Wednesday, January 14, 2004


2004 promises to be a pivotal year for "systems" oriented practitioners - through no action of their own. Due to a "perfect storm" confluence of responses to the class of Enron, the business judgment rule is being eroded for the senior management of USA corporations. What that means is a regulator, namely the SEC, will require a trail of evidence to support assertions about corporate health made by its leaders to their stakeholders. Anyone caught doctoring the evidence will go to jail. The watchdog responsibility for all this falls to internal control auditors. The cute aspect is that, up to now, no rational data-driven trail of information was legally necessary for conclusions by either management or auditors. What better field than systems to assault the complexity of preparing regulatory-compliant financial statements?

The head-on collision between corporate management and their regulator occurs on 15Jun04. The outcome is unpredictable. This is not just another layer of paperwork in the endless code-decode game of finding loopholes. This is a frontal and public threat to CEO power. The cozy relationship between regulator and the regulated is turning toxic. Can an organization where the brains controlling the intelligence genie are in the basement, still be called hierarchical?

As homework, mull over what you mean, exactly, by "intelligence." I am totally locked in to Ashby's definition of intelligence as appropriate selection. As the key driving force here is intelligence amplification, it's best to be collectively congruent on its definition.