In the last few months, the world has been learning devastating lessons from uncertainty. It comes at a grave cost of life, health, wealth, and psychological wellbeing. If someone tells you that there is a playbook for this level of disruption, they are sadly mistaken. We can and should learn, however, from key trends, historical precedents, and wise prognosticators.
Several years ago, a dear friend of mine, Darrell Mann, CEO of Systematic Innovation, predicted that some catastrophic event would soon plague humanity. He could not determine what it was going to be, only that the systems that humanity created were going to be challenged with devastating effects in the short term. His prediction was rooted in a data pattern his team had researched, which showed a major global disruption every 80 years (or every 4th generation) over the past 2,000 years. Ray Dalio, Co-Chief Investment Officer at Bridgewater Associates, concurs with the same timeline in trends, recalling that the last time in history we faced a similar scenario to the one we are experiencing now was the Great Depression in the 1930s. For more information regarding these trends, I encourage you to read the published works by Straus and Howe, authors of The Fourth Turning: An American Prophecy—What the Cycles of History Tell Us About America’s Next Rendezvous with Destiny.
Another way to think of this pattern of disruption is to consider the evolution of humanity as one giant S-Curve. An S-Curve is the measurement of speed in the adoption of new innovation. Before reaching the top of the S-Curve, there will be disintermediation, which moves humanity from the current S-Curve to a new one. This transition point in the innovation cycle can be caused by a new innovation or an unrelated disruption. Either way, there will always be disruptions and innovations that follow, leading to large-scale change. The point in which the change takes off is known as the tipping point. Businesses have observed this phenomenon since its illumination in 1903 by Gabriel Tarde, who first plotted the diffusion S-Curve.
“The search for simple – if not simple-minded – solutions to complex problems is a consequence of the inability to deal effectively with complexity.” –Russel Ackoff
The Cliff of Uncertainty
As a multi-disciplinary partnership, we at CO2 Partners have found Dave Snowden’s Cynefin framework to be helpful in better understanding the operating environment of an organization. He developed Cynefin while at IBM to help decision-makers better understand how to behave based on their assessment of the organization’s environment.
This model is not a categorization model; it is a sense-making framework. It provides insight into what to do depending on where you are in the model: Obvious, Complicated, Complex, Chaos, and Disorder. The ability to determine where you are is often the biggest challenge. Disorder, at the center of all environments, happens when you do not know which environment you’re operating in. The default for most leaders is to be fixed in what is most familiar and comfortable for them and in what has worked for them in the past. It’s not necessarily where they should be operating, however.
Climbing Out of Chaos into Complexity
If you are in Chaos, Cynefin helps us to see that success in this environment comes from Acting first, then Sensing, then Responding. This approach feels wholly counterintuitive to leaders who have found great success in the world of best practices (Obvious environment.) In today’s environment, your organization may have been thrown into Chaos by COVID-19 from what was an Obvious or Complicated operating environment. The model intentionally illustrates the cliff dropping effect and loss of control when falling into the Chaos environment, which many of us are feeling today.
Recognizing the patterns and corresponding opportunities those patterns offer allows CO2 Partners to work with a wide variety of companies, some who are experiencing uplifts from the challenging environment because of the particular industries they compete in, while others are facing the most considerable challenge their companies and executives have ever experienced. As coaches and leadership development experts, we rely both on proven models and years of experience in operating businesses. For years, we have been communicating to our client partners that the art of running a business is not to simplify it, but to allow it to function in a Complicated or Complex environment. When one simplifies their business, they take out the elements of competitive advantage and the ability to build resiliency in a world that is anything but simple and obvious. Those businesses that have relied solely on best practices, it’s worth noting, are among the most substantial casualties of the latest environment change brought on by the COVID-19 crisis.
Much of CO2’s work with clients is in helping them understand during more stable (Complicated and Obvious) times, their team is often more equipped for the growth and scaling of the business using complicated operating models in order to gain a competitive advantage. We caution them against falling into “easy button” best-practices solutions that make their business more fragile and less resilient.
For those clients whose best skill set is leading in Chaos and Complexity, they have been able to be opportunistic and see patterns for intervention during this time. The danger they face is in overuse of that strength, which may slow down the growth of the company. In short, finding the right balance of stability and innovation is key for all companies.
When we enter commit wholly to one go-to-market strategy as a company or as a society, the environment and, subsequently, the world inevitably has something to say. Understanding how to navigate those shifts in the world and see the changing environments is what we at CO2 Partners love to help our leaders do.