I recently spent some time speaking with the director of a well known consulting firm about the possibility of incorporating complexity science models into his practice. I was struck by his choice of language as he described to me what he was trying to accomplish for his clients.
He said that he was trying to make the "cause-and-effect relationship between the clients decisions and the resulting outcome clear." For example, he went on to say that sometimes his clients did not seem to realize that saving $2 here was going to cost $2000 somewhere else. Or, alternatively, the client might have a correct intellectual understanding of a situation but due to momentum or other pressures found it impossible to make decisions consistent with the outcome they wanted. He went on to say that this was symptomatic of a general difficulty in seeing business issues holistically.
I got really excited as I listened to his story. Recently, I have been wondering if naming this blog "Cause-alities" was wise. Much writing about complexity science seems to emphasize the elusiveness of cause and effect relationships and seem to suggest that we cannot understand the consequences of our decisions. Well, this is where the "attitude" part of my blog's tagline kicks in.
In matters of management I think that leaders need to invest in understanding as much of the cause and effect chain that drives their business as they can. They will find the real value of a "systems understanding" (to rename the cause-and-effect chain a little bit) in the realization that, to a large extent, the future they get is the one that they create through the decisions that they make.
This is a vastly more powerful notion than the traditional "predict the future and I'll react" mentality.
What this boils down to is that in much of the business system the "cause-and-effect chain" is really a "cause-and-effect loop." And our decisions are in fact part of that "cause-and-effect loop."
In practice, the only way to develop deep causal insight into business systems is through a complexity science simulation model. As I've written before a spreadsheet, while sometimes useful, is inadequate to describe how a business works because business systems are feedback systems and spreadsheets simply don't have the expressive power to describe feedback.
Finally, I have to acknowledge that not everything that happens in our business is something that we created through our actions. The environment is important and external events are important. Nevertheless, in most cases, the trajectory of the firm is a result of management leadership, not outside factors.