Читать книгу Managing Through Turbulent Times - Anthony Holmes - Страница 6

Turbulent times are pernicious. They are the periods when the structural and financial weaknesses of our organisations become exposed and consequently, because of the stress they induce, some, perhaps many, of the individuals we rely on to manage our institutions begin to function ineffectively and sometimes irrationally.

Our language expresses our conceptual preferences and few people enjoy or want to preserve a period of turbulence. We speak about ‘re-establishing control’ and never about ‘recreating turbulence’. We prefer peace to war; certainty to uncertainty; calm to storm; progress to retreat; compliance to lawlessness; positive to negative.

In general, our social system has developed to function best in times of stability, when a significant level of control is possible, the rule of law prevails and reliable predictions of future conditions are feasible.

So turbulence is an abnormal and undesirable state in which normal procedures are unreliable or simply ineffective and we want to navigate through the abnormality quickly and safely in order to resume our day to day activity in a more conducive environment.

Natural disasters such as the Asian Tsunami of 2004 and Hurricane Katrina that devastated New Orleans in 2005 provide examples of events that have a significant impact and occur suddenly without adequate warning to facilitate protective or preventative action. The only response is to address the consequences.

Economic turbulence is different in that it emerges gradually, is sometimes predicted, always argued about in advance of its impact, often denied and occasionally ignored. Despite any advance discussions most managers are unprepared. Turbulent times, irrespective of the cause, are anathema to corporate managers. Turmoil undermines the conditions they prefer, some say need, to ply their profession.

Moreover, economic turbulence in the form of recession is a natural feature of the business cycle that is characteristic of the capitalist system and it is therefore an ever-present possibility. It is a necessary adjustment phase that releases excess pressure from the system created when asset values exceed their economic value by too great an amount. In simple terms when a bubble forms.

So why are managers anxious about operating in what should be an anticipated phase that has been encountered sufficiently often to have enabled the learnings to be codified in the managerial toolkit?

I believe that such general economic turbulence is not dissimilar to widespread warfare. You cannot avoid it, you may or may not survive or be disabled, you may endure without physical damage and, for a minority, it will be the most rewarding period you have encountered, but few of those affected by it make adequate preparations.

When hostilities have ceased most people do not want to pour over the ashes but to get on with rebuilding, so the lessons are rarely learned and each subsequent occurrence is confronted without preparation as if it were a novel event.

My objective is not to take political turbulence and apply it to the corporate world, although the similarities will resonate throughout what I have to say. My concern is exclusively with how corporate managers approach turbulence and I shall be inclined towards how they should act in a climate of general economic turbulence, although this isn’t the only type of disorder that can affect their business.

Turbulence arises in companies because:

 Companies and markets do not have the dependable nature of a machine that enables them to be controlled in all situations.

 The economic world is not a knowable and controllable place although we would like it be so and, for most of the time as managers, we delude ourselves that it is, more or less.

 Over the last 50 years it has become clear to mathematicians and economists that the more interlinked a system is the more it is susceptible to chaotic episodes and turbulence.

 Additionally, it is apparent that the faster you run a system and therefore approach its operating limit the more unstable it becomes.

There are three big ideas which I believe provide the greatest influence:

 The advent of modern telecoms and computers has facilitated an exponential rise in both connectivity and networking, which has removed the limits to the pace of activities previously imposed by the speed of communication.

 We have the capability to delude ourselves that more sophisticated analytical tools and models enable us to accelerate our activity securely to a hyper pace and thereby engage in marginal activities or operate at a scale that previously was untenable.

 We can fund this by increased leverage which removes the constraint of capital availability but increases the company’s vulnerability to financial distress.

As managers we seek the comfort of stability and control but perceive (and then deny) actual and potential instability, but there are situations the reality of which we cannot ignore and we argue that we cannot act because these are chaotic situations of complexity and are unresponsive to our conventional toolkit.

Most of our scientific management tools were not designed to function in a period of instability or economic contraction. They originated in an age when our economic system was less interconnected and somewhat slower paced. It is not surprising, therefore, that they do not seem to work as well today as they have in the past.

The near collapse of the world’s financial system in 2008, which is the most interconnected and model-driven sector, and the catastrophic pace at which it disintegrated, illustrates the dangers.

Through trial and error we may, eventually and retrospectively, formulate new tools and procedures but in doing so we need not begin at the point of ignorance and inexperience at the bottom of the learning curve.

Nor can we rely on economic downturns and corporate distress being self-correcting. They do not represent a pause in an inevitable long-term stable trend of growth and profitable development. They precipitate the collapse and elimination of units of economic activity, especially those that are vulnerable because they have reached the final phase of their lifespan. In the same way that a pernicious virus takes the lives of the weakest, the very young and the old and infirm, so the turbulence of an economic downturn destroys vulnerable companies and leaves others disabled.

What shall we do as managers operating in unstable times, when the reassurance we desire is absent and the uncertainty of today promises an unpredictable tomorrow?

We must identify the nature of the areas and the times of instability and embrace uncertainty. We must rediscover and apply different, sometimes counter-intuitive and unconventional, methodologies which have been honed in recessions and other turbulent situations but which are discarded and forgotten when the cyclical economic winter turns to spring.

That is what this book is about.