Complexity, risk, uncertainty and change


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Business management, particularly for those intent upon ‘change’ or responsible for managing exposures, needs a rigorous, objective, measurement of the endogenous properties (complexity) that enables the functionality from which (through interactions with exogenous parties) the business generates the revenues that sustain it in changing and turbulent economic times.

“Complexity increases cost and decreases flexibility — often in unforeseen ways — and also tends to decrease stability,”….

Peter Leukert, CIO of Commerzbank

It is the number, nature and integrity of dynamic, multi-scalar, interactions that are the sources of strength (enabling performance greater than the sum of the parts). The ability to distinguish and respond to ‘signals’, that maintain the variety, effectiveness and agility of the complex system, from the ‘noise’ of flawed metrics, self-serving culture, hierarchical structure (silos), skewed incentives – of an unsustainable, failed or failing, model (reliant upon  assumption, reflexive, subjective, statistical analysis and prediction) that has its foundation in flawed (linear) economic thinking.

We won’t get different or better answers while we keep on asking the same questions.

For meaningful change to occur and to be sustained requires a rigorous justification, sufficient to counter financial projections that satisfy the goals of C-level short-termism that are detrimental to the stability and long term health of the business.

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Phew! He’s not mad and that makes me feel MUCH better


Image representing Seth Godin as depicted in C...

Image via CrunchBase

 

If only Seth Godin felt about me how I feel about him. If you have read my blog before you may already know that I have declared my love…for him – more accurately his work.

His books (not that I have read them all!) and blog are, consistently, thought-provoking and frequently inspiring. I never thought I would say that about a “Marketer” but then I didn’t ever think I would publish my own thoughts on-line OR declare my love for (1) a man (2) a man I have never even met (3) a man that I have not met and who looks like Seth Godin…strange times!!!

If you only ever sign up for updates for one blog make it his. The full article can be found here: What does ‘pro-business’ mean? However, as someone whose daily business focus is upon identifying, mapping and managing the risks surrounding “dynamic (non-linear) systems” – more accurately helping business leaders to understand that this is an alternative description of THEIR company and its ecosystem – I am frequently left wondering if the nature of business actually moved beyond the post industrial model or if complexity and global inter-connectedness were just figments of my imagination.

Seth says I’m sane! YES, things have changed in our World but unless they change further – with good old fashioned values at the core – and an awareness of the risks and responsibilities that accompany the opportunities open to right-minded individuals.

Seth calls them “Linchpins” and I like that but I prefer the moniker “Risk Leader”…admittedly not as snappy but, with an insight into the nature of complexity, risk and uncertainty I believe that, for vision to flourish, a good view of the “risk horizon” is essential.

…we could see pro-business strategies looking more like this:

  • Investing in training the workforce to solve interesting problems, so they can work at just about any job.
  • Maintaining infrastructure, safety and civil rights so we can create a community where talented people and the entrepreneurs who hire them (two groups that can live wherever they choose) would choose to live there.
  • Reward and celebrate the scientific process that leads to scalable breakthroughs, productivity and a stable path to the future.
  • Spend community (our) money on services and infrastructure that help successful organizations and families thrive.

Once you’ve seen how difficult it is to start a thriving business in a place without clean water, fast internet connections and a stable government of rational laws, it’s a lot harder to take what we’ve built for granted.
Capital is selfish and it often seeks the highest possible short-term results. But capital isn’t driving our economy any longer, innovation by unique people is. And people aren’t so predictable.
Linchpins are scarce. They can live where they choose, hire whom they want and build organizations filled with other linchpins. The race to the top will belong to communities that figure out how to avoid being the dumping ground for the organizational, social and physical pollution that factories create.

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