As the fiscal cliff drew nearer in the final days of 2012, the cry for certainty grew louder from many in the business community. Uncertainty, they claimed, was inhibiting their ability to manage their companies efficiently and make informed strategic decisions that would help boost the economic recovery.
Each time I heard this basic narrative repeated in the news, I wondered about whether there was really something to it or if it was kind of a cop out. I mean, when has anything in life (or business) ever been certain or completely predictable?
Closed linear systems (like machines) are predictable with clear cause and effect relationships between their parts. These features make them controllable so that efficiency can be optimized.
Open non-linear systems (like biological systems) and their myriad inter-related components and sub-systems, on the other hand, interact in complex ways that defy predictability. About the best we can do is develop forecasting models where slight changes in key assumptions will often yield dramatically different outcomes with varying levels of probability.
While efficiency is the key to succeeding in a linear system, resilience is the key to surviving and thriving in a complex system over the long run.
As the financial meltdown so clearly taught us, succumbing to the illusion of thinking you can control or expect certainty from a non-linear system is not only futile, it’s like playing Russian roulette. Very risky.
That’s why in these volatile times of increasing economic, social and environmental uncertainty, boards of directors need to have a keen understanding of complexity and how to skillfully manage the dynamic tension between the dual needs of efficiency and resilience; between short-term profits and long-term business value.
In his excellent book “Resilience: Why Things Bounce Back” Andrew Zolli writes:
“If we cannot control the volatile tides of change, we can learn to build better boats. We can design – and redesign – organizations, institutions, and systems to better absorb disruption, operate under a wider variety of conditions, and shift more fluidly from one circumstance to the next. To do that, we need to understand the emerging field of resilience.”
Rather than pining for certainty, boards that are committed to creating long-term value must make building resilience and adaptive capacity higher priorities for their organizations, making them “better boats” with a new breed of captain and crew.