I
am less than two years from retirement from the Army right now. I have had an
amazing career full of excitement, adventure, and camaraderie but I am ready to
move on. Now is about the time that I need to start networking for my next career.
(In fact, that is why I am working so hard to finish this particular degree as
soon as possible. I need this for my resume as soon as possible but, more
important, I need the information that I am learning to ensure my success in
the future.) I am very fortunate to live where I do at this point in my career
because it has allowed me to become a full member of the New York Athletic Club
(NYAC) at the military rate which is an incredible deal. The NYAC is so much
more than just a gym. It is more of a social club that happens to have a gym in
it and being a member has given me access to some amazing networking
opportunities. Most of what we have been studying lately ties right in to the
stories that my friends at the NYAC tell me which excites me because it
validates my decision to pursue this particular degree (Masters in Leadership).
It allows me to see how this information is truly applicable to my future
career.
Right
now, we are studying decision making in complex environments. When I first dove
into the assigned reading material for the week, it was a little hazy to me but
I think I have better grasp of the concepts now. I didn’t understand what was
meant by a “complex environment” at first but some examples helped me frame the
picture. A complex environment in this case doesn’t mean working with a diverse
group or working in austere conditions but rather it means environments that
are having to rapidly change due to rapid globalization. Some examples used
were catastrophic insurance and utility providers. “The environment of business
has become a maze of information and Internet-driven change. This change is
intertwined with the globalization of economic activity, the attendant growth
in the size of companies and markets, the increasing importance of
knowledge-intensive processes in business activities, and the natural evolution
of systemic stress on organizations facing increased competition resulting from
these forces” (Hoch, Kunreuther, & Gunther, 2001, p. 118). Essentially,
complex environments are caused by the “shrinking world”. There are three
different factors/methodologies to consider: navigating data, navigating
systemic complexity, and navigating multistakeholder and environmental
complexity.
The
first methodology is navigating data. With the information revolution, managers
now have to also become researchers (Hoch, Kunreuther, & Gunther, 2001). The
book that we use for this class was published in 2001. If that was true 15
years ago when this was written, imagine how much more true it is today. Today,
we all have access to all of the data imaginable right in the palm of our hands
wherever we go. Case in point – I have my iPhone right here and I just received
an alert telling me that rain is expected for the afternoon commute. In her TED
Talk, Susan Etlinger (2014) discusses how data is everywhere. However, data are
just bits of information that are made by people and therefore require context.
She gives a great example of data on smoking. We can look at statistics and tell
that people that smoke may face different health risks, have different
qualities of lives, work in different fields, come from certain socioeconomic
backgrounds, etc. However, without the true context, interpretation of this
data becomes impossible. Where you may think that you are interpreting data and
making informed decisions based on people that smoke cigarettes, what if I told
you that the context was people that enjoy smoking barbequed meats? Context is
critical. My friend, Chris, is a hedge fund manager. Before he did that, he was
a trader on the floor at the NYSE. He was trying to convince me to try working
for his company in the future but to be prepared for long hours. I know that he
works about 80 hours a week trying to analyze data to decide when and where to
buy and sell. The proper interpretation of data in the proper context can make
or break anybody in that industry.
The
second methodology is navigating systemic complexity. This complexity is
created by the interactions between the organization and everybody else (Hoch,
Kunreuther, & Gunther, 2001). This is also an effect of the shrinking
world. There is very little room for organizational isolation anymore. The best
analogy for this that I can think of is the butterfly effect (2014). You may
recall hearing about this in different films in pop culture but it is a real
theory developed by meteorologist Edward Lorenz to describe how something as
minor as a butterfly flapping its wings can cause minor variations in the air
around it and those variations cause a ripple effect until entire weather
patterns are changed. As organizational leaders, we have to be able to see
variances not just in our own markets but also in unrelated fields because that
ripple may eventually affect our own dealings. I was running with my friend,
Thomas, last night. His family owns a ski resort in the Catskills. He was
saying something to me about his family hiring additional seasonal staff
because of the subways here in the city. Basically, with the opening of a new
line on the Upper East Side and the pending closure of the L line between
Brooklyn and Manhattan, they are expecting a heavy migration of young
professionals to the Upper East Side which has direct access to the Metro North
Railroad which will in turn create more of a demand for weekend getaways. This
may not be a perfect example but imagine organizations operating like that
based on data collected from interconnected networks.
The
final methodology is navigating multistakeholder and environmental complexity.
These stakeholders include “competitors, regulators, and public interest
groups. These mutual dependencies and the necessity for agreed-upon rules have
been described as ‘co-opetition’ (cooperation combined with competition)” (Hoch,
Kunreuther, & Gunther, 2001, p. 125). I would imagine that this may be the
most difficult methodology for some because of the temptation to beat out the
competition. In fact, this is pretty much why we have white-collar crimes such
as insider trading. Decisions are being made to bypass regulators and
co-opetition. Ultimately, though, “the key is to ling this external stakeholder
mapping process to company strategy” (p. 127). Recently, I read a book about
the deregulation of the airline industry and the robber barons involved called Hard Landing (Petzinger, 1995). The book
is chock full of examples of co-opetition. On example that sticks out in my
mind in particular was a conversation between Bob Crandall, then in a marketing
position at American Airlines, and Howard Putnam, marketing chief at United
Airlines. Due to the “adult” nature of the conversation, it isn’t really fitting
to re-write here on my blog but the bottom line was that Crandall told Putnam
that both airlines should raise their prices as both would be profitable from
the ordeal if they cooperated and moved together. Now this is a very famous
conversation that was actually recorded and used as part of an antitrust suit
but it does highlight the need to consider all stakeholders in the decision
making process.
Considering
these three methodologies - navigating data, navigating systemic complexity,
and navigating multistakeholder and environmental complexity –we have to
remember is that the approaches to decision making within complex environments
has changed. “The decision maker is preparing to make correct choices in the
future rather than on nailing down the decision in advance” (Hoch, Kunreuther,
& Gunther, 2001, p. 128).
Butterfly
effect. (2014). In C. Cleveland & C. Morris (Eds.), Dictionary of energy.
Oxford,
United
Kingdom: Elsevier Science & Technology. Retrieved from
ntry/este/butterfly_effect/0
Etlinger,
S. (2014, September). Susan Etlinger:
What do we do with all this big data? [Video
file]. Retrieved from
Hoch,
S. J., Kunreuther, H., & Gunther, R. E. (2001). Wharton on making decisions. New York: Wiley.
Petzinger,
T. (1995). Hard landing: The epic contest
for power and profits that plunged the
airlines into chaos.
New York: Times Business.
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