One of the first metaphors for chaos theory, penned by Edward Lorenz, centres on the idea that the flap of a butterfly’s wing in one place causing a Hurricane in a distant region several weeks later.
As our world gets ever more complex, with the interaction of many borderline chaotic systems, from environment and climate change to High speed trading algorithms in stock markets , the likelihood of sudden, dramatic, unforeseen events increases. This morning, Charlie Bean, the outgoing deputy governor of the Bank of England pointed out a number of potential “flaps”. The likelihood of increasing interest rates in UK meeting housing demand and regional pricing bubbles, the uncertainty in Ukraine, and rate rises in the USA.
Yet we are still training and coaching businesses as though normal is back. Rote learning, “Guru systems” and a dangerous lack of curiosity. Normal has left the building, and we are not likely to see, for many years, the benign stability that characterised the industrial age.
We are regressing to the mean, which means volatility, and that we have to be self sufficient. We have already seen how banks and other large institutions react to crisis; a swift pulling up of the drawbridge. In a fiduciary sense, they are right to do so; their prime responsibility is to their shareholders, not the society where their clients live. That makes them very conditional partners.
So, within every business plan, there needs to be a line of “what is it that we do, that we do better than anybody else, and for which there is a sustainable need”. If times get tough, can we cut back to our core and still survive? Are we confident in those on whom we rely?How exposed are we? Are we happy with that risk?
This is not doom mongering – anything but. With such confidence, we can dance happily with uncertainty, in the knowledge there will always be opportunity, even when we hit those inevitable bumps in the road. This is just an observation. Choose your partners as carefully as you pick your friends. You can be sure that, within the next few years (at the latest), something is going to happen that will test that relationship.