Catastrophic change and the safety of buying IBM.

For a while now I have been advocating that the business world I inhabit has undergone a paradigm shift or, in mathematical terms, a catastrophic change.  What I mean by that is there has been a fundamental change in many of the assumptions affecting business and as a result we need to think about and manage business and its resources very differently; a transformational change from one working framework to another.

As business has realised that it no longer knows what it thought it knew and has less idea about how to move foreward with confidence there has been a commensurate change in risk appetite and thus behaviours. Not surprisingly there has been move to risk aversion, not only on a corporate level, but also, more relevantly, on a personal scale. This is, in my opinion, driving some counter-productive behaviours.

When I started working some years ago, there was a management saying that no one got sacked for buying IBM. There may have been financially more advantageous deals around with other manufacturers, but IBM was the "safe" decision. Well in the current world it seems that the equivelant position is to be seen to be trying something new (with new people). It seems that to draw upon past experience and personnel involved in the "old" business is the risky option, even where they have shown an ability to adapt and create. Much safer to do "new things" with "new people", because even if the result is no better then at least you tried.

This is a bit like throwing the baby out with the bath water. The big unspoken risk is that one makes a poor trade, bringing in blatant and unfounded opportunism in place of good judgement, resilience, and other qualities that are still relevant and valuable. In contrast those that are already in the company have a bond and an understanding that helps them work together (the operative word being TOGETHER). Yes, they may need new skills, they may need a refocussing of mind and body, but at the core they already work together. They also probably know many of the issues that have been faced and the pitfalls to come. To discard this carelessly seems wasteful, yet it is the most common pattern I observe these days.

Part of this problem is changing the "contract" with existing staff, frequently undermining loyalty, trust, respect, etc. and thus engagement and commitment. It is not surprisng when this elicits what are seen as undesirable behaviours. I have spoken of reciprocity, of investing before one expects to accumulate. Of course it is much more comfortable to bring in people you know, but that just makes a bigger group who do not know the company. Usually it is more devisive than constructive, even if it does give an illusion of quicker progress. I can think of a number of examples, that I won't identify, where after an initial burst of progress, things slow right down as the newcomers (re-)discover all the previous staff already knew.

So you get my view? It is to build on the positives. By all means augment them and weed out the irrecoverables, but be very wary of wholesale turnover when you see it in teams that are meant to be delivering significant and startegic change to you.

Now I would like to explain Catastrophic change as I think the mental image will help you identify it when you encounter it in your world.

Catastrophic Change

Some years ago a college friend gave me a book that is now rather yellowed, called " Catastrophe Theory" by Denis Postle. It is by necessity a branch of complex mathematics with multiple "dimensions" and some wonderful names like parabolic umbilic. In it however is a simple diagram that I have held in my head and used a number of times to understand this type of change.

In essence the the concept is that there are behaviour surfaces that represent all the likely behaviour for a set of conditions. Let us take an example of trust and argue that it is a function of both credibility (ie can they do the job required) and confidence (will they do they job required). The red surface below represents all the levels of trust that could exist for the various levels of credibility and confidence.

Now if that surface was not smoothe like that but had a fold in it as illustrated below.

While much "normal" change can be pretty much undone by reversing the factor that created the change, a catastrophic change cannot. For example a 1/2 % change in interest rates will change business behaviours in some way or another. This could be modelled and factored into business plans etc. The reversal of that 1/2% change would reasonably be expected to largely reverse that position, bringing the world as a whole back to pretty much where it started.

The implications are twofold. Either you choose stay on a new "level" with new rules about action and reaction, change and resistance. Your new realities will be truly new and you will need to find new measures of progress and recalibrate success. One implication is that "IBM" may no longer be the safe option!

IF you really need to regain your original position it will be a much harder longer path through areas you are unlikley to have experienced before. This may be so different and so tortuous that it may be practically impossible to recovery to position A.

In this latter case there is a grieving/acceptance process to deal with the loss of the old reality.

I have found these diagrams and thinking useful on a number of occassions and think they are very relevant today. Do let me know what you think?