A chaotic era we live in, indeed. Here, right now, in the middle of the 4th industrial revolution we must try to cope with the digital disruption, Donald Trump, Brexit and climate change. And that’s just a handful of (chaotic) variables that confront our businesses every day.
So how on earth (maybe shortly Mars – even more chaotic!) should we approach these extraordinary onslaughts? I don’t know, but let’s ponder on it…
Maybe it’s best to start when everything seemed simple and made sense. A couple of decades ago…
Order, the forgotten time before this chaotic era
We are now in the 21st century.
Not so long ago, in fact during the 20th century, running a business was not as big issue as it is today. I mean, take department stores as an example. These stores existed for generations, doing business at the same locations, selling the same products to the same customers.
Indeed, managing department stores was a boringly predictable task. If you did your long range planning, have drafted a five year sales budget and have employees willing to work for the rest of their lives at your store – well then you’ve made it.
At that time there was order, and hence the business was run orderly. In fact, businesses could be run by managers using the following assumptions:
- That organizations need a top-down approach to strategy and objective setting;
- That the role of management and human resources is to measure/control what is being done to achieve objectives and to provide the corresponding incentives for performance or non-performance; and
- That monetary incentives motivate people.
“Accepting these assumptions, grounded in a dogmatic approach, means that CEOs and executives decide on behalf of people, managers control and HR professionals develop complex systems to measure performance, incentives and consequences”, explains Paolo Gallo in Forbes.
But, the chaotic era started to take its toll. And traditional businesses such as department stores started to close down in droves.
So why did the sudden carnage happen? It was because the traditional linear thinking that managers relied on during the time of order wasn’t effective anymore at the time that chaos arrived. Even more, managers failed dismally because they faithfully believed that their strategic plan is a means to an end. In this chaotic era, it was tragically just an end…
Everything but order in this chaotic era
And then there was chaos!
The chaotic era that we are experiencing now has its roots in information and communications technology (ICT) sector. The changes in ICT happened so fast that its effect on businesses was reported as ‘disruptive’ back in 1997. From the turn of the century the chaos caused by the disruption increased in scope and intensity. And it was getting worse…
Advances in digital technology facilitated even more and complex innovations and applications up to point where we are now, and going further. Disturbingly it resulted in robots building robots, artificial intelligence intruding everywhere – and customers taking control in the digital channels.
The applecart had been turned over. And there is no coming back – chaos, therefore…
Luckily, even chaos can be explained. The chaos theory argues that relationships in complex systems such as markets and organizations are nonlinear, made up of interconnections and branching choices that create unintended and unexpected results 1. According to the chaos theory, the map of the future cannot be drawn because of the non-linearity of relationships. This creates a tremendous challenge for business decision makers.
This is exactly what happened with businesses that failed to embrace the opportunities of this chaotic era. But surely there must be something good coming from chaos?
Out of chaos comes insight
The chaotic era has forced us to reconsider our assumptions about managing businesses.
Here’s why. Conformity, defined as adhering to conventional wisdom, usually gets leaders to the top often. However, it also disqualifies them from grasping the scale and nature of disrupting chaos. No second guessing, these are the top-down managers that rose through the ranks by listening and conforming to those like them.
But conformity is the last thing that business leaders need to consider now, according to Nik Gowing and Chris Langdon, Strategy + Business. Indeed, according to Nik and Chris, taming chaos requires precisely the opposite. It needs leaders to think, and plan for, ‘unthinkables’. In order to do this, it is imperative that leaders have a clear purpose. They also need to embrace diversity, inclusivity, and new behaviors, which will help them to understand and even anticipate the impact of disruption.
Business leaders need new skills to manage uncertainty and enjoy opportunities in the chaotic era.
The skills that leaders need to enjoy opportunities in the chaotic era
I think by now it’s clear that the traditional way of running a business in this chaotic era it a waste of time. Jared Lindzon, FastCompany proposed the following five skills business owners need to lead the company of the future:
- The ability to think of new solutions. One of the most valuable assets of future leaders is their willingness and ability to create something entirely new.
- Being comfortable with chaos. In an increasingly chaotic business landscape, the leaders who thrive are those who work well in unknown conditions.
- An understanding of technology. Successful leaders of the future will at least be required to demonstrate a robust understanding of the capabilities, applications, and future potential of emerging technologies.
- High emotional intelligence. In a future that incorporates more artificial intelligence in the workplace, leaders who are emotionally intelligent will ultimately thrive.
- The ability to work with people and technology together. The most effective leaders of tomorrow will understand how to delegate between humans and machines in a way that maximizes the capabilities of both.
The clock is ticking. Every second gives birth to a new app, tool or system – which tells us that the change or disruption will never end. Although the chaos that businesses incur will be on a galactic scale, events in the marketplace may have to be attended to on a micro level.
We will find order in the digital chaos in the form of bits and bytes that are linked to individuals, which are now our friends. Adapt or die…
A well researched and written Business Plan helps to get your business started the right way.
1 Samli, A.C. 2010. Developing counterchaos marketing strategies: the key to survival and success in modern chaotic markets, The Marketing Review, 10(2):185-202.