Establishing “cause and effect”: don’t be misled
Friday, 2 September, 2011 Leave a comment
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!
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.