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The complexity of the global environment

Written by on 13 September 2010

Much is talked about the complexity of the global business environment. To understand the true nature of the current operational environment, a wider perspective is required. A number of factors have emerged and combined to provide key strategic “thematic themes” that will resonate over the coming decades. Businesses must understand these key themes and appreciate the challenges that they will face.

Understanding complexity and volatility

Many business practitioners have found the increased complexity combined with the volatility of the global environment challenging. Key to understanding the nature of these factors, the complexity is when a situation is presented that has a number of variables that cannot be easily resolved within the individuals cognitive experience or capability. This situation can then become volatile when another factor (such as time) is introduced, which creates a situation where the individual is overwhelmed with their own inability to operate effectively within the context.

Managing complexity and volatility

Individuals can become better prepared for managing complex and volatile situations. This can be through a combination of training and experience. It is critically important to understand that complexity and volatility are individual constructs. What is complex and volatile to one individual can be the normative state to another. It is important to understand that individuals can be developed to operate more effectively within these contexts but the question of whether the organisation wishes the individual to operate within their environment will largely rely on their own leadership qualities.

Ambiguity and managing risk

When an environment becomes complex and volatile, it is unlikely that any clear picture or definitive decision will become apparent to an individual. The ambiguity of this dilemma can create a stagnation or decision myopia within an organisation, where individuals wait for the answer to emerge. However, leadership is the ability to effect change and engage the whole organisation in managing the context as a collective. Rarely will the answers to a problem come from the leader. These insights will often emerge from the wider community, the secret is spotting the answers, giving direction and support to achieve the aim and it is this that is effective organisational leadership.

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Comments (1)

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Iain Lownes wrote at 15:23pm on 16 September 2010

The realisation that uncertainty and complexity must be managed is critical to decisionmaking. Many assume that finance raising or concluding a deal requires fulfilling simple rules set by the funders. "Fact" which is often itself a more subjective term can be less powerful than personality or creating a vision. In order to achieve your aim you have to overdetermine the outcome and reconise the act of will required. Picking up on Ivan's point about stagnation in an organisation it is important to note that making no decision or waiting are both a decision.

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