The second economy: McKinsey Quarterly – Strategy – Growth


If you haven’t read any of my previous blogs or the rapidly growing catalogue of articles and reports on the subject, this article from McKinsey illustrates the sheer scale and pace with which complexity features in much of what, already, underpins life in modernity.

Every so often—every 60 years or so—a body of technology comes along and over several decades, quietly, almost unnoticeably, transforms the economy: it brings new social classes to the fore and creates a different world for business. Can such a transformation—deep and slow and silent—be happening today?

via The second economy – McKinsey Quarterly – Strategy – Growth.

Quite apart from a couple of "everyday" examples, one involving air travel and the other Global Supply Chain, I think that this extract really conveys the message:

If I were to look for adjectives to describe this second economy, I’d say it is vast, silent, connected, unseen, and autonomous (meaning that human beings may design it but are not directly involved in running it). It is remotely executing and global, always on, and endlessly configurable. It is concurrent—a great computer expression—which means that everything happens in parallel. It is self-configuring, meaning it constantly reconfigures itself on the fly, and increasingly it is also self-organizing, self-architecting, and self-healing.

These last descriptors sound biological—and they are. In fact, I’m beginning to think of this second economy, which is under the surface of the physical economy, as a huge interconnected root system, very much like the root system for aspen trees. For every acre of aspen trees above the ground, there’s about ten miles of roots underneath, all interconnected with one another, “communicating” with each other.

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Strategy under uncertainty: McKinsey Quarterly – Strategic Thinking


Revisiting a McKinsey article from 2000. If business leaders haven’t realised that we are facing, at least, Level 3 uncertainty they may just be stupid or lucky enough to “muddle through”…not much of a strategy though!

Whilst I agree wholeheartedly with the sentiment behind this article it is worth remembering: whilst we have a single history, we have multiple futures

Chart: The four levels of residual uncertaintyAt the heart of the traditional approach to strategy lies the assumption that executives, by applying a set of powerful analytic tools, can predict the future of any business accurately enough to choose a clear strategic direction for it. The process often involves underestimating uncertainty in order to lay out a vision of future events sufficiently precise to be captured in a discounted-cash-flow (DCF) analysis. When the future is truly uncertain, this approach is at best marginally helpful and at worst downright dangerous: underestimating uncertainty can lead to strategies that neither defend a company against the threats nor take advantage of the opportunities that higher levels of uncertainty provide. Another danger lies at the other extreme: if managers can’t find a strategy that works under traditional analysis, they may abandon the analytical rigor of their planning process altogether and base their decisions on gut instinct.

via Strategy under uncertainty – McKinsey Quarterly – Strategy – Strategic Thinking.

What if “counterintuitive” is THE mark of a leader?


Sustainability, like Complexity management, isn’t just “good for business” it’s good for everyone.

imageAs it is something that has been of great interest (and concern) to me I keep an eye on what is happening with business and sustainability. For too long the business perspective was that it was a case of the “politically correct – treehuggers – costing hard-pressed businesses money that they couldn’t afford”! But, low-and-behold, the evidence is mounting that:

(1) business leaders – particularly the “greed is good” MBA variety WERE WRONG

(2) working with nature isn’t only good for the planet but is also good for profitability  

Of course I just love the fact that this fits very well with my own thoughts (and I am far from alone) on the lessons that business can learn from nature…something I have been banging-on about for the last few years.

Unfortunately, as we have endured the current crisis (of our own making) the intuition of Bankers and Politicians has been allowed to prevail. Instead of acknowledging that they had no knowledge how to “fix” the broken system they have attempted to justify a prolonged period of micro managing (national) macro (global) issues. They did what they “knew” in the belief that their actions would/should/might correct things and the socialised costs would be repaid as things returned to “normal”.

What if this is the new normal?

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