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 ------------------------------------------------------------------------- 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