Complexity:: Strategy and the ‘threatened’ business model


It would be wrong to say that I am in total agreement with the content of this article but that is simply because, courtesy of Ontonix, I hold an ‘informational advantage’! That is because, of course, it is a great deal easier to identify which products, services or aspects of the operation are dragging the model down when you can, objectively, identify sources of internal [endogenous] risk and measure their impact upon the stability [or resilience] of a complex system.

But there is a lot of good stuff that I would highly recommend. Particularly for those readers who have already determined (subjectively) that any downward trend is temporary, a result of ‘bad’ luck/timing, financial volatility or unforeseeable uncertainty. Of course, you may be right but you COULD be wrong and your inaction might only be exacerbating the problem…or accelerating the rate of decline.

I dread to think how much valuable resource is wasted by organisations treating symptoms that are self-generated. John Seddon, a leading ‘Systems Thinker’, talks (with some humour) about the need to address the right problem instead of, inadvertently, creating more "failure demand". It would be fair to say that with an understanding of the complexity of business systems – aided of course by a means to identify and address sources of risk and uncertainty – even the business owners, without whom the organisation may not have come into being, can learn a great deal about a business they feel they know intimately.

But this ‘mistress’ has secrets that will remain hidden unless they are coaxed out…

Business ecosystem

The Gravity of Risk Can Slowly Crush Business Models

Executives must proactively assess their business model, and do so on a regular basis. What was once a great business engine can grow less viable years later because it has become outdated or ineffective due to market shifts or new developments in industry’s business environmental conditions. It is the course all businesses must run, facing the need to change along the way in order to survive.

Risks are about events that, when triggered, cause problems. Hence, risk identification can start with the source of problems, or with the problem itself. It is important to remember that risks emanate from threats, but the manifestations are much broader and may be internal or external to the organization.

Strategy and the Threatened Business Model | Corporate Strategic Planning | Strategic Planning Articles and Resources | Management Consulting Services Firm | Business Strategy Consulting.

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.