August 1, 2018

3 reasons why Enterprise Architects should focus on Game Theory

BY :     August 1, 2018

Software is eating the world, and for us Enterprise Architects, this is not new. The more special developments are, the more we hear: “Agile is eating our companies”. This has an enormous impact on enterprises. Here are three reasons why Enterprise Architects should start specializing in Game Theory.

Reason 1- Evolutionary Game Theory & Agile at scale 

The era of command & control and strategic planning is over. The global society is transforming to empower small autonomous teams. These teams operate as small organizations in a big enterprise, forming together an ecosystem.  

Mindset Shifts For Organizational Transformation Mindset Shifts For Organizational Transformation
Source link:  http://qaspire.com/2015/11/23/mindset-shifts-for-organizational-transformation/ 

An ecosystem evolves according to the rules of nature. One way to predict how populations  will evolve is by making use of Game Theory. This is called Evolutionary Game Theory.

Even when our organization consists of autonomous teams, we still have the urge to guide the swarm in a certain direction, for example a certain market focus, a certain style of communication, compliance to PCI, HIPAA, GDPR, etc. We need to learn the fundamentals of Game Theory to influence the evolution of our population inside our enterprise ecosystem.

In his blog, Christian Jantzen describes Game Theory in a startup ecosystem and includes a nice video that introduces its effects.

https://www.youtube.com/watch?v=BOvAbjfJ0x0

Summary reason 1 – Enterprise is an ecosystem

Since an enterprise is an ecosystem of people and teams, Game Theory should be part of the Enterprise Architect toolkit to guide and predict the evolution of the organization.

Reason 2 – Game Theory and (bitcoin) blockchain

At this moment (July 2018),  bitcoin blockchain is the only open, permission-less blockchain solution out there. We still do not know of any hacks that can destroy or compromise the system.

When you look at the second biggest blockchain implementation – Ethereum, you see that people try to cheat the system via (bugs in) smart contractsetc. This has already resulted in a hard fork in the code. This is a very impactful move to undo an action of a malicious user.

You can fork software but it is not ideal to fork your organization. So it is very interesting to know what makes bitcoin different from Ethereum in regard to users trying to cheat the system?

One of the most prominent theories around is that the Game Theory behind Bitcoin motivates people to play along and not cheat the system.

Game Theory does not have a long history in the field of digital assets and with the behavior of people in this field. As a result, many people are writing exploratory papers on the subject nowadays but there isn’t much evidence yet on its leading principles. Below is a small selection of writings on the evolution of Game Theory within the blockchain ecosystems.

Game Theory and Bitcoin Blockchain

  1. Game Theory and Blockchain
  2. What is Cryptocurrency Game Theory: A Basic introduction
  3. How Game Theory Helps Blockchain Tell The Truth About The World
  4. Understanding Crypto-Economic Security through Game Theory
Summary reason 2 – Persuade to play the game by the rules

Game Theory is a tool that should be part of the Enterprise Architect toolkit to seduce/persuade people against tampering with the architecture principles that form the fabric of the enterprise.

Reason 3: Systems Engineering & Game Theory

The modern Enterprise is evolving into not only a collection of autonomous teams but also into more and more small applications. The trend is to break down monolithic systems, which on their part evolve into micro-services and Function as a Service (FaaS). The driving force behind this is the evolution within teams to the usage of Continuous Integration (CI) and Continuous Deployments (CD). Some organizations are using temporary (micro) teams that are created to fix a specific feature or bug and then dissolved.

Chaos and non-deterministic behavior

When you combine systems with a few input variables into one ecosystem, you create a chaotic system.  An example of the simplest chaotic system is the double rod pendulum (tip: also search for triple rod pendulum videos). Clause Witz has a nice collection of Chaotic System demonstrators.

Chaos: When the present determines the future, but the approximate present does not approximately determine the future.” – Wikipedia

A non-deterministic system is not easy to govern and control. The field of Systems Engineering is the academic approach to make sure your system as a whole operates  properly. The field that has a focus on enterprises is called “Enterprise Systems Engineering” and Game Theory is part of this field.

Systems Engineering and Enterprise Architecture

“One type of enterprise architecture that supports agility is a non-hierarchical organization without a single point of control. Individuals function autonomously, constantly interacting with each other to define the vision and aims, maintain a common understanding of requirements and monitor the work that needs to be done.” – Systems-Engineering Body Of Knowledge

Summary reason 3 – System(s) with non deterministic behavior

An organization that consists of only emergent autonomous teams is determined to display natural non-deterministic behavior. Game Theory is a tool that should be part of the Enterprise Systems engineering capabilities to guide the chaotic behavior to stay within given parameters, for example law and regulation.

Where to start

Where you would start depends on your familiarity with the topic and style of learning. Coursera and Goodreads could be good options to explore. Wikipedia can provide basic information and useful suggested readings.

Please leave a comment and join the conversation around the following question:

How should we combine Enterprise Architecture, Game Theory, Enterprise Engineering and Organizational Behavior Management in a non-complex way?

Coursera
  1. Game Theory I (Stanford University, The University of British Columbia)
  2. Overview of Systems Engineering Courses
Goodreads
  1. Game Theory: A Nontechnical Introduction by Morton D. Davis
  2. Algorithmic Game Theory by Noam Nisan
  3. An Introduction to Game Theory by Martin J. Osborne
Wikipedia
  1. Behavioral game theory
  2. List of games in Game Theory
  3. Systems Engineering
  4. Enterprise Systems Engineering
  5. Overview of Systems Engineering Universities
Edzo Botjes

About

Edzo Botjes is an Enterprise Engineer with more than 15+ years experience. His believe is that Enterprise Engineering covers not only Enterprise Architecture but also the skills needed to realistically implement innovation, governance and architecture. This implies that Group Psychology, IT Security Architecture, Technology Innovation and Ethics are a few topics that should be included into the developing strategy and architecture. Edzo is currently working on a Blockchain Reference Architecture and separately active as Principal Architect PKI.

More on Edzo Botjes.

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    *Opinions expressed on this blog reflect the writer’s views and not the position of the Sogeti Group