SA Business needs to embrace complex systems thinking to ensure growth and sustainability

Michiel Jonker, Grant Thornton Director Future Studies.

‘Holistic measures needed to ensure long-term sustainability’

Increasingly volatile conditions in South Africa and the world have given rise to growing uncertainty amongst business leaders and the need to embrace complex systems planning must become a priority now – especially to ensure sustainability and future growth.

Grant Thornton Director Future Studies, Michiel Jonker, said it was imperative to embrace more comprehensive ways of addressing concerns among leaders, in business and government, about lacklustre growth expectations, fuelled by concerning current events, trends and gloomy future outlooks.

As the introductory speaker at a high level talk by internationally renowned academic Professor David Snowden in Johannesburg on Wednesday, Jonker said that in complex systems the use of quantitative and qualitative forecasting and prediction to inform strategic decision-making had become more challenging, if not outright dangerous.

Complex systems involve numerous stakeholders or components (or sub systems), interacting in a local and non-linear manner with each other – but without considering the impact of their actions on the rest of the system or the other systems they are interacting with. Society is a complex system, so are political and economic systems.

Complexity is also due to the free will of these elements (humans), making it difficult to predict the outcomes of these interactions. Past history (data) cannot be used as there are no patterns.

“Prediction could lock business leaders and policy makers into a kind of ‘tunnel vision’, a strategy that only recognises one destiny, making it difficult to adapt when unexpected events occur,” said Jonker. “In short, history is no longer a reliable indicator of the future; predictions based solely on the past (and past data) will expose organisations to unpleasant surprises in a complex world.”

Jonker said while the growing popularity of scenario planning in the mid-20th century offered a way to unlock thinking by enabling organisations to consider and prepare for more than one probable scenario, it had its shortcomings.

He said that exponential change and unending transformation and disruption created a world where society no longer deals with a few probabilities but with a literally infinite number of possible scenarios.

“We live in a world that is complex and non-linear, where seemingly insignificant events can suddenly bring about major unexpected consequences. As there is no way to predict, or even think of all these potential futures, scenario planning – which is normally capped at a maximum of four scenarios – cannot exclusively be relied upon to support our strategic planning,” he said.

One of the fallacies that had been propagated about complexity in business and government was that it was unmanageable, he said, however, once complexity was embraced, management became easier.

“In complex systems we focus more on understanding the present, than to try to predict the future. If we understand what a system’s disposition or inclination is in the present, and which direction it is evolving into, we can start monitoring for weak signals indicating that something in the system is about to shift,” said Jonker.

He said that such signals triggered a higher state of alertness enabling systems to be able to monitor certain aspects more closely. Planning therefore should shift from a focus on the future, to a focus on the present and the evolutionary potential that might be found there.

However, traditional methods to understand the future were not totally irrelevant – even today.

“Western wisdom is informed by a cultural approach of “either-or” thinking – where either one or another solution is the best and only solution to the exclusion of others,” said Jonker.

However, more useful was to approach complex problems with a ‘both-and’ approach. This approach implied that multiple available methods or solutions could be used, each in the context where it was most appropriate.

“Forecasting and trend analysis, scenario planning and embracing complexity and working to identify ‘weak signals’ of change in complex societies are all seen as valid within contextual boundaries,” Jonker concludes.