 
Kenneth Arrow, the Stanford University economist and Nobel Prize winner, 
sits on the institute's science board. The board's co-chairmen are 
trustees Murray Gell-Mann, a Nobel Laureate in physics from California 
Institute of Technology, and John Holland, a leading complexity theorist 
from the University of Michigan.

Prof. Gell-Mann happens to be "in residence" on the subject of 
"complexity, entropy, and teh physics of information."

In 1994, Santa Fe Institute launched a Business Network for Complex 
Systems Research. The more than 25 members include Allied/Signal, Boston 
Consulting Group, John Deere, Ernst & Young, McKinsey & Co., Pacific 
Bell, Shell, and one financial services representative--Citicorp.

The members each pay $25,000 a year to support the institute's complex 
systems research. In return, they have access to the research and the 
scientists, meet periodically to pursue and share lessons, and nad send 
representatives to summer school to rub shoulders with doctoral fellows.

Citicorp has sadi little about its involvement or what it gets out of it. 
"They've been a big supporter since our first economics program in 1987," 
Mr. Simmons said. "I can only conclude that they support the mission of 
pure research."

Citicorp has gone so far as to endow a Santa Fe Institute professorship, 
held by Stanford economist Brain Arthur, who directs the program on "The 
Economy as a Complex Adaptive System." Mr. Arthur has done some deep 
thinking about how knowledge- and information-based economic forces turn 
the iron law of diminishing returns on its head. His notion of 
"increasing returns"--defined by Wired magazine as "the more you sell, 
the more you sell"--influenced the Justice Department in its decision to 
block the proposed Microsoft-Intuit merger last year.

Mr. Arthur presumably has influenced Citicorp's strategic thinking. Colin 
Crook, the bank's chief technology officer, quotes him liberally in 
campaigning for a more "adaptive" organization and culture.

Meanwhile, the Citicorp-Santa Fe axis is spawning synergistic byproducts 
of its own.

The Financial Services Technology Consortium, a group of 14 mostly large 
U.S. banks that Citicorp organized to explore and test emerging payment 
and communications technologies, has worked closely with the Department 
of Energy's national research laboratories. Santa Fe is conveniently 
situated between two of them--Sandia, to the south in Albuquerque, and 
Los Alamos, a half-hour drive northwest--and many consortium meetings 
have been held in the area on such subjects as data security, biometric 
identification, and fraud control. 

Plenty of Los Alamos brainpower--Mr. Simmons himself spent much of his 
career there--is now concentrated at the Santa Fe Institute.

The Smart Card Forum, another initiative of Mr. Crook's Citicorp 
technology office, has parallel Santa Fe connections that may be getting 
stronger. Catherine Allen, the former Citibank vice president and 
founding chairman of the Smart Card Forum, has settled in New Mexico to 
launch a consulting firm, the Santa Fe Group. She expects to keep working 
for the forum and on card-technology advances while pursuing new ideas 
and business opportunities in emerging management and complexity theories.

Ms. Allen has developed close ties to the Santa Fe Center for Management 
Strategy, which has been trying to link the Santa Fe Institute principles 
with business problems in a seminar series called "Complexity and 
Strategy in Action." The collaboration may result in one or more ongoing 
forums to expose business people from various industries and disciplines 
to the new ideas. 

The management center was organized by Howard Sherman, a successful 
franchising enteprenuer, one-time philosophy professor, and member of the 
Santa Fe Institute's business network, whose intellectual quest runs from 
Plato and Aristotle through Kant to Einstein and Brian Arthur.

"Brian Arthur has said that all business problems and failures are 
cognitive problems and failures," Mr. Sherman said. "I am interested in 
the impact of complexity on what he and I call "the cognitive."

se7en

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Resources:

Los Alamos National Laboratory
Industrial Partnership Office
Irene Gabel 505-665-2133

The Santa Fe Group
Catherine Allen
505-466-6434

Santa Fe Institute
Bruce Abell or Mike Simmons
505-984-8800

Santa Fe Center for Management Strategy
Howard Sherman
505-466-7901

Sandia National Laboratories
Technology Transfer and
Commercialization Center
Warren Siemens 505-843-4200