understanding opportunity and risk

minimising future risk       creating sustainable advantage       creating opportunity

BUSINESS EVOLUTION: the order of chaos August, 2010

In the entire universe there are some basic rules. If left on their own:

1. a completely chaotic system will eventually create order
2. a completely restrictive system will create chaos

The key to avoiding these oscillating extremes is balance. In nature this is termed the "equilibrium" and is usually a free flowing process of complex interactions. This is much the same in business - but requires the pro-active management of change to maximise the business benefits.

Does this sound a bit strange?

Well, actually, although it's generally how business works, it's how the natural world works and as part of both the natural and the business world it's also how human society works. Therefore although we may not realise it this has a massive impact on all our lives. The trouble is … where as people will invariably just get on with their lives and not often be too concerned with the dynamics of behaviour and evolution, business simply can't afford to do that. This is exactly the critical point of conflict between business and reality. Many businesses do not understand or just "pay lip service" to the changing nature of their commercial landscape in the mistaken ostrich belief they are innocent by-standers. They do not understand and often do not apply organised change management to (as the name suggests) manage the changes required to remain relevant and also to look beyond the immediate to the future they are developing into, essential for NPD and market share.

Quite often therefore without a pro-active management, without the focus of an equilibrium, the business will veer towards one of the behavioural extremes of either chaos or restrictive control.

Ok, let's get back to basics.

1. a completely chaotic system will eventually create order

As an example, look at social networking. On the surface it's just mad. Yet this "free for all" creates groups and communities of interest where people share experience - and learn. So, while there remains a general chaotic approach, underlying structures of behaviour begin to appear, creating function and purpose (specific to the groups), and attracting greater attention, creating gravity.

This is the same for how planets are created, how galaxies form and move, how turbulence in a river creates changing paths, how wind moves, how people move through a crowded street, etc, etc, etc. It's all around us.

2. a completely restrictive system will create chaos

As an example, look at the highly engineered processes and restrictive cultures of some organisations. Some are just so process driven and not open to question / change that they quickly become the focus for organisational and people frustration - and so start to lose business and certainly lose skills due to its inability to change.

The thing is … engineering processes should not simply be about engineering. The term "engineering" implies one way, the best way and the only way. A Lean production environment. This is fine for machines and for computers - but not for people. People are not machines. They cannot be viewed as machines and expected to work as machines. If a business wanted people to be machines why not just build the machines and forget about employing staff. It doesn't quite work that way and is why we, as people, are employed. We are employed because we bring something different, something special, something needed to the work place - and our input is valuable.

We can think - and we benefit business. It is this benefit the management of change addresses and actively enhances.

The world is changing. The pace of change is increasing. To remain relevant, each and every organisation needs to actively and pro-actively change with regards to its market and the general changing world. The management of this change is not just a "nice to have". It is a business necessity. It will make your business. Without it, it will break your business.

A key element of this management of change is the gradual evolution of the business. This will require process change, refinement and remodeling. It will require new skills and now outlooks to overcome new challenges. It will require innovation and the type of culture that can accept innovation. It will require dynamism.

It is all too easy to re-engineer processes to be highly efficient and leave no room for error, no room for deviation, no room for innovative input. Yet rule 2 dictates this will quickly unravel because, people being people, they will find short cuts, change things to more suit themselves, respond to other changes, like or dislike political moves, etc, etc, etc. Slowly but surely the restrictive processes will either devolve into a myriad of unstructured local change and the business loses control resulting in "fire-fighting" and high internal costs, or the restrictive processes will stop the flow of business because lack of change in a changing work invariably means that which does not change will be left behind.

Creating and refining processes (an essential) needs to have an inbuilt flexibility to allow for change in a changing world, to allow for business evolution - and from good ideas on how to do things better. This is the effective management of process where the system is not viewed as being "written in stone", but there is a reasonable expectation that the system will be questioned. If the system is robust and effective there is no harm in it being questioned - and tested. If the system does not have this inbuilt flexibility, if it concentrates only on efficiency and the maximisation of effort, staff will be alienated. Some will leave, taking with them valuable skill and knowledge. Others will stay but will hardly be in a position to contribute to their full potentail, and will not want to because the business clearly does not value their contribution.

Innovation will stop. NPD will be ineffective and completely miss the moving target. Market share and profitability will decrease as internal costs increase.

Probably we all have our tales to tell about this.

I am constantly surprised at how "professionals" discuss and propose process development in terms of machine like behaviour without understanding the human element or the psychology of business. A business is an entity. It is a commercial creature. Creatures move. They change with the changing environment. It doesn't matter how big and powerful the creature is, it's survivability depends on how well it can move and how well it can change to changing circumstance - and look beyond what is required today, to what will be required tomorrow. This is intelligent working.

If history teaches us one thing it is that the past is littered by such creatures who could not evolve quickly enough. We have the fossil record to prove it. Accepting inflexibility, high costs and the loss of business is disastrous. Don't do it. Do not be consigned to the fossil record.

Regards

JS
 

If you don't understand the risks, how can you prepare? Can you afford to let the issues be blurred?

The turbulent 21st century

life isn't black and white

central@alt3.co.uk