What price simplicity?

William of Ockham, from stained glass window a...

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It is fair to say that the (adapted) words of “Occam’s razor” are as valid in 21st Century as they were in the 14th!

Pluralitas non est ponenda sine neccesitate

For those of us whose knowledge of Latin didn’t extend beyond ‘O’ Level, this is roughly translated as: Entities should not be multiplied unnecessarily.

However a more familiar quote, oft attributed to Einstein, that expresses what William of Ockham was telling us, is: Everything should be made as simple as possible, but not simpler.”

In modernity we have, unwittingly, come to rely upon levels of complexity in communications, products and services that were the stuff of science fiction in our own life-times…that does pre-suppose that your are old enough to remember Colour television as the preserve of an affluent minority!

But, if we should be striving for simplicity, THE question is: how can we reduce complexity without losing functionality?

Ontonix quantify current complexity and, more importantly, the point of “critical complexity” beyond which loss of function, failure or collapse are assured. We contest that, without a means to, objectively, quantify system complexity the ability to simplify – without loss of function – is impossible as there is no means to “track” causality!

I have read some experts (and consultants) talking about adding “good complexity” and removing “bad complexity”. Great! That makes sense, but if defining complexity has been the source of much Academic “mental masturbation” for over 30 years – without unilateral agreement – I would suggest that this amounts to little more than a sales pitch for consultancy services! Read more of this post

“Both insurers and insurance intermediaries need to fundamentally rethink how risk is assessed”

Not my words but those of Achim Bauer, Partner in PwC’s Insurance Practice. I will be really surprised if any more than 1% of industry “leaders” have read these words before, even though they appear in an industry report that was released in early 2010.

Perhaps it would have had greater impact had it been distributed to shareholders in major insurance firms. Because, whilst they may not be risk experts, they are unencumbered by traditional techniques, engrained belief systems formed over many years and justified (not validated) by decades worth of risk data.

Financial Services has a great technique for dealing with “the inconvenient truth” when it comes to risk and other people’s money. It is something that Ostriches are known for and is the perfect position from which to claim that some major, traumatic, loss event was “unforeseen”. Then, after the event, blame another feathered friend: the Black Swan.

It is worth remembering that unforeseen does not, necessarily, mean unforeseeable.

Read more of this post

Establishing “cause and effect”: don’t be misled

Nobel Prize winner Sir Paul Nurse reassures us all that establishing causality in complex systems is far from straightforward. As he points out and is readily understood, there is no doubting that biology and weather present “obvious” challenges in this regard but this isn’t only the case in nature!

BBC Horizon: Extract from an excellent series–causality PLAY FROM 7:50 ONWARD

It isn’t much more straightforward when it comes to complex business or financial systems…no matter what the “experts” (who inevitably have a vested interest) would have us believe.

“High complexity is incompatible with high precision” – this is known as L. Zadeh’s Principle of Incompatibility.

Few would argue that our globalised economy, markets, supply chains, global banking, web & IT infrastructures are highly complex. Although, undoubtedly, the  scale is different but it is also the case that relatively “small” businesses are also reliant upon the successful interaction of multiple (internal and internal – external) functions, ALL interacting within turbulent and unpredictable environments. As a result (and in accordance with Zadeh’s Principle – above)  the ability to reliably forecast, to predict future outcomes and returns is lost…as is the ability to track causality.

However, all is not lost! BUT opportunity does require a preparedness to challenge belief systems built over many years, embrace some new technology, some scientific facts and a manner of thinking that is as old as the planet: there are lessons for business leaders to learn by viewing businesses as systems and interrogating the data in ways that reveal new and invaluable information.

The warning signs of defending the status quo

My admiration for Seth Godin is pretty well documented. He consistently sees things that others don’t and simplifies what some make unnecessarily complex.

If you don’t recognise some of these traits in yourself that is, perhaps, understandable. BUT, if you have experience of sales or endeavouring to introduce a new product, concept or theory then you most certainly will identify with some techniques intended to resist what is new…even when resistance is irrational!

Thinking different (or even just keeping an open mind) can mean seizing a competitive advantage…or survival.

When confronted with a new idea, do you:

  • Consider the cost of switching before you consider the benefits?
  • Highlight the pain to a few instead of the benefits for the many?
  • Exaggerate how good things are now in order to reduce your fear of change?
  • Undercut the credibility, authority or experience of people behind the change?
  • Grab onto the rare thing that could go wrong instead of amplifying the likely thing that will go right?
  • Focus on short-term costs instead of long-term benefits, because the short-term is more vivid for you?
  • Fight to retain benefits and status earned only through tenure and longevity?
  • Embrace an instinct to accept consistent ongoing costs instead of swallowing a one-time expense?
  • Slow implementation and decision making down instead of speeding it up?
  • Embrace sunk costs?
  • Imagine that your competition is going to be as afraid of change as you are? Even the competition that hasn’t entered the market yet and has nothing to lose…
  • Emphasize emergency preparation and the expense of a chronic and degenerative condition?

Calling it out when you see it might give your team the strength to make a leap.