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Catastrophic Forgetting

Uncertainty…If one thing is for certain, it is that we are in a time of great uncertainty.

To comfort us in this period, many institutions are taking a stab at what we should do to live in uncertain times.  For example, this morning we were somewhat blessed with the wisdom of the long-held masters of consulting innovation, The McKinsey Quarterly.  Their attempt at an action plan for coping with our crazy times was put forth in their article, “How managers should approach a fragile economy”. Of course, this article immediately caught my attention.

While I was somewhat satisfied with their assessment of the situation (3/4 of the article), I was majorly disappointed by their solutions (1/4 of the article).  Generally, I would assume that an article titled “How to…” would give a substantive action plan instead of purporting executive solutions.  Hmmm…I guess it is ironic that McKinsey did not include market and media misdirection as part of their analysis.  *sigh* So much for a well-informed citizenry.

So, what exactly chapped my cabbage about McKinsey’s “solutions”?  Let’s take a look at some of the direct quotations:

“Thoughtful economic modeling can start to capture all this complexity.”

McKinsey is going to explain it to us by modeling the complexity of the market.  Well, it is becoming clearer and clearer to many on the edge of research that “all this complexity” cannot be modeled using traditional methods.  I’m not going to go into this in depth due to the esoteric nature of the subject.  It requires letting go of some pretty deeply held assumptions about how the world really works.  If you’re interested in digging deeply into this subject, I invite you to contact me via email.  For this article, I’ll just say that you’d expect we learned something from the way we were modeling risk in the market and to what ends it led.

“…they must drop the pretense that they can predict the future.”

Ummm…What are the models you use in the above supposed to do?  Physician, heal thyself!  Models are meant to create a tool which allows for predictable outcomes.  In a sense, McKinsey is saying:  “Hey, stop relying on your projections because they are useless due to the assumptions inherent in the data, but we don’t have to because we smaarrrt.  You duuuumb.  Buy our product!”  Here’s the bottom line folks:  McKinsey knows about as much as you do about what is happening.

“…they must continue adapting their management processes and capabilities with an eye to making better decisions under uncertainty.”

We did this back in the 80’s and 90’s…It was called BPR.  By adding the words uncertainty to the end, are we going to magically enlighten ourselves?  Institutional innovation goes much deeper than this shallow interpretation of the matter.  When I talk about real solutions in later posts, I’ll talk about some of the mind power behind the shifting that is occurring.

“…building greater flexibility into strategic activity by putting a greater focus on acquiring options, contingency planning, and the use of stage-gating techniques for committing resources.”

How do you plan for contingencies without predicting the future?  Stage-gating is an old school control-oriented mentality. Not allowing innovation to happen at the lowest levels of the organization can handcuff organizations to their old business models.  Rigidity of old needs to give way to real flexibility.  What is real flexibility?  Stay tuned.

So, I hate to say it, but McKinsey offers no answers here.  They are just as uncertain as the rest of us.  It is quite apparent in the confusion underlying this article.  They in effect telling executives to do a headstand instead of a handstand. That will get us through this.

Nope.  Time to walk on our own two feet.

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  1. October 14, 2009 at 7:59 PM

    McKinsey’s recommendations sound like my staff meeting last week. hmmmm.

  2. October 14, 2009 at 9:12 PM

    Michael…

    So on point here! The old club will not give up their assumed “rightful status” easily. Someone once said that progress happens one funeral at a time. I hope we find an accelerated and human way to jettison from our “cognitive prisons” and open up to the implicit value in everything. Sooner would be good… no?

    …bk

  3. October 15, 2009 at 12:33 AM

    Micheal,
    Spot on. I can’t pull the thoughts from the McKinsey article the way you did, but I whole-heartedly concur that (on average, in general) management at many major companies in the US are sleepwalking through the process. They are “doing it the way we’ve always done it” because the comfort zone is too comforting, and it’s a lot of work to do or learn something new. When new people come along to either offer insight or – gasp – buck the trend, feathers are ruffled, and eyebrows are raised.

  4. November 1, 2009 at 3:02 AM

    hello,

    Thank you for the great quality of your blog, each time i come here, i’m amazed.

    black hattitude.

  1. October 22, 2009 at 8:30 PM

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