The Nature of Business:: achieving through leading


That stats below merit some thought or discussion I would have thought!?

This is a Knowledge Economy of willing Risk Leaders, being starved of the liquidity of an Innovation Economy, by the discredited policies of political and financial institutions.

Unless we STOP constraining living business systems, with the structures, philosophies and values of a past era, we will fail to adapt to the complexity of systemic information-flow.

With the ability, for any firm, to measure and monitor business resilience on-line comes the capacity to better understand and build, measurably resilient; interdependent; sustainable; communities of dynamic networks and systems of sub-systems, with shared values, risks and rewards as the basis for an adaptable, sustainable and equitable platform for Responsible Capitalism.

In 1986 the average knowledge worker carried in their heads 75% of the knowledge they needed to do their job. By 2006 the average had dropped to 8%, today it’s around 5%, and within 10 years the average will be 1%. (ref. Carnegie-Mellon rolling study by Robert Kelley).

This is a paradigm shift. To succeed as a 1% knowledge worker requires learning different capabilities to before, not just trying harder. This is hitting leadership roles hardest, soonest. Leadership today requires much that leadership used to require; and a lot more that is part of a different paradigm.

As Peter Drucker said:

in times of turmoil, the danger lies not in the turmoil, but in facing it with yesterday’s logic.

via Leading with Love « The Nature of Business.

Drivers of Business Complexity & Simplicity


Drivers of Complexity

This is a brief but by no means exhaustive summary of some of the drivers for increasing complexity in a business. These include but are not limited to:

  • Increasing customer choice through product proliferation
  • Pressure for diversification of products & customers
  • Many engineers, accountants and technologists (who love to work in complexity)
  • People creating complexity to secure their jobs & positions
  • Processes that people have been modifying for years without regard for the impact these changes have on the output
  • Information departments / systems seeking or delivering ever increasing detail just because they can!
  • Complex planning systems (or no planning systems)
  • Increasing compliance requirements
  • Belief that rigour equates to volume (e.g. of reports) when it comes to analysing, justifying and planning.

The drivers for simplifying a business have in the past generally only been exploited when the business is under intense pressure to improve performance i.e. when it is in trouble, as often occurs during economic downturns. It is a shame these drivers only appear in times of trouble rather than growth, for if they were a focus during good times then more businesses would perform well. Read more of this post

Institutional Investment:: education committee “strive to minimise complexity”


“The delicate balance to strive for is the minimum level of complexity necessary to obtain the desired portfolio”

In other words, the new way to design portfolio is NOT to minimise portfolio covariance but complexity…admittedly this could have been written by Ontonix.

But I PROMISE it wasn’t!!!

I don’t mind admitting that, although I read plenty of “in depth” reports, this one lost me pretty early on. Hardly surprising since it was written for an institutional investor market: “…endowment funds, pension funds, foundations, insurance companies, and private family investors—the limited partners in hedge funds and in private equity funds”.

However, I understood as much as I (or anyone else) should need to appreciate that complexity IS a challenge that too few in the sector like to admit.

“It is better to have visible complexity that is controllable rather than the appearance of simplicity with uncontrollable complexity underneath”

Prof Andrew Lo

Beyond Risk Management:: What Are the Alternatives?


There really isn’t much point in me adding to this blog from Ontonix. Maybe one of these days the financial sector will overcome its “prediction addiction”. Maybe!!?

Risk STILL isn’t optional: nor is the truth!

When facing large doses of uncertainty risk model-based methods of managing uncertainty don’t work. One thing is to manage an assembly line producing, for example, computer chips, another is to run a company in a globalized, turbulent, chaotic, non-stationary and shock-punctuated economy. Some things can be accomplished via mathematical modelling some cannot. Sure, you can model anything. Nobody can stop you from dreaming up an equation based on which you invest your own savings or those of other individuals. That is not the point. The point is that some models are unable to produce results that would be good enough to justify the effort of building them. Why is that? Those who have a few decades of experience building math models know that:

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World Economic Forum:: New Models of Leadership–John Maeda


John Maeda is President of the Rhode Island School of Design and is a Member of the Global Agenda Council on New Models of Leadership.

As far as I can recall, I first came across the name of John Maeda from this beautifully succinct quote:

“Openness simplifies complexity”

A decent introduction to anyone, I think you’ll agree. Particularly when you have spent years trying to convey the need for and merits of TRANSPARENCY; the costs associated with AMBIGUITY and risks created by excessive COMPLEXITY.

John Maeda is President of the Rhode Island School of Design and is a Member of the Global Agenda Council on New Models of Leadership.

Discussions this year from the Global Agenda Council on New Models of Leadership culminated in a white paper, which describes a set of competencies for leaders in the 21st century. A central thesis of our work is the need for leaders to be agile in what are increasingly volatile and complex times.

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