The level of synchronicity is pivotal for the agility of social systems such as business families and takes precedence over the traditional family governance practices, especially when they are in a quasi-legal format.

Business families introduce complexity in decision-making processes through the family effect. We look at the challenges these families are facing to provide the basis for this paper. We then explore what synchronicity means in this context and discuss the outcomes and meaning in the light of family governance and how functional synchronicity is key to social-system efficacy that creates social capital and why dysfunctional synchronicity erodes it in significantly less time than it took to built.

Introduction

A culture of cohesion does impact on the external and internal social capital which are significant and quantifiable family-business advantages in terms of valuation. Family businesses are opaque and less transparent that non-family firms. In a world of high information asymmetry, status signals are very valuable, especially when they costly to imitate. Sending the status signal ‘family business with significant internal and external social capital’ demands a premium on the valuation of a family business in M&A transactions[1].

Thus, it is conceivable, that investing in the social system of a family enterprise leads to tangible performance and valuation premiums.

Business families are social systems characterized by continuous processes of coordination through verbal and non-verbal communication. Specifically, they are complex, socio-economic, dynamical systems with at least 3 layers: a macro level that describes the system, micro systems that describe the individuals that make up the macro-level and meso-levels i.e., clusters of individuals bound together by sympathy (cliques) or on a functional level based on the 3-circle model suggested by Renato Tagiuri and Professor A. Davies[2].

Accordingly, groups must be understood and investigated beyond well-defined roles, norms and identities as distinct groups but as overlapping social networks.

Business family systems are self-organizing systems, i.e., there is not one super-master or blue-print guiding and controlling the outcome of the system-evolution.

They share a common concern, goal, and exhibit shared attention but with multi-stability, i.e., the systems trajectory is shaped buy more than one attractor resp. repeller.

The system is prone to endogenous shocks and/or exogenous shocks. These shocks send the system into a transition phase while it changes trajectory. The carrying and adaption capacity of the system defines how resilient the system is. Any combination of shocks in number or magnitudes that result in impacts exceeding the system’s carrying and adaption capacity will tip the system into bifurcation or chaos, which depends on the number of freedom-degrees a system features.

In a recent study by the Cambridge Institute for Family Enterprises and Citi Private Bank[3], the respondents were concerned about difficult to navigate times in the 2020s described as a VUCA environment in an ever-growing interconnected world with more frequent and faster changes than ever.

Sources for exogenous shocks could be:

Socio-economic and (geo) political dynamics
Environmental changes and challenges
Technological disruptions
…

Endogenous shocks can emanate from:

Marriage & divorces
A newborn baby which could be a successor
Widening diaspora and cultural differences
Societal impulses like democracy, diversity, and inclusion
The drive for self-actualization
Generational divide and longevity of predecessors
- Intergenerational communication / different belief-bubbles
Succession planning: transfer and transition of wealth and governance
…

The effective response to these perturbations relies on identifying signals of change and change of change (gamma), agility, and the attitude of ‘perpetual beta’, the commitment to constant self-improvement by updating beliefs, gathering, and synthesizing multiple perspectives with an active open mindset[4]. It is the art to embrace complexity and create carrying resp. adaption capacity within the social system, which requires a dynamical state of synchronization.

Synchronization is formative for social relations and promotes rapport [between the constituents] (Chatrand & Bargh, 1999, Dijksterhus 2008), makes groups resilient or even antifragile and more predictable, which is essential for service providers who want to serve family enterprises efficiently and effectively.

Phase Transitions and ‘transegrity’

Phase transitions in social change processes are triggered by an event, that causes a perturbation of an intensity that goes beyond a certain threshold of the systems, manifesting itself in action dynamics between the local level, meso- and macro level that influence each other reflexively across all family enterprise domains that John A. Davies proposed in his 3-circle model[5] within a given context that is defined by the immediate and wider socio-economic and geo-political environment.

On a meso level, i.e., the family circle, family business circle and owner circle and their overlaps have different subjective realities. That is in addition to the different subjective realities we meet on a micro level e.g., in social dyads, which are influenced by the pattering on a meso-and macro level the (the whole system, embedded in the influential social environment of which everyone is a part of. Over time, the micro-and meso-level shape the macro level.

Different subjective realities in a desynchronized state result in tension-build up and tension-releases, translating into endogenous shocks that perturb the social system.

Exogenous shocks are impulses from the environment, e.g., geo-political, ecological, and socio-economic shocks that impact on the family enterprise system and trigger resp. accelerate system transitions (see Graph 1.1). Conversely, the family system also influences the immediate socio-economic environment.

Graph 1[6]: Social system of a family enterprise

Constantly evolving external context, given by the socio-economic and geo-political environment, other external influences arising from societal impulses, cultural norms, advisor ecosystem…

Endogenous and exogenous shocks can send the entire family enterprise system into a transition phase which is not linear as illustrated below.

Graph 1.1[7]: Generic Transition Model for family enterprise social system

The predevelopment phase can be interpreted as the initial condition X_0,and the stabilization phase is a meta-stable state, where the system is temporarily stationary. Mind you, it can be a positive or negative state.

The greatest criticality is the acceleration phase where changes are happening very fast. It is a phase transition of 2^nd order. A system without sufficient adaption capacity risks tipping into chaos, followed by a stabilization phase after the system has reorganized itself but it may fragment during transition. The social system is therefore losing efficacy, eroding the likelihood of transgenerational, social, and financial capital preservation resp. creation.

Chaos

Chaos is a situation with dynamics that go beyond oscillation (short for recurrence of states) where auto correlation functions go to zero, hence predictions of any sort on any timeline are impossible as everything is seemingly random without repeating patterns in certain time periods. It is a situation of indescribable complexity, an incomprehensible primordial state also termed tohuwabohu[8].

The logistical map is a simple deterministic system with 2 opposing forces that can produce chaos, dependent on an order parameter.

It’s a system with a negative feed-back-loop that produces chaos dynamics when the carrying capacity is exceeded resp. the adaption capacity is insufficient.

Equation 1:

x_t+1 = x₀δ (1 – x_t)

With:

0 ≤ x_t ≤ 1 : current state of the system (fraction of the maximum carrying capacity)

0 ≤ x_t+1 ≤ 1 : state of the system subsequent time period

0 < x₀ ≤ 1 = initial state of the system (initial condition)

δ = Change rate – a control or order parameter

δ ≤ 1 : extinction

δ = 1 : stable and stationary

δ > 1 : growth dynamics

Examples of opposing forces for tension build-up and tension-release are:

Conflicting roles, norm perceptions, interpretations and logics arising from the 3-circle model depicted in graph 1:
- The business favours earning retention for growth x₀δ vs. excessive dividend demands from owners (1 – x_t)
- Family-owners’ business growth requirements x₀δ vs. underperforming owner-family CEO (1 – x_t)
- Thriving family-owners x₀δ vs. envying non-owning family members (1 – x_t)
- …
Goal divergence: next generation wants x₀δ, the predecessor generation wants (1 – x_t) eg., in succession dilemmas
Any form of cooperation x₀δ vs. competition (1 – x_t)
Personal impulses x₀δ vs. self-control (1 – x_t) e.g., in succession dilemmas
…

Graph 2: Logistical Map as a function of the change rate :

The graph shows that a change rate of 1 < δ ≤ 3 keeps the system grow smoothly and balanced as the competing atrophy term (1 – x_t) works as a balancing feed-back loop or, depending on the control or order parameter δ, induces bifurcations or even chaos.

This could also be interpreted as old generations dying away or making room for next gen or other counteractive measures that are taken to balance the trajectory of the system (point attractor), a concept dubbed ‘transegrity’[9] or tensional integrity, which we also find in the brain (functional transegrity) where excitatory and inhibitory forces lead to useful behavioural outcomes.

With a fast change of the change rate δ from let’s say 1.5 to 3.45, (γ = 130%!) the system starts to bifurcate and oscillates between 2 significantly different states. At δ > 3.55 the system becomes even more unstable for all initial conditions x₀ and tips into chaos from 3.6 onwards. The system never revisits the same state (hysteresis).

This example illustrates that in the absence of adaption capacity, change rates δ and the speed of change (the second derivative referred to as γ in option pricing models) can have a profound impact on the family system that is now in a state of complete entropy.

We can influence x₀ which has initially great effects on chaos dynamics until δ = 3.55 We are limited in influencing δ or γ, so we need to create adaption capacity by introducing freedom degrees that allow us to respond with agility to the given parameters and bring the system back to an equivalent of 1 < δ ≤ 3 resp. create a functional x₀ for functional attractors to emerge.

The usual response is family governance with a family constitution that should prevent family systems from tipping into chaos which we can interpret as the change of the initial condition x₀. Reducing x₀ allows for higher δs but in this model, it is futile for δ ≥ 3.55

Institutions like formal family governance / family constitutions are balancing the trade-off between freedom and costs of reaching goals as a social system by an agreed set of rules and norms designed to guide collective behaviour for more complex social functions. The idea is to reduce complexity for the individual and to facilitate the navigation of social space by providing a frame of reference.

But family constitutions and family governance protocols can be dysfunctional as they can even introduce chaos. The economist Albert Hirschmann highlights 3 common objections to governance: perversion of governance by reducing adaption capacity, i.e., it aggravates the very problems that it intended to solve by reducing freedom degrees of the system that makes it more likely to tip into chaos. Family governance might be even futile when it is not being complied with (see below: compliance trade-off), and thirdly it may even contradictory as it puts other important values in jeopardy[10] which are deemed unintended consequences.

2^nd order phase transitions are and will become more frequent as discussed above and are rather the norm than an exception in a world of VUCA, so we can expect regular impacts with the equivalent of δ ≥ 3.45.

In fact, we are living on the edge of bifurcation and chaos. The big question is how we can ensure transegrity?

Ontology

As the equation 1.0 shows, we are dealing with a non-linear system that features feed-back loops and a changing trajectory depending on x₀δ.

The question arises if linear methods are sufficient to solve this non-linear problem!

To converge on a solution, we can utilize the Cynefin framework, a phenomenological sense-making device developed by C.F. Kurtz and D. J. Snowden[11].

Cynefin challenges basic assumptions in decision making:

Order: it implies a clear understanding of cause-and-effect relationships that can be verified empirically and are separated over time and space. Predictions are possible and interventions can be designed to drive, control, and achieve desired outcomes. Intelligence can be generated through analytical, reductionist research as whole equals the sum of its part, by scenario planning and standard operating processes as well as ‘Best Practices’ can be derived and applied.

This is a linear and very mechanistic view of the world which also implies repeatability and reversibility and lays the foundation for ‘business engineering’, a term that was very popular in the 1990s and is related to Taylorism, which is inspired by the reductionist view of Rene Descartes and Isaac Newton.

Rational decision-making is limited, as many studies in psychology and behavioral economic have revealed[12]. The mere fact that some 150 biases are identified, ruins the idea that humans are rational beings. Kurtz and Snowden define rational decision making as maximizing pain or pleasure which inherently belongs to the affective decision-making domain. In consequence, behaviours can be controlled and managed by influencing the perception and expectation about pain and pleasure as responds to certain behaviours individuals exhibit.

The last challenge is the intentionality of behaviours. Actions are always intentional and deliberate.

Assuming all three pillars of organizational support and strategy resp. rational, ordered system thinking are true, classical family governance would be sufficient to navigate the social system through all x₀δ situations.

A world that demands casual thinking is predictable and thus, it feels safe as seemingly it is easy to navigate that reduces stress responses elicited by cognitive load and cognitive dissonance arising from uncertainty.

Inevitably, we do everything to boil problems down to something that we perceive as manageable and predictable which manifests itself through the substitution bias which inevitably creates errors[13]. Looking at a mentally complex problem, we tend to break it down into simple problems that we think we can solve. This reductionist approach leads to solving the wrong problem precisely and risks united consequences. It is a common error which is discussed in more detail as Type III or γ – error by Patrick T. Hester and Kevin MacG. Adams in their book ‘Systemic Decision Making’[14].

After all, the whole problem is more complex than the sum of its parts in this is what the domain of complexity research is concerned with.

It is a world of self-organizing, emerging patterns with many self-reinforcing and diminishing feed-back loops that are path-dependent and meta-stable. Cause and effect are not clear. Hysteresis makes these dynamical systems irreversible in time.

Linear thinking and the assumption that the analysis of the past will help to predict the future is futile, since new and unknown patterns may emerge that haven’t been seen in the past, depending on prevalent endo-or exogenous system perturbations. Only through iterative probing and multiple perspectives can we solve these systems based on our subjective reality, which contrast with the assumption of one singular objective reality implied in a linear, ordered world as discussed above.

We need to accept that order is dynamic in nature and more complex than we like to assume.

Order is a state of synchronization depending on an order parameter we encountered in the logistical map called δ. Order can be persistent (dysfunctional synchronization) transient (intermittent synchronization) local (individuals, dyads) or global (entire system). The local level influences the global level and vice versa through reinforcing and counterbalancing, diminishing feedback-loops with various degrees of strength.

Effective family governance needs to address both domains – the basic assumptions of order, rational decision-making, and intentional behaviour (mechanistic view) as well as the domain of complexity, which is the ontology for organisms like social systems.

A plethora of best practice literature for corporate and family governance based on the mechanistic world view already exists.

In this paper we investigate how we can embrace complexity and ‘manage’ the social system effectively and sustainably by influencing its trajectory and create better outcomes on a spatio-temporal scale.

Synchronization and Chaos

Synchronization is formative for social relations and promotes rapport (Chatrand & Basgh, 1999, Dijksterhus, 2005)[15] and is the most important factor in transegrity.

Thus, the capacity to achieve synchronization is important for culture and society, but there are various definitions of synchronization[16].

The narrowest definition of synchronization pertains to the binding of distributed constructs formed transiently in response to stimuli adjustment of the trajectories of 2 or more non-linear oscillators. Over time, the trajectories merge into one single trajectory by a so-called fixed-point attractor [FPA], however this is a narrow and static definition.

The most suitable is the Amplitude-Envelope Synchronization (Gonzales-Miranda. 2002)[17]. It is the weakest form of synchronization where the coupled systems x(t) and y(t) are resonating on the same frequency when they synchronize. The systems must have at least 2 oscillatory frequencies in a way that e.g., the beat frequencies coming from the sum of 2 waves having slightly different frequencies.

All synchronized systems feature asymptotic stability, i.e., once the synchronization state has been reached, the effect of small perturbations is rapidly dampened by balancing feed-back loops, and synchronization is recovered again, implying freedom degrees in the system for intermittent synchronization. This is different for pre-synchrony states, i.e., when x(t) and y(t) are not synchronized. Small perturbations are amplified in time and can tip the system easily into chaos[18].

This phenomenon can be measured by the Lyapunov exponent λ, which also measures the ‘butterfly effect. That is, when a butterfly flaps its wings in China, a Hurricane emerges in New York when this exponent assumes positive values.

λ measures the mean convergence and divergence of 2 neighboring system elements resp. their trajectories in a dynamical system[19]. Let 2 trajectories originate from 2 infinitesimal close initial conditions x₀ ∧ x’₀.

When the trajectories diverge exponentially, the system exhibits chaotic dynamics and is highly sensitive to the initial condition, i.e., the infinitesimal difference at the beginning has huge impacts over time. In line with this paragraph, we can interpret the control parameter as |δ| = x₀ = x₀ – x’₀

Differences can arise from miscommunication, ever so small differences in what the sender intended to convey x₀, and the receiver perceived and interpreted x’₀.

if: λ < 0 : the 2 trajectories are attracted by a fixed-point attractor [FPA] or limit cycle attractor [LCA] and the trajectories converge – misunderstandings can be neutralized.
if : λ > 0 : the 2 trajectories are not attracted by an FPA or LCA. Rather, they are sensitive to the initial condition δ and diverge exponentially- small misunderstandings lead to major issues in a short time period.

Thus, a synchronized system corresponds to a negative Lyapunov exponent λ < 0 indicating a non-chaotic system, and a desynchronized system corresponds to λ > 0, indicating a system prone to chaos[20]

Our definition of synchronicity includes compensatory dynamics – energy deficits or surpluses in the system are being levelled out to the extent that λ < 0.

Synchronization: emerging property minimizing social transaction costs on a spatio-temporal scale

Synchronization is the antecedent for functional, social systems of utmost efficacy and transegrity to create sustainable, transgenerational social capital and it is key in reducing the probability of unproductive, relational as well as task- and process-conflicts. A state of synchrony tends to prevent conflicts resp. favours a collaborative conflict management style leading to a productive outcome in case conflicts ensue. This is important because conflicts need to be sorted out in current generations, because inherited, transgenerational conflicts are a negative and resilient X₀ that creates chaotic attractors for the then current and future generations.

However, permanent, and highly intense synchronizations on a spatio-temporal scale are not conducive to create a functional social system with efficacy and transegrity.

Intermittent synchronization

Performance of a functional social unit needs cooperation of elements of the system which presupposes a form of synchronization. Synchronization arises from the mutual influence through consistent and congruent signals from one element to another to coordinate temporarily.

Synchronization plays a crucial part in the emergence of functions in relationships and promote effective group-performance. But global and persistent over-synchrony can be even dysfunctional e.g., when dyads fall into a relational trap, i.e., are bored of one another start conflicts just for the sake of being felt and heard. Epileptic seizures are example dysfunctional synchronization of neurons in the brain[21].

Dysfunctional synchronizations are evident at a social system level e.g., in ‘cabin fever’ situations or, groupthink dynamics[22]. Over-synchronization inhibits self-correction mechanisms via constructive criticism, the power of diversity and the generation of collective intelligence. It can lead to deindividuation by exchanging own identity for the group identity and engaging in collective rationalization of events, losing the ability to take different perspectives and the tolerance towards discrepant points of view as all the energy is directed toward group coherence. It predisposes group members to incongruently agree with one another by implicit or explicit coercion (peer-pressure), fosters the eco-chamber effect, favours in-group bias and polarizations which inhibits the emergence of collective intelligence. Moreover, this makes the system inefficient, rigid, and fragile.

People with a fixed mindset are often looking for quick, cognitive closure, make fast judgements and do not exhibit and active open mindset or a permanent state of learning. That leads to rigidity which can be detrimental for the individual and an entire social system when it is stuck in its tracks as described above. These systems lack adaptation capacity, oscillate on low frequencies and are more prone to chaos as they lack freedom degrees and are unable to create adaption capacity.

These patterns of dysfunctional pattern can also be observed in business family enterprises, where unconditional love and belonging lead to family blindness in a flood of oxytocin release.

Paradoxically, oxytocin can have these adverse effects of over-synchrony. It is an endocrine that is secreted when we feel that we belong and are loved, e.g., a touch, a hug, and someone speaks our ‘love language[23]’ or we feel the expression and expectation of unconditional love.

It increases trust and cooperation resp. reciprocating with a sense of shared obligation, and it makes us more pro-social, even charitable and initiates more sensitive and responsive to social cues and creates fuzzy feedback loop and supports bonding processes. It inhibits the central amygdala and thus, reduces fear, anxiety, stress activating the parasympathetic nervous system. It fosters social connections and is known to excite the Temporal Parietal Junction (TPJ), implicated in the theory of mind (ToM), improving social skills and processing social information more accurately[24]. Thus, oxytocin secretion contributes to psychological safety.

Overdosing oxytocin by nasal injection is implicated in having adverse effects, as the in-group cooperation is increasing but non-cooperative behaviour and even aggression towards out-group members increases, a phenomenon Robert Sapolsky calls ‘Us-Theming’[25], favoring in-group members and hating out-group members, blocking off any disconfirming, critical information.

Another example of over-synchronization with reinforcing positive feed-back loops was recently researched and published by Nadine Kammerlander and Julia K. Groote[26]. Looking at the past trajectory and path-formation of family businesses, they asked the question of organizational path dependency.

Path confirming behaviour is linked to positive reinforcing feed-back loops which is akin to over-synchronization and path-breaking – which manifests itself in agile responses and proactive action implies freedom degrees that allow desynchronization from previous paths that can result in better economic outcomes vs. those families who stayed on their path because they adapted the business model to the current and future challenges.

The former is an example of an external fixed-point attractor, a higher order structure that demands mutual consistency of elements on a lower level in evaluation that has lost evaluative elasticity and describes a state in which the system will resist forces that perturb the system – it is the wrong kind of resilience, the latter is a situation where the system gravitates towards a different attractor resp, the former external attractor turns into a Repeller, allowing the system to change trajectory. The system exhibits meta-stability.

Ironically, path-breaking behaviours are a form of collective action which implies strong synchronization of the social system behind this change of path. The internal attractor in the family that forms a functional social unit makes this collective action possible.

Synchronicity should be more ephermal and sequentially reoccurring rather than a permanent feature on a local level[27]. In other words, it needs freedom degrees in order to prevent the system from tipping into chaos.

Intermittent synchronization is also a regular phenomenon in the brain, whereby bursts of synch form coherent representations of perceptions and for actions resp. responses to stimuli. But also, on a social level in dyads, and societies to perform a specific task followed by a desynchronization after the task is completed. This readies the system for a different task for which a resynchronization takes place. The system forms various task specific functional units, which is a structure that performs momentarily functions and may never reassemble in the same configuration (hysteresis). The purpose of these functions is not necessarily obvious or conscious, yet they still have a purpose, otherwise they wouldn’t be performed.

For instance, empathy, the ability to simulate other people’s emotional states empathy is an essential function for human connection and synchronization of higher order. The state of empathy is a functional unit created by the brain through synchronization of neurons and the state of empathy does not require conscious awareness.

A recent study[28] found that empathy, is induced by synchronized, neural oscillations in the right hemisphere in the brain (rACC – right anterior cingulate cortex involved in error detection and rBLA -right basal-lateral amygdala, involved in threat detection and fear responses).

Operationalizing synchronization by coupling of logistic maps[29]

$x_{1} (t + 1) = \frac{δ _{1} x _{1} ( t ) + ( 1 - x _{1} ( t )) + α δ _{1} x ( t ) + ( 1 - x _{2} ( t ))}{( 1 + α )}$

$x_{2} (t + 1) = \frac{δ _{2} x _{2} ( t ) + ( 1 - x _{2} ( t )) + α δ _{1} x ( t ) + ( 1 - x _{1} ( t ))}{( 1 + α )}$

0 < x_1,2 ≤ 1 : Value of behavioural outcome of person 1 respectively 2

x₁(t + 1) : Value of outcome of joint action performed by person 1 and 2 coupled by

0 ≤ α ≤ 1 : average coupling parameter indicating strength of mutual influence

0 < δ_1,2 ≤ 1 : internal states of persons

Simulations showed, strong influence (high α) promotes quick and perfect synchronization on a superficial/behavioural level only after a few iterations but runs the risk of the dyad not synchronizing on a deeper level by sharing internal states.

In a family enterprise context, a high average could be the m/patriarch coercing everyone to comply and cooperate according to his or her agenda which can have negative implications for the trajectory of the social system.

For weak influence (lower average α ⟺ introducing fredom degrees) there was a tendency for the individuals to achieve greater stability and regularity in social patterning and less chaos in their respective behaviours and synchronize on a deeper level with internal states[30].

Thus, weaker but more frequent synchronization is more sustainable and can be achieved by regular family meetings.

Frequent social interactions promote synchronization and attractors in individuals’ emotional-cognitive system that promotes consistency in behaviour.

The resulting inter-brain synchronization promotes social interaction and pro-social behaviours, but a steadily strong influence is not necessary to promote interbrain synch, but it is enhanced when there is an emotional context for social interaction. (Nummenma et. al. 2012)[31].

Performing joint tasks synchronizes brain regions associated with perception of intention and the Theory of Mind (ToM) like the dorsal-medial prefrontal cortex (dmPFC) and the temporal-parietal junction (TPJ), motor cortexes (including pre-motor cortex) and at a deeper level like intentionality, goals, values, and emotional states resp. empathy through positive reinforcing feed-back-loops.

The inter-brain connection and synchronization is possible through mirror-neuron system in our brains. The mirror neuron mechanism is thought to be involved in action and intention understanding[32].

The mirror neurons start oscillating which develops into anticipatory coding and predictive perception, where a behavioural signal of the partner elicits the correct prediction of the next move, which is essential for the coordination to perform rapid complex tasks like dance or playing music. Fast switches between anti-phase (coordination of opposite movements) and in-phase synchronization (coordination of equally directed movements) are required, which works best in a positive emotional context.

Dancing happens between dyads on a local level and a on a dance floor on a global level when dyads navigate the floor and avoid collisions with other dyads. Individuals synchronize on a task (local level) and synchronize to a higher order as workgroup through progressive integration, where individuals find resonant states based on time and phases delayed feed-back and feed-forward loops that are oscillating with harmonious frequencies[33].

The integrative role of synchronicity is a matter of frequency of synch phases which are also observed in the brain between neuronal assemblies.

The working memory in our brains requires regions in the hippocampus and the mPFC, where neurons synchronize in the theta band (4-10 Hz) with dynamic synchronization that peaks in the actual decision-making phase and when the right (i.e., congruent) decision is made. Wrong (incongruent) decisions have a de-synchronization effect.

This oscillation of neuronal assemblies provides dynamic neuronal processes (Singer 2018)[34] which allows for an active open mindset, a growth mind-set, and a state of ‘perpetual beta’ to learn, which is s social construction process and integrate new and novel information.

Synchronous oscillations are happening in monkeys and humans during cognitive processing and learning which rewires the brain according to the Hebbian Learning Hypothesis[35]: ‘What fires together, wires together’ in the brain. This is analogous to social systems that have sufficient adaption capacity, oscillate on higher (resonant!) frequencies and are less prone to chaos as they can create freedom degrees.

In general, the optimal level and frequency of synchronicity is the necessary condition for effective family governance, because in a state of synch, family members are more likely to be committed to the cause (commitment culture).

The social system synchronization needs to be curated to strike the optimal balance between creating a feeling of belonging, psychological safety, a space where people are willing to take socio-emotional risks, and collective goal orientation with the flexibility to retain agency and agility on a local level with openness and curiosity.

Attractors are a great way to achieve functional synchronization.

Attractors

Attractors and their counterparts – the repellers are specific domains within the general state space of a system. They come in forms of single points (fixed-point attractors FPA) or a set of point (limit cycle attractors LCA) and describe how the system evolves in time close to the attractors. LCAs are important factors in neurosciences, social sciences and many other natural sciences like chemistry and biology[36].

FPAs define a state space where the amplitudes of perturbed systems decay in time and return to the initial state, at least for small perturbations, but not necessarily for large perturbations.

LCAs are not single points like FPAs, they are closed lines (circles) like an orbit. Either the system is spiraling out from the center (X₀) and is limited by the circle, or the system is converging upon the circle from an initial condition outside the circle.

The state of the system will evolve along this circle-line, i.e., all points will be touched over time. Thus, LCAs is a temporal pattern describe oscillations, for instance like the spring of a watch. The system will converge in either case, i.e., it will never touch or become the attractor. Attractors emerge, depending on the initial condition X₀ which can be set[37] by e.g., the family system on a macro level and by the individual on a micro level. System behaviours are depending on attractors and repellers that are set by X_0.

The asymptotic point attractor can also be interpreted as a limit cycle attractor that naturally allows for intermittent synchronization. To which the attractors the system will converge on depends on x_0. Thus, the family should work on their x₀for appropriate limit cycle attractor to emerge on a global level.

Chaotic Attractors

A chaotic attractor is unstable, dysfunctional and creates chaos, depending on the initial condition X₀. The system is characterized by λ > 0. The Lorenz Attractor is a representation of that.

In a 3-dimensional system like the 3 circles of a family enterprise as discussed above and which is highly sensitive to the initial condition, creates trajectories in the shape of loops of different sizes and it unpredictably jumps from left to right – never visiting the same state twice. It is creating a strange picture like the eyes of an owl. Thus, it is called a strange or – simply put – a chaotic attractor[38].

Graph 2.1 Lorenz Attractor[39]

In a family context, this chaotic or strange attractor can be interpreted as ‘money attractor’. When the initial condition is set in way that a ‘money attractor’ emerges, the whole system will evolve around money and the relationship people have with it.

It is a fragile system that will not have sufficient adaption capacity for even very small perturbations as discussed above.

The family business researchers Peter Jaskiewicz and Sabine Rau[40] -confirm that financial wealth without purpose (a functional attractor) is a poor glue to keep families united and happy It fosters entitlement and elicits compensation strategies to fill the purpose-gap as this context denies family members a meaningful life

Thus, it is very important to change x₀ so that functional attractors can emerge and synchronize the system for high adaption capacities.

Synchronisation effects

Synchronization between brains e.g., through behavioural synchrony promotes social interactions and shared emotions and shared intentionality which form reinforcing (diminishing) feed-back loops. of periodic synchronization, which introduces a vital property: self-regulatory control (Waddell & Zochowski, 2006)[41].

It forms a functional social unit defined by mutually meaningful relational patterns that create a coherent group identification and impart purpose at a higher order level and provides meaning and integration for lower-level identities (micro-level).

The outcome of a diverse but synchronized group is superior to a homogenous group or a group that is not synchronized but diverse, as the diversification benefits, such as noise cancellation and bias reduction are unused. Diversity can even create frictions and tensions that lower output.

A functional social unit is an irreducible entity with its own characteristics resp. dynamic properties, the very features family governance and family constitutions are attempting to achieve.

Family constitutions can be a manifestation of the substitution bias, as it is a seemingly simple solution to a complex problem. Solving the wrong problem is tantamount to not solving the actual problem at all. The family constitution should align the family system and is a context dependent structure, often designed to control the outcome of the social system and thus, it favours a compliance culture on a micro level as rules and regulations are individually interpreted. That carries an inherent trade-off problem, described by the ratio ω :

Equation 2:

ω = \frac{e[U(x)]}{E[U(y)]}

x : non-compliant action; y : punishment if get caught

ω > 1 : The expected positive utility from norm violation exceeds the expected negative utility of punishment => non-compliant action will be performed
ω < 1 : The expected negative utility derived from punishment for norm-violation exceeds the benefits => non-compliant action will not be performed
ω = 1 : indifferent

Inevitably, the evaluation of ω is shaping behavioural tendencies on a micro level and finally, on the macro level.

A commitment culture within the social system is equivalent to ω → 0 . The level of commitment can be interpreted as x₀ from which a functional attractor emerges which helps synchronizing the system – THE necessary condition for effective and sustainable family governance as it allows for higher-order integration because it minimizes the social transaction costs in the system.

Furthermore, commitment and compliance are in a reflexive relationship and create a positive, reinforcing feed-back loop. People who are committed to the cause comply, are accountable and exhibit responsible behaviours, and being compliant feeds their commitment because they feel, they have done the right thing and they can observe compliance in other’s behaviours, which is validating their own behaviour.

The family constitution is thus merely the sufficient condition for effective family governance that is complied with based on the necessary condition: commitment.

Information and communication

A social system contains elements that coordinate by means of verbal- and non-verbal communication or for short – by signals [signaling network].

Communication is the mediation between interdependent spheres and translates between the original impulse to re-create its intention and original meaning with a self-reflective element between syntax and semantic in a way, that another person receives the intended meaning.

Communicative coupling of social systems requires channel capacity as a medium to get the information across to the receiver in an unambiguous way – i.e., free of noise.

Noise in Swarms

Swarms are collectively moving individuals that are self-organizing (with relationships at the root), complex, dynamical / adaptive systems consisting of are agents that perform a task that outperforms the ability of the individual agent and can be described as a cascade of topology dependent emerging phenomena.

The information processing capabilities of a swarm are at the core of global ordering by local interactions, which is vital for its behaviour i.e., for the initial configuration and re-configuration in response to perturbations. It involves all sensory modalities and differences in perception.

To achieve the collective behaviour, the quality of information distribution and transmission channels are vital, i.e., a sufficient, accurate and reliable information flow is paramount for coordination and collective action, and it increases the perceptual, radial range of the swarm-organism vital for the creation of collective intelligence. Information are signals in a signaling network that drive dynamics. It shapes and reshapes the network according to the current requirements and aswarm is a networked-control system for collective computation and decision-making. Information flow becomes the limiting factor for the ability to self-organization and swarms collapse due to signal disruptions as swarm dynamics are coupled to local signal detection and global information flow, depending on one agent send the information and the other agent’s capability to interpret and infer the correct meaning of the received signals that are reinforced or diminished through feed-back loops for the propagation of information through the system.

The quality of the signal transmission is at the core of these mechanics. Every signal has deliberate and undeliberate content that is subject to social evolution.

Stimulus and response noise (often undeliberate content) are signals that perturb the dynamic of the system, depending on noise levels and the system density[42][43].

Let φ be the alignment parameter with φ → 0 indicating that the system fails to organize (disorder) and φ → 1 indicating the system self-organizes (order).

The level of noise is represented by η and the network density by $ρ = \frac{N}{L^{2}}$ of self-propelling agents (particles) moving in a 2-dimensional space i.e., L x L.

Graph 3:

The graph below shows the various of average alignment measured by φ depending on noise levels η for various densities ρ:

 : ρ = 4
 : ρ = 2
+ : ρ = 0.4

This experiment shows how noise inhibits signal propagation and impacts on the alignment of the agents. The lower the density of the network the more susceptible it is to noise measured by the average alignment φ.

We can interpret ρ as synchronization proxy, which has communication and information transmission at its core.

Intergenerational communication or the lack of it has been identified as a significant impediment and limiting factor in succession-transitions resp. transgenerational leadership change[45]. The quality of relationships in a social system are a function of meaningful communication, frequency and duration which leads to trust and commitment. The absence of communication inhibits trust building, leads to false assumptions and frustrated expectations based on very different, subjective mental models of the world, a situation conducive to unproductive conflict.

Hence, it is warranted that we investigate the subject of noise in information transmissions.

Channel Capacity and Information Entropy

Claude Shannon[46] reformulated this problem into one of communication reliability, which is a function of signal strength S, bandwidth W and the noise N within the communication channel:

Equation 3[47]:

$C = W l o g_{2} [1 + \frac{S}{N}]$

Synchronization impacts positively on the bandwidth W, reduces N and hence, allows even lower signal strength to travel as a unit to its destination. It is noteworthy that the noise term is logarithmic, meaning its contribution to channel capacity is asymmetric. One unit of noise reduction has disproportional impact.

Graph 3.1:

The y-axis depicts the noise-adjusted signal strength of 5, the x-axis the units of noise level with W =1. W is a scaling factor of channel capacity that can be interpreted as perception range of individuals. The higher W, the more information with various degrees of noise can travel.

In a social context this could mean quiet voices that normally wouldn’t get heard but they can be equally frustrated and reactive. Alternatively, a low level of W means people don’t perceive 100% of the information presented because of the lack of bandwidth.

It can lead to information asymmetries and misunderstandings causing reactions with unintended consequences and even tip the whole system into chaos when the system is chaotic i.e., Lyapunov positive ( λ > 0 ) Information asymmetry is one of the major issues in personnel selection processes in the corporate and family business world i.e., successions[49].

Information flow in a network is a function of 2 different channel capacities i.e., edges and nodes[50]. Noise emanates from the sender can be exacerbated by the transmission channel, and the receiver, whose perceptual biases may introduce noise, e.g., by differences in sensory modalities, cognitive and emotional noise arising from the information processed and the behavioural responses, i.e., how the responder interprets and reacts to the perceptually biased information which is another source of noise from the responding sender of information.

E.g., a simple difference in bandwidth can create a situation where tiny difference in the sent signal and perceived signal lead to massive system perturbations if the system is highly sensitive to the initial condition:

Equation 3.1

W _sender > W _Receiver => C _sender ≠ C _receiver

W_sender: Family CEO speaking about the business with full bandwidth
W_receiver: Family member doesn’t have bandwidth for business dynamics, is overwhelmed, feels like an idiot, and doesn’t dare to ask for clarification, fearing the same situation equation 3.1 is describing i.e., the family CEO doesn’t have the bandwidth to listen to his or her questions and concerns without judging.

It reminds us of the small differences in the initial condition |δ| = X₀ = x₀ – x’₀ from which 2 close trajectories start (1^st trajectory: sender and 2^nd trajectory: receiver) and that we discussed above under the headline ‘Chaos’, i.e., when the system is λ > 0.

It describes the fact that noisy communication process is a reinforcing feed-back-loop and hence, noise in a social system does not cancel out – it aggregates[51] exponentially and can tip the whole system into chaos A well-constructed noise-audit will provide valuable information about biases, blind spots, and specific deficiencies in the social system[52] in a bid to implement countermeasures (diminishing feed-back loop) that allow for a transition towards λ < 0.

But even if the communication channels are clear, congruent, and wide open, surprises can happen as the information is ambiguous and uncertain resp. deliberate or undeliberate. ‘The fundamental problem of communication is for the receiver to be able to identify what data was generated by the source, based on the signal it receives through the channel’[53], pertaining to the freedom of choice in constructing communication and the resulting congruency of signal intention and signal interpretation.

This is the so-called ‘Shannon Information Entropy:’

Equation 3.1

$H = - \sum_{n}^{i = l} p_{i} (x) l o g p_{i} (x)$

H is the entropy, and p the probability distribution of information x. ‘

The entropy of a process measures the unpredictable part of an information process which is linked to the channel capacity. Synchronization influences p_i (x) e.g., through a higher signalling rate which strengthens the signal and if consistent as it pertains to the learning a dyad experience through interaction.

Entropy and channel capacity are important factors for the communication flow in complex systems[54].

Thus, before erecting the family governance edifice, the family needs to create communication reliability and reduce communication entropy in order to create a resilient base by the way of social system synchronization.

In a synchronized system, signals are more likely to have congruency between what the sender is sending, and the receiver is receiving which reduces information asymmetry.

Critical information transpires much quicker and more reliable through synchronized systems, informing higher order structures and vice versa, which is evident in swarm intelligence. Peripheral information travels quickly across the swarm elements like in a flock of birds. Based on a wide perceptual (radial) range which is greater than the interaction range, the swarm opens to circumvent an obstacle or predator, just to regroup quickly after the navigation is complete and move on in the direction of travel at the same time.

Neglecting that, risks the family to collapses when the earth starts shaking induced by endo- or exogenous shocks induced by tension build up followed by knife-edge – tension releases upon suitable triggers. The system trajectory is no longer smooth and continuous.

The family governance edifice may even counteract ‘transegrity’ as it is conducive to tension-build-up resp. tension release and is increasing the amplitudes of the earthquake (reinforcing feedback-loops) because of missing freedom degrees and λ > 0, a cause we alluded to earlier as ‘the perverted outcome of family governance’ (A. Hirschmann).

A high channel capacity – level implies high communication reliability and in combination with low entropy, it increases the level of effective communication, which reduces misunderstandings created by noise or narrow bandwidth and thus, it is conducive to reducing (perceived) information asymmetries, which is a major cause for unproductive conflicts in social systems. This can be achieved through system synchronization.

Communication reliability (and low entropy) is a necessary condition to create shared meaning space with a high degree of signal congruency, which in turn, allows for the creation of a shared reality.

This shared reality is a prerequisite for the system to take collective action as functional social unit.

Synchronizing Mental Models of the World

The mental model of the world [MMoW] is a 3-tiered, cognitive infrastructure that creates our subjective reality. It is responsible for our epistemology and phenomenology on a cognitive resp. emotive level.

It is important to remember that we are all travelers and mapmakers at the same time[55] and in this context, it is conceivable that 3 levels are reflexively connected[56], and we can interpret the MMoW as dynamical complex system

The emergence of a MMoW is based on experiences that are a function of communication, perception and interpretation of social and contextual cues presented. The temporal space stretches from pre-natal experiences in mother’s womb but even beyond through transgenerational epigenetics (we inherit stories) to experiences made in the past and retrieved and reinterpreted in the present moment in combination with presented stimuli in that present moment, and expectations about experiences and outcomes in the future.

The lowest level (micro level) is the executive stage where we relate known facts and unknown facts about the world in the context of our mental state, perceive and interpret encoded sensory input, engage in meaning making, conceptual thinking, simulate and predict, dream and reason about the world and act on resp. react to subjective information cues.

The meso-level is responsible for corrections, neurologically driven by the anterior cingulate cortex, [ACC] which is active during error detection in our brains. This level performs the updating (revisions, additions, eliminations) of the micro-level and is responsible for e.g., Bayesian learning as well as other forms of learning such as imitation learning and observational learning.

The structure controlling the meso- and micro level is the macro level -the highest order of the MMoW. It is involved in self-regulation and the failure of it (dysregulation). Regulation includes monitoring and controlling cognitive and emotive processes. It coordinates the meso level by giving permission to change i.e., to learn and unlearn as central adaptions via meta cognitions and it is selecting various sub-MMoWs μ_i depending on context, which can be created by symbols and attractors (contextualization and recontextualization).

Equation 5

μ_i ∈ Μ

M : The total, subjective mental model of the world
μ_i : sub-mental models

Synchronization changes the social context in a way, that more and more system elements choose a greater overlap of their mental models resp. create a new and joint, emerging model specifically for the family enterprise [FE] or even beyond the FE context.

Equation 5.1 shows the synchronization state of 2 MMoWs:

Equation 5.1

μ_{FE}^{i} \subseteq μ_{FE}^{k} \Leftrightarrow μ_{FE}^{k} \subseteq μ_{FE}^{i} \to M^{i} \subseteq M^{k} \Leftrightarrow M^{k} \subseteq M^{i}

$μ_{FE}^{i}$ : family enterprise specific MMoW of person i (micro- and meso level)
Mⁱ : (macrolevel)

To understand the risk of de-synchronization, again, we can use the model of small differences in the initial condition $∣ δ ∣ = X_{0} = x_{0} - x_{0}^{'} \Leftrightarrow μ_{FE}^{i} ⊈ μ_{FE}^{k}$ i.e., 2 close trajectories start (1^st trajectory $x_{0; μ_{FE}^{i}}$ and 2^nd trajectory $x_{0; μ_{FE}^{k}}$ and when the system is λ > 0.

The MMoW synchronization must take place in a psychologically safe environment, and, at the same time, synchronization nurtures psychological safety[57] across all levels to achieve the greatest effect with the greatest leverage possible. It is setting X₀in a way that a stable LCA emerges.

The satisfaction of equation 5.1 is paramount for semantic synchronization, i.e., a shared meaning space, where the level of ambiguity in communication tends to be zero. That is the antecedent for a shared reality, which we can describe as a space that emerges through the combination and recombination of synchronized individual realities. Shared meaning space and shared reality enter a positive, reinforcing feed-back loop.

A shared reality helps to navigate complex environments and to learn as a social system. It makes it anti-fragile.

The term ‘anti-fragile’ was introduced by Nassim Taleb and describes a system that thrives and learns in world of VUCA and improves with shocks. Thus, it goes beyond the robustness or resilience of a system. Antifragile systems can even navigate in disordered environments that resemble chaos.

“Simply, antifragility is defined as a convex response to a stressor or source of harm (for some range of variation), leading to a positive sensitivity to increase in volatility (or variability, stress, dispersion of outcomes, or uncertainty, what is grouped under the designation “disorder cluster”). Likewise, fragility is defined as a concave sensitivity to stressors, leading a negative sensitivity to increase in volatility” (Nassim Nicholas Taleb) [58].

A shared reality is both – an outcome of synchronization and a reinjection into synchronization, creating a positive, reinforcing feedback loop of higher order.

Synchronization methods

Synchronization occurs naturally without further ado but also can be curated and nudged into a specific direction by giving system elements the illusion of choice by creating a choice architecture which has been researched by the behavioural economists Richard Thaler and Cass Sunstein[59].

Nudge is a departure from coercive paternalism, more like a ‘libertarian’ paternalism. It is leading by incentives [attractors], nudging people while preserving the perception of freedom of choice to make the desired and required choices themselves which increases commitment through the self-consistency bias.

Spontaneous Synchronization

Synchronization depends on the topology of the network[60], which we described as x₀.

Individuals are predisposed to synchronize (even spontaneously) with regards to action and internal states, a basic tendency of collective behaviour in a shared reality. When cooperative behaviour emerges and everyone realizes the benefits of it, it can form a strong attractor that synchronizes the social system and introduces social order based on information exchange and reciprocal behaviour. Once a moral system has emerged out of initially self-interested cooperation and the will to promote order and organization, people exhibit self-sacrificing cooperation[61].

Herding is also a form of spontaneous synchronization in the light of risk and uncertainty e.g., a predator challenging individuals or stock market investors who synchronize around the fear of missing out or panic selling their portfolios after news trigger a great deal of uncertainty for future, discounted profits of equities. Even pendulums and metronomes can synchronize as coupled oscillators over time, so do fireflies, heart- and breathing rates, menstruation cycles etc. synchronize when dyads get on well[62].

Collective Action – A manifestation of Social System Synchronization

Collective action is a manifestation of collective intentionality which presupposes that everyone understands individual intentionality, which implies the requirement for functional synchronization.

Martin Kornberger illustrates in his book ‘Collective and Distributed Collective Action’[63] a collective action performed by a refugee help group called ‘Train of Hope[64]’, a self-organizing phenomenon based on spontaneous synchronization.

Kornberger identifies 4 models for social system synchronization and collective action:

Invisible hand (self-organized by self-interested market forces)
Visible hand (driven systems by command and control)
Institutions (social norms, rules & regulations creating expectations)
Grassroot (emerging attractors)

Adam Smith introduced the term ‘Invisible Hand’ to describe the process of self-organizational behaviours of market mechanisms whereby collective goals are achieved while individuals focus on self-interested behaviours which can lead to inefficient outcomes and market failures.

On the other and of the spectrum is the Visible Hand. It epitomizes the mechanistic world view based on the scientific revolution driven by Rene Descartes and Isaac Newton etc.

Thus, the Visible Hand is a synonym for driven systems (as opposed to self-organizing systems), whereby a planner at the top of the hierarchy sets goals and directs, oversees, and coordinates collective action with managerial command and control with the help of deputies to create a well-oiled machine’. This is the linear, mechanistic world view Frederic Taylor[65] based his scientific management approach from the 1920ies – i.e., engineering collective action by scripted workflow and coordination implying fixed mindsets and the drive from protection against perturbations, a costly position because it makes systems fragile. Everything is process driven, mechanistic, thought up by top management and executed by the minions i.e., employees who are reduced to a commodity and denied their humanity. The mind is the management board, employees and their departments are the matter – or simply means to an end.

Periodically, the machine needs servicing and up-dating, which is termed ‘business-re- engineering’.

On a higher level, institutions shape collective behaviour trough global cultural norms interpreted on a local level and conventions based on the integration of collective rationality, whereby individuals on the local level contribute to the institution on a macro level which in turn, influences the relational patterns on a local level. However, this also invites free riders like. Individual rationality can create irrational, suboptimal aggregated outcomes.

Institutionalized practices take on moral legitimization that can become sacred to the community (see above: fixed point attractor for dysfunctional synchronization) and therefore introduce rigidity and fragility of the system as discussed above. Like the visible hand, the institutional model is limited in scalability.

Finally, there is a grassroot explanation for collective action, based on civil society movements based on ‘free will’ resp. choices.

Events that lead to common grievance and form shared identities is an example of self-organization corresponding to an attractor for collective orientation and distributed agency.

This functional synchronization needs an infrastructure, a choice architecture, i.e., X₀for the emergence of a functional attractor:

Interfaces for clear communication between heterogenous sub-systems
1. Shared mental model of the world
2. Communication (sufficient channel capacity, low entropy)
3. Shared meaning space and shared reality, inhabiting the same temporal universe.
4. Psychological safety[66]
Architecture for participation and contribution
1. Space for meaningful contribution
2. Diversity and inclusion
3. Grammar that embraces complexity and trying to reduce it
4. Inviting commitment
5. Strategies balance temporalities and are socio-cognitive infrastructure for collective reasoning to facilitate collective action. Strategies and Models test the metal when they interact with reality where the group needs to straddle the shores of planning and emergence. Adaption capacity i.e., flexibility and agility are needed to navigate more than the strategies or model that haven been hatched at the beginning of the process.
Shared values & beliefs, a global cause, shared concern, meaning and purpose. These are attractors that exert centripetal forces (attractors) overcoming centrifugal forces (repellers) in the system. A manifestation of an attractor are often physical or meta-physical symbols. Symbols are relational constructs between mind and matter. Narratives can also become symbols that inform and energize collective action and are the most important device for it.
Evaluative infrastructure for feed-back loops as coordination and synchronization are reliant on it by the way of communication.
1. Constructing phase space of what is possible
2. Reducing information asymmetry
3. A-posteriori evaluation – no a-priori evaluations for feed-back loops
4. Active open mindset, group learning
5. Collective control, responsibility, accountability

Albeit scalable, the danger is the dysfunctional over-synchronization.

Oscillations are thus vital for the social system to change direction just like a swarm flying towards an obstacle and deals with the matter in a self-organized swift reaction to navigate the difficult territory with agility resp. fluency and at high speed. This is tantamount to functional (intermittent) synchronicity required for collective action and group agility.

Collective action in turn, strengthens the synchronization effect in a positive feedback loop.

Curated Synchronization

It is about creating the infrastructure or architecture for a functional attractor to emerge and to nudge the system towards a state of synchrony. Technically, curated synchronization is about setting X₀for the appropriate attractor to emerge by introducing synch-elements x_{0_i} with

Equation 6:

x_{0_i} ∈ x₀

Specific x_{0_i} have been document to promote synchronization in social systems e.g., by changing the network topology through the introduction of consciously constructed x₀, whereby the synchronization results are better (and more sustainable) with weak institutional authority[67].

Typical sources of attraction (or x_{0_i} for functional attractors to emerge):

x_{0_i} = {attitude similarity, physical proximity for thoughts, cooperative behaviours,…}

Synchronization may also be induced by traditional synch devices and external stimuli like playing music together, chanting, ritual dancing, marching in synch for perilous collective action like going to battle, a decision that may not be taken idiosyncratically, i.e., the group identity is overriding personal identity to form a functional social unit.

Transformative leadership

The leader’s task is to set the appropriate X₀ in a way, that an attractor emerges that synchronizes the social system into functional social unit with efficacy for collective action.

Thus, leaders play an important part in inducing states of synchronization with strong and frequent signals pertaining to positive internal states – especially trustworthiness and steps to creating psychological safety[68] a key antecedent of synchrony combined with a call for collective action and direction.

A psychologically safe space allows agents to take socio-emotional risks which leads to authentic signaling patterns with reduced noise and increased bandwidth. Psychological safety emerges through enacted leadership behaviours characterized by empathy, compassion, active listing without judgement[69] resp. perceived vulnerability and appreciation[70].

Leaders must have profound knowledge and experience in mentalizing states of other people, exhibit a growth mind set[71] and need to be open for thought experiments i.e., detach ideas from traditional contexts of classical management styles. They need to have an active open mindset to understand and connect singularities, turning mere objects into intelligible experiences and see the Gestalt that is irreducible.

To navigate the social system on a local level, they need to apply diplomatic skills[72], i.e., tact – the sensitivity to social situations between cognition, emotion, and action and to connect values and culture sensually and intellectually by taking perspectives (social intelligence or SQ), which presupposes emotional intelligence – the ability to understand and control one’s emotions (EQ).

This contrasts with the traditional, patriarchal resp. authoritative command and control al a Frederic Taylor or even meritocratically achieved leadership positions by the virtue of knowledge and experience and performance, sometimes at the expense of others.

It is a collaborative approach, more akin to a coaching process that works with the individual on a micro-level and with the social system on a meso- and macro level by asking questions and creating a space that needs to be filled by the individuals rather than working against the social system.

This safe space is created by the leader’s active listening, a whole-body process with a wide, 360-degree perceptual range and focused attention with curiosity. Personal judgements need to be suspended, social comparisons, the impulse to jump to conclusions and solve problems while the other person is still processing need to be consciously suppressed.

Empathy is key to the process of creating safe space. It is the simulative, visceral experience of another person’s experience which gives the other person the permission to suspend self-judgement.

The process strengthens the self-efficacy of people in the social system for better connections and inspires them to find and discover answers to questions.

It is an investment in relationships that must be reciprocated to a degree. This is necessary because we are dealing with conditional relationships as opposed to unconditional relationships that only exist between mother and child[73]. This means that everyone in the social system must invest, but the leader is required to be the first mover by sending strong, frequent, and consistent signals pertaining to the matter. The level of information asymmetry is high in a psychological unsafe environment and the greater the skew, the greater the impact of signals. Mindful communication is key to nudge the systems’ trajectory into a positive direction.

One key signal is the understanding that it is not about the leader but about the social system s/he’s leading. It is a major mind-shift from the seemingly ego driven patriarchal driven approaches.

To be effective on a macro-level, leaders need to engage in dynamical complex system-thinking and understand feed-back loops, ripple effects and need to be catalysts for change by curating a safe space, a shared meaning space and a shared reality, connecting the system elements laterally, vertically and diagonally and cultivating the social system by sponsoring it on a macro, meso- and micro level for effective relational patterns in a way that the social system becomes a forceful functional unit for collective action with high efficacy. The social system will show agility and the ability to learn. They manage to transform a heterogenous group of agents into interdependent, synchronized agents that create collective intelligence and produce outcomes that a greater than the sum of its parts, which is dubbed by the NLP master and pioneer Robert Dilts as ‘generative collaboration’[74].

Narratives as synchronization tool

Narratives are very powerful in the world of family enterprises as to analyze and to gestalt them.

Narrative analysis is a powerful tool to understand social dynamics and relational patterns holistically as it addresses multifaceted and complex social constructs performed by various agents in different contexts honing into the various subjective mental models of the agents[75].

On the other hand, narratives are strategic devices[76] and play a significant role e.g., during transgenerational leadership change[77]. The ability of people to achieve coordination (and synchronization) in groups is enhanced by using scripts group members can act in accordance with (Shank & Abelson, 1977) or narratives (Lane & Correy, 2007; McAdams, 2001; Nowak, Kacprzyk, & Serwotka, 2016)[78].

The brain is an interpretative system, trained to perceive what it deems probable (predictive perception and validation) and narratives play a pivotal role in this process. Narratives impact on the brain’s probability distribution, especially in family enterprises where they frame transgenerational meaning making processes in the context of a multigenerational family history within serval contextual evolutions.

Thus, narratives are transformative as well as informative: they form, and convey individual and collective identities, legitimize successions and other phenomena, frame and align experiences, guide behaviours. They organize and shape perceptions resp. experiences, arranging and connecting internal resp. external data points which become meaningful and legitimate by the way of contextual interpretation. But narratives also contextualize and re-contextualize. More specifically, they weave patterns we use for shaping our subjective reality and thus, our orientation/navigation is based on the interpretation of social cues that are framed by subjectively emerging narratives. They even can induce symbolic meaning that travels beyond small groups to impact societies on a global level.

Thus, narratives are an effective tool to set X₀ and induce synchronization through the social construction of X₀for a functional emerging attractor. When narratives become symbols, they are great leadership tools as they nudge the system towards synchronicity from different angles.

A narrative-symbol serves as strong attractor for the social system where the trajectories of individual group members converge on and synchronise beyond a merely functional unit. Narratives create shared feelings and experiences (synchronization of internal states), create a shared reality resp. identity and can be social change agents as well as a frame of reference. Narratives are crucially important to achieve coordination and to maintain coherence as they create shared attention and are prescriptive in guiding action e.g., by supporting synchronized anticipatory coding resp. predictive perception.

Narratives and their co-creation process play a pivotal role in synchronisation, social cohesion and transegrity during social change processes. In turn, social change processes influence narratives, which forms a complex system. Narratives induce and form social system evolutions with positive feed-back loop for a meaningful social interaction on a macro level and on a local level.

For further elaboration on the relevance of narratives for synchronizing social systems, we refer the interested reader to the Family Hippocampus paper ‘Narrative Embedded Family Governance’[79].

Conclusion

Synchronization is at the core of functional social systems resp. social system efficacy.

In this context, the ‘family first’ ideology seems to be warranted, but not in the exploitation frame. Ultimately, financial wealth is the result of the family’s non-financial assets (external and internal social capital, human capital with the competencies) and financial assets which are a non-linear combination that led to a thriving business.

Family and business are forming a complex system with mutual influences and form an irreducible Gestalt, a social system that needs perpetual investment. It is an organism that requires frequent impulses for synchronization. But this presupposes a ‘holistic mindset[80] which everyone in the family needs to adopt.

Synchronizing a social system is a bottom-up social system intervention which builds a resilient base for the family enterprise and its governance as it promotes agility of the system and even antifragility. It is a reflexive process with positive reinforcing feedback loops between the socio-emotional and cognitive dimensions. The synch process is initiated by creating a psychological safe space through leadership and progresses in conjunction with synchronizing the mental models of the world for a shared meaning space and to create a shared reality in a way, that system elements can co-evolve as a function social system, i.e., achieve high levels of transegrity.

Dynamical systems move on a spatio-temporal scale, so we only see snapshots of the system’s state at time . But the system is always in transition. When the system is fully synchronized in , in it will have different levels of synchronization, owed to a combination of internal-and external (even ever so small) stimuli that nudge the system’s trajectory in all directions or even shocks that are perturbations of higher order and magnitude.

Thus, synchronization interventions are not a one-off task. Rather, social systems need regular synchronization-inputs in the various domains at optimal frequency and intensities , which are social system specific.

A synchronized system is characterized by high social efficacy and transegrity, i.e., it will build significant social capital because it is antifragile as it has sufficient adaption capacity and is less likely to tip into chaos. The adaption capacity is increasing with shocks as the system learns and thus, the system gets stronger, even in a chaotic environment because it features agility. It will have significant status signaling power, demanding valuation premiums in M&A transactions.

Conversely, a de-synchronized social system will not build significant social capital as has low social efficacy, is fragile resp. short of adaption capacity, cannot learn, is prone to chaos and it lacks status signaling power which may weigh on the family enterprise valuations in M&A transactions.

Top-down family governance does not necessarily create adaption capacity, it can even reduce it making the system more fragile than it was before. In the paper we propose a bottom-up family governance, focusing on social system synchronization to build a resilient base for a formal family governance edifice, that sustains shocks and helps the family system to learn and grow.

Summary

Business families are dynamical complex, social systems or organisms that are prone to endogenous resp. exogenous shocks that perturb the system’s trajectory. Upon shocks, the system enters a transition phase, and the outcome is a function of the system’s adaption capacity. It either fragments, tipping into chaos, is resilient or even antifragile.

In this paper, we conducted thought experiments how synchronization can increase the system’s adaption capacity to become antifragile and can form a functional social unit for collective action.

Acknowledgement

A major source of inspiration for this paper are ‘In Synch, by Andrzej K. Nowak et. al’., and ‘Strategies for Distributed and Collective Action by Martin Kornberger.

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Synchronicity – The importance to synchronize social systems

SYNCHRONICITY

The importance to synchronize social systems

byDominik v. Eynern, Family Hippocampus

Abstract