“We did not expect this! “
“It happened so fast.”
“We never thought it would be this bad.”
These are the kinds of comments that we hear more and more lately. Even the most seasoned tipster have found themselves unable to guess at an increasingly diverse array of disruptions: a sophisticated cyberattack, a devastating hurricane, a sudden grid collapse, or a ship stuck in the Suez Canal. âWe will be in unprecedented territory again and again,â Rachel Cleetus of the Union of Concerned Scientists told NPR in a recent interview. Indeed, these days are predictable and unpredictable.
The two groups within organizations that I believe are responsible for helping companies prepare for such turbulence are the risk management team and the business continuity team. Unfortunately, neither is well equipped for the unprecedented. The people of these two regions face known and historical threats and are essential in this regard. Yet the assumption underlying their function – that relative stability is the norm and disturbances are episodic – is becoming obsolete. Such predictability is increasingly an illusion. As a result, the risks facing organizations are becoming increasingly confusing and complex. Executives need a different mental model to manage them.
In 2019, I wrote about four trends that I’ve been following for almost 15 years that suggest consistency is giving way to relative turmoil. These are climate change, rapid urbanization, a split between an older global north and a younger global south, and greater global interconnection through travel, trade and technology. While the specifics of each of these factors are difficult to predict with precision, the general direction is clear – they are classic ‘gray rhinos’ (obvious and overlooked risks), sniffing and ready to charge – and should inform any perspective looking to the future. the future. Moreover, they are not discrete phenomena. They are part of a complex and adaptive system with many overlaps and interdependencies that can trigger and amplify disturbances.
A new mental model to assess risk
To better understand these challenges, I use a version of âshear layers of change,â a concept commonly associated with architecture. The term was coined by Frank Duffy, a British architect, then updated and developed by Stewart Brand in the 1990s. The basic idea is that the different components of a system change at different rates – in a building. , for example, furniture can be rearranged daily, while plumbing and other basic support systems can last for years without change, and exterior walls can stay fixed even longer. . As long as these rates of change are predictable and constant in relation to each other, one layer does not overlap with the other. The applications of this model go far beyond buildings.
There is a problem with the assumption that relative stability is the norm and disturbances are episodic. Such predictability is increasingly an illusion.
The brand has repeated the concept of Duffy over and over, ultimately applying the idea of ââshearing layers to civilization and posing six distinct elements (from fastest to slowest evolution): fashion, commerce, l infrastructure, governance, culture and nature. The faster layers spur innovation, while the slower layers provide stability. When everything is in balance, the system works well. However, if a layer accelerates or decelerates, significant disturbances can ensue. In the structural analogy, imagine how problematic it would be if the exterior walls of your office building were rebuilt every two or three years.
We see this imbalance playing out today. Gig and sharing economies, cryptocurrencies and social media platforms, for example, accelerate the commerce layer as the creaky cogs of governance struggle to keep up. Nature, Brand’s slowest and most stable layer, is also accelerating. I spoke with Alice Hill, senior fellow for energy and the environment at the Council on Foreign Relations and author of The fight for the climate after COVID-19, and she said, âWe are going down from a stable climate to an unstable climate. We’re picking up speed and we don’t know what’s down there. The consequences of climate volatility will spill over into other layers, upsetting long-established rhythms.
How to improve risk perception
While the Shear Layers of Change model does not tell us how to deal with momentous change, it is useful in helping leaders define risk in new ways so that they can anticipate possible sources and effects. upheavals. What effect does the fast moving fashion technology have on your business and your industry? What cracks in our culture could be caused by the insecurity of food, water and housing resulting from climate change? What economic models persist only because no one has yet imagined an alternative to the status quo? What change in conditions would make the moment conducive to the emergence of latent innovation? Where are the opportunities and threats? And how can your business help solve emerging social and environmental challenges to help customers, workers and communities thrive?
Another approach to weathering the turmoil comes from April Rinne in his new book, Flux: 8 superpowers to navigate in constant evolution. She suggests ârunning slowerâ as a way to improve your perception and understanding of what is going on and happening around you. “Faster, stronger” is not the solution to all problems. She writes, âThere is an inextricable connection between your ability to slow down and your ability to thrive. What weak indicators of impending disruption might you spot if you weren’t “always active,” addicted to the immediacy of the present?
A third facet of the solution is to establish ever deeper connectivity throughout your organization’s ecosystem. Work on embedding future intelligence across all functions of your business and with external vendors, customers, and others who may be able to see the things you are missing. Always test your assumptions and question the orthodoxies. It helps develop foresight skills so you can anticipate changes rather than react to them.
An increasingly uncertain future
The conditions in the world are such that trouble and confusion are inevitable. Unfortunately, there is no business discontinuity department that can step in to save you. There shouldn’t be either. Acceptance and understanding of the new ânot normalâ must permeate your organization if you are to dance with the disruption rather than being overwhelmed by it.