Innovation:: managing complexity & reducing risk [Design News]
Tuesday, 11 June, 2013 Leave a comment
I was first aware of the author courtesy of this quote…that alarmingly few business ‘leaders’ appear to, either, believe or understand…
|“In a complex system, learning how all the pieces—constant and variable—interact gives a depth of understanding that averts catastrophe. That is what we mean by human-centred design—understanding the interfaces among technology, people, communities, governments, and nature. This is what makes complexity manageable”.|
If you are in the business of making money based upon the ability of another party to avoid financial loss, then your own ability to identify the properties that distinguish ‘good risk from bad’ is, SURELY, fundamental!? So the message that there is a means to gain “…understanding that averts catastrophe“, through “understanding the interfaces among technology, people, communities, governments, and nature” must surely be greeted with wide-eyed enthusiasm.
Even if, initially, there is scepticism, one could reasonably expect that would abate with the realisation that such a ‘solution’ could transform your entire business model and is firmly based in rigorous scientific/engineering discipline. And NOT just some re-hash of a qualitative/consultative approach, wrapped in some sexy marketing and the subject of a clever Social Business strategy. So…why the hell are smart people who stand to gain a massive competitive advantage still not capitalising?
I would love to be in a position to offer a substantial incentive for explanations as to why organisations, to whom even single digit percentage performance improvements can mean tens, if not hundreds, of millions of pounds of potential profit, continue with techniques that lack sound theory…but, sadly, I am not in such a position! Nevertheless I would welcome any thoughts on the subject from individuals who are well versed in risk transfer. Because I’m buggered if I can explain it.
Thankfully I’m not the one who, if their shareholders and customers knew the truth, would have to explain why opportunities to significantly reduce risk, help build customer and portfolio resilience (reducing the regulatory burden) and increase profit, are dismissed ‘out of hand’ whilst the spiralling costs associated with predictive modelling and the ‘reputationally damaged’ discipline of risk management, prevail. Not so much conventional or crowd ‘wisdom’ and more a case of ‘cognitive bias’ and herd mentality! Systems, assembled to serve those that sustain them, have, through their self-serving culture, value-stripping processes and close-coupling, have become incapable of disentangling the complexity they have created.
As the man says, first, we must understand the interdependencies and interactions to attempt to begin the process of managing complexity – a recognised source of risk, currently unidentified that, unmanaged, adds to uncertainty and volatility.
We can only hope that the following, some more of Prof. Craig’s very recent output, can open the eyes and minds of those who would be future risk ‘leaders’:
Systems are fundamentally made up of components or parts. A functionally related collection of components forms a unit. An array of units forms a subsystem, which all come together to form the system. An accident is a failure in a subsystem, or the system as a whole, that damages more than one unit and in so doing disrupts the ongoing or future output of the system. What systems are prone to system accidents? To answer this, two concepts need to be considered: interactiveness and coupling.
- Complexity, risk, uncertainty and change (fitforrandomness.wordpress.com)
- The 7 Element OEM System: Breaking the Viscious Complexity Cycle (fitforrandomness.wordpress.com)
- Complexity:: Strategy and the ‘threatened’ business model (fitforrandomness.wordpress.com)
- Both Aleatory and Epistemic Uncertainty Create Risk (fitforrandomness.wordpress.com)