November 28, 2014

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Why Systemic Decision Making Matters

In a world that is volatile, uncertain, complex and ambiguous, we need strong tools to guide decision-making.

Probst-and-bassi

By Dr. Gilbert Probst and Dr. Andrea M. Bassi

Part one of a CSRwire series based on the book, Tackling Complexity.

The Making of Decision Makers

It is not difficult to be a decision maker. We all make several decisions every day. Having accumulated considerable practice over time, we even become good at making decisions.

And aren’t decision makers in the public and private sectors masters of their destiny? They decide what information to use when making decisions, how to assess the gravity of a problem, or the viability of an opportunity, and to act upon it. And this process is so simple that it often takes just a fraction of a second for preferences, which will be acted upon, to materialize.

All Decisions Are Not the Same

Current trends show that the data we have available for making decision is growing exponentially. We can track most Tackling-Complexity-book-coversocio-economic dynamics in real time (e.g., tracking traffic patterns and congestion with our mobile phones), and have learned to identify the causes of problems, even if these are distant in time and space (e.g., climate change).

In this context, we could argue that all decisions are dealt with in the same way. In other words, while there are different degrees of complexity, or differences in the depth of knowledge required to understand a problem, or recognize an opportunity, the approach we use seems to be largely the same: We “personalize” problem solving.

We become wiser with age, and our ability to deal with our personality and the way we perceive the situations unfolding around us improve all the time. We therefore make headway in generating information that allows us to use the same decision making process in the surrounding world.

Questions and Lessons from History

We are surrounded by successful decision-making stories. And failures. Once we could only react to events unfolding around us; now we more often than not manufacture (even global) crises, for which, we then need to find solutions. We have crafted a socio-economic system that is so strongly interconnected that our actions feed back and re-affect us within an ever-decreasing period of time.

What is happening? Why are we unable to find durable solutions? Why are many historical companies, the pride of entire nations, going bankrupt? Why are countries still failing?

The answers to these questions are complicated – even complex. However, it is actually quite simple to identify some of the causes of the above problems. In short, we are applying a process that works for us – monitoring what happens to us when we take action to solve a problem – to an ever-evolving system changing in ways that we cannot fully understand, nor expect. This new and highly interconnected world constantly takes us – humans living collectively on Earth planet – out of our VUCA-word-cloudcomfort zone.

Volatile, Uncertain, Complex, Ambiguous

If we take our experience as a model, can we apply this to someone else, or to a completely different system? How can we identify the multitude of causes that impacts the data we collect and monitor? How do these massive amounts of data help us understand how society, the economy, and the environment interact with each other and influence human behavior?

The acronym VUCA – Volatile, Uncertain, Complex, Ambiguous – increasingly applies to all aspects of our lives. Can the decision-making processes we currently use help us tackle such complexity? Are we making progress in recognizing that the future may look nothing like the past? Do we truly realize that future decisions will only be effective if they are not based on past experience?

Tools for Decision-making

The good news is that various tools and skills are available that will allow us to “see systems” and find correct entry points for intervention. Two companies, Bühler and DSM, started off with a very successful business model, decided to enter a new market and failed miserably. They used a linear approach and simply replicated their well-tested strategy in a very different socio-economic and cultural context.

After a careful assessment of their mistakes, and a systemic analysis of the markets they wanted to access, they crafted a successful strategic plan. This plan evolved from an exclusive focus on product development to adopting a more comprehensive approach that prioritized the local context. This more transparent and collaborative process allowed the companies to better understand consumer preferences and to involve a variety of stakeholders, which determined their ultimate success.

There are many such Futurecases, but even more failures.

We need to learn from history – specifically, we should learn not to replicate past successes. We need to avoid mistakes, because our interactions with the world should constantly change if we want to make strides towards sustainability (whether economic, social, environmental, or all three).

This post is based on the book Tackling Complexity by Bassi and Probst. Click here for more information on the book.

About the Authors:

Dr. Andrea M. Bassi is the founder and CEO of KnowlEdge Srl, a consulting company exploring socio-economic and environmental complexity to inform decision making for sustainability. He is also an Extraordinary Professor at Stellenbosch University in South Africa. In his work Dr. Bassi is a project leader and researcher with over 10 years of experience supporting more than 20 governments, several international organizations and business leaders primarily on green economy and green growth strategies, action plans for resilience and risk mitigation, and sustainable development planning.

Gilbert Probst is Managing Director, Leadership Office and Academic Affairs, and Dean of the Global Leadership Fellows Program at the World Economic Forum. He is also a full professor for organizational behavior and management and Co-director of the Executive-MBA program at HEC, University of Geneva, Switzerland. He served as the president of the board of Swiss Top Executive Training (SKU), the Swiss Board Institute and as a member of the board of the Swiss Management Society.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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