Complexity: structural engineering for business survival

Trust me, even the smallest business is a complex system! And there is so much more that EVERY business can learn from the rigorous scientific environment than they will ever gain from the “soft skills” of management consultants attempting to re-engineer the conventional hierarchical structure. That parrot is deceased!!!

In modernity it is pointless denying that we aren’t all part of an infinitely complex network of systems and ecosystems. We need to get “fit for randomness”…

  1. To take the “fat tails” of power law systems seriously. Expect change to arrive not gradually, in a way that will allow the organization to adjust in real time, but in sudden discontinuities of great consequence that reshape the business environment, bringing both dangers and opportunities.
  2. To recognise that globalization and decentralization bring risks as well as rewards, and that more is sometimes different — that increased interdependence can create the conditions for “emergent” threats that are traceable to no specific element within the system.
  3. To take note of the human element in efforts to become adaptable, in part by organizing practices to decrease “entrainment of thinking.”

The Institutions that, for generations, enjoyed our trust have been exposed as untrustworthy. The model was created for the, predominantly, linear processes* of the Industrial era. Although the techniques and tools of management have certainly evolved, from what we now know about the nature of systems, our efforts may be misguided and more damaging than we could have known.

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Creators and casualties of complexity: why banks are eurozone’s fault line [BBC]

The familiar expression that springs to mind is “what goes around comes around” or, in Biblical terms, perhaps befitting the scale of the problem…

“as you sow so shall ye reap”

However, please note the deliberate use of the term “casualties” rather than victims. Because, the ability to socialise the losses renders citizens as the VICTIMS!

Here’s the lethal chain of causality: banks have found it harder to borrow because of their big loans to the likes of the Italian, Spanish and Portuguese governments, and because of fears these governments will struggle to repay their debts; but if one or more of the banks were nationalised, the perceived liabilities of these governments would increase; and that in turn would erode confidence in the ability of other banks to repay what they owe; and so on, till no institution in the eurozone is seen to be sound. Read more of this post

Complexity conundrum: Commerzbank and Capco’s complexity “coincidence”!

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

If you run IT, those are three of your most important KPIs.”

So says Peter Leukert, CIO of Commerzbank, one of the largest banks in Germany. Nice one Peter!

“Commerzbank has already seen some eye-opening results, one, a counterintuitive indicator about the need for master data management tools” Read more of this post