Don’t Let Complexity Kill Your Sales Model – Forbes


I’ve tried BUT, grudgingly, accepted that you just can’t show people – who are blinded by their own self-importance, ignorance or whose vision is impaired by the blinkers of an engrained belief-system – stuff that they just don’t want to see!

When things start to head in the wrong direction ‘they’ are the one’s fastest to seek to apportion blame. Whether it is the “market”, the competition, the supply chain, a division, team  or specific individual there has always got to be someone or something to point at to deflect criticism away from them. Strangely this brand of leader are never so quick to acknowledge the impact of factors, often outwith their scope of control, when they add up to success!

These people are business leaders in name or position but NOT in nature. They are able to perpetuate what they have learnt but at the expense of what they should know. They have spent so long reaping the rewards of manipulating systems – to sustain the financial returns the model DEMANDS – that they have become so obsessed with the golden eggs, they forgot to feed the goose!

Business customers increasingly want their vendors to have real expertise in their specific industry or function, such as finance or marketing. They expect vendors to help solve business problems…

via Don’t Let Complexity Kill Your Sales Model – Forbes.

As I read this article, as I do with many, I viewed it in the context of my ‘own’ industry. Insurance. In particular insurance broking. For the sake of my health I probably shouldn’t! As a breed, those at the upper echelons of, both, insurance and banking, are hampered by years of success and appear content to spend their time enjoying the trappings it has brought them. However, as Nassim Taleb identifies in his books, (when referring to financial traders), too many ‘experts’ fail to understand the nature of randomness let alone, differentiate risk from uncertainty or get to grips with, an abstract concept like, complexity.

Bankers, traders or purveyors of insurance, each is intimately involved in the ‘risk business’ and happy to let outward appearance convey the image of ‘expertise’. But, as we all know, appearances can be (are) deceptive! This is an invaluable lesson about complex systems, whether biological, financial, social, etc. A lesson that it would be  unwise to ignore…

Complex systems are really robust – up until a certain point.  I’ve referred many times to Joseph Tainter’s theory that once past that ‘certain point’, things begin to fall apart rapidly.  In Tainter’s own words:

The graph in Figure 4.1 is based on these arguments. As a society increases in complexity, it expands investment in such things as resource production, information processing, administration, and defence. The benefit/cost curve for these expenditures may at first increase favourably, as the most simple, general, and inexpensive solutions are adopted (a phase not shown on this chart). Yet as a society encounters new stresses, and inexpensive solutions no longer suffice, its evolution proceeds in a more costly direction. Ultimately a growing society reaches a point where continued investment in complexity yields higher returns, but at a declining marginal rate. At a point such as B1, C1 on this chart a society has entered the phase where it starts to become vulnerable to collapse. [2]

Complexity-decl-marg-returns.png

Figure 4.1. Diminishing returns to increasing complexity (after Tainter 1988).

Two things make a society liable to collapse at this point. First new emergencies impinge on a people who are investing in a strategy that yields less and less marginal return. As such a society becomes economically weakened it has fewer reserves with which to counter major adversities. A crisis that the society might have survived in its earlier days now becomes insurmountable.”

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