Complex Economy

Ceteris Paribus

Dave Kinnear 1-On Leadership

Here’s the challenge. We live in a complex world. Things are getting more complex every day. We try to figure out how to interact with that world; how to manipulate it. We build big complex systems in an attempt to model that world and make predictions based on the results. We analyze the data, and then, make a bold statement such as – Our new drug will be a hit in the oncology space, ceteris paribus (all things being equal.)

Therein lie the seeds of disaster – ceteris paribus is almost never applicable in our world. All things “never” stay the same while we manipulate one particular parameter. We can’t control what the competition will do or what some heretofore unknown start-up has cooked up by way of disruptive technology. Consumers are notoriously fickle; we don’t really have a clue how they will actually react to our offering. So we do the best we can and fool ourselves into thinking we’ve got a handle on what will happen.

The latest, and highly visible, example of this hopeful thinking are the giant insurance exchanges. Why were we surprised that they had and are having difficulty launching? (I wasn’t surprised and I’m sure many others weren’t either.) I’ve been on several large ERP installations in my career and none has gone as planned. The software, the hardware and the business processes were all much too complicated for us to predict all the consequences of the implementation. I chuckled when I heard all the promises of being “largely ready” for the launch at the beginning of this month. As complex as the systems were that I had to deal with, the concept of the exchanges and dealing directly with the public on a complex decisions like healthcare coverage made my challenges look like a cakewalk. Here’s what did surprise me: California’s exchange seems to be working quite well, for some 30 million people. So I believe the other implementations have some hope of success as well.

As leaders, we have to walk a very fine line between being positive, upbeat and Champions for the large complex changes we often have to implement and being ignorant of the details that can “kill us.” We also have to encourage moving forward with initiatives and giving the impression that we must succeed and at the same time making sure we have a plan “B” for when things don’t actually work out. All of which is vital to the survival of the company.

So what do you do to ensure that you are made aware of the difficulties being encountered by the folks doing the implementation? How do you balance “we must make it work” with having a contingency plan in your back pocket? When does your team’s “can do attitude” become obstinacy?