By: Dr Randall Carolissen, Dean: Johannesburg Business School (JBS), University of Johannesburg (UJ)
This article first appeared in Daily Maverick, published 17 May 2021.
Business leaders today operate in an increasingly complex, volatile and unpredictable global ecosystem. Seemingly random events become the norm, and counterintuitive phenomena challenge the logical mind. This is frightening terrain that has the potential to paralyse leaders who do not understand chaos.
When George Boole developed Boolean algebra in 1847, nobody could have anticipated the impact it would have almost two centuries later — as the foundation of the digital economy. By the 2000s, with the confluence of mathematics, chip technology and the internet, digitisation had rapidly ramped up on a commercial scale, with astounding and unimaginable results.
Our lives are now controlled by a highway of trillions of zeros and ones flashing around the globe, governing everything from the most sophisticated financial systems to appliances in ordinary households. The binary numbering system has come to dominate technology, setting the exponential growth of the digital economy. In 2020 the digital economy contributed $7-trillion to global Gross Domestic Product (GDP), growing 2.5 times faster than other contributors to GDP growth over the past three years, while the seven fastest-growing companies globally are all digitally platformed.
The debate is no longer whether technology supports core competencies of business, it has shifted to all companies needing to have their core business and technology infrastructure as competitive advantages to ensure future prosperity. But what does this mean for business leaders, who find themselves operating in an increasingly dynamic, complex, volatile and unpredictable global ecosystem?
In South Africa, for instance, business leaders find themselves contending with a political landscape marred by factionalism, fractious labour relations, fickle financial markets, unreliable supply chains, an education system that continues to operate on the verge of anarchy, among a host of other sector-specific challenges. Individually, these systems require nimbleness, astuteness, and a South African parlance of streetwiseness from decision-makers.
When these complex systems come together in a constellation, and overlap, the sparks literally start to fly. It requires a single seemingly small event to cause a system to become unstable and through reinforcing (constructive or destructive) feedback loops, trigger systemic collapse on a global scale.
For example, a confluence of weather systems that emanate in extreme destructive forces, or a relatively small slippage of ocean plates spawning tsunamis that reconfigure coastlines thousands of kilometres afield with massive fatalities. Or the current Covid-19 global pandemic, which can be traced back to patient zero first detected in China, which has had dire global ramifications. Or the assassination of Archduke Franz Ferdinand in 1914 in Sarajevo that triggered World War 1, and set in motion a chain of calamities that eventuated in atrocities of genocidal proportions in World War 2.
These are some examples of the “butterfly effect”, where an innocuous flap of a tiny wing can cause hurricanes on the other side of an ocean.
In this world theatre, seemingly random events begin to become the norm, and counterintuitive phenomena challenge the logical mind. This is frightening terrain, which has the potential to paralyse leaders who do not understand chaos and were trained to seek order for efficiency and progress.
As business leaders increasingly deal with such complex and interconnected systems, it requires the “rewiring” of their brains to establish new neural networks and mental constructs. Following the science of neurology, when confronted with complex tasks, new cultures and languages and even trauma, synapses in our brains rewire to increase our responsiveness and brainpower. Any graduate will tell you that they approach problem-solving in a much different way than what they did at the start of their degree.
Future-fit business leaders must therefore prime themselves to shake off Newtonian clockwork business training (touting predictability and order as the enablers to progress) that they may have undergone, and incorporate and reskill in quantum thinking.
The development of quantum theory in the early 1990s paved the way for an understanding of the universe, defining physical laws and embracing uncertainty and probabilistic theories as opportunities. This saw the quantum leap (pun intended) of technology that shrank the world and extended our information horizon beyond imagination.
Future-fit business leaders must appreciate that technology on its own is not a solution in itself to the myriad challenges they face. Many challenges remain in changing attitudes, paradigms and spheres of influence, including unlocking the immense opportunities of taking a cross-disciplinary approach and viewing uncertainty as an opportunity rather than a threat.
For example, future-fit business leaders must also understand the real threat of technopreneurs to business models. They potentially have more data about customers, suppliers and staff, and may well be planning to take over entire value chains with smart technology by offering lower prices with a higher value proposition. New merger models are now characterised by large companies buying out these technopreneurs to stay in the game.
To become a future-fit business leader also requires courage given the unfamiliar territory we find ourselves in with the digital economy beginning to dominate global GDP. Although this terrain is frightening, as the departure from a traditional and orderly business environment gains increasing momentum, the dynamism offered by complexity and chaos has proven to be fertile ground filled with promise and opportunity.
An appreciation of complexity and chaos theory are therefore essential tools for any business leader who seeks to prosper in the current and future reality of operating within a constellation of highly complex systems, driven by digital transformation and technology in the Fourth Industrial Revolution.
Future-fit business leaders must develop an understanding of chaos theory, and how it presents not only the biggest opportunity for innovation and the creation of new business models, but how best to manage differently paced, evolving systems to curtail meltdown and, ultimately, achieve progression and the advancement of humanity.