Analogy of Climate and Business Climate
Does understanding the climate around the globe help us in understanding the business climate? This is an important question because of the many simulations that have been made that would help us understand the business climate better and do dynamic strategies accordingly. This buzz tries to answer this question.
My first observation relates to Pareto Rule. Studies have shown that 20% of banks make 80% of the total profits of banks. I found also applies to the insurance sector. In works we find that 20% of employees do 80% of the total effort and productivity. By volume, dry air contains 78.09% nitrogen, 20.95% oxygen and the remaining percentages of small amounts of other gases. Oxygen is active (20%) and nitrogen is inactive (80%). Organizations have similar distribution of workers where only 20% of employees are active and same ratio for active and profitable customers. This is the first analogy.
The second analogy is turbulent times for businesses and for climate. Turbulence with all its negative impact on the markets. Turbulent climates may lead to the disruption of businesses as turbulent markets lead to the disruption of human lives and societies. Take for example the famine experienced in Africa because of drought for consecutive years. The turbulence of the climate extended its butterfly effect to cause disruption of peoples’ normal life.
We may still remember the volcanic ash cloud in Iceland in 1994. The cloud mads flying risky and for almost a week there were no flights in Europe. This resulted in billions of dollar losses because of the disruption of flights. Airlines lost. Hotels, touristic centers and restaurants lost. Huge losses were experienced in other sectors such as food staff that needed to be exported without delay. Hospitals lost because foreigners couldn’t seek treatments in European hospitals. The cascading effect of one event caused chaos in many distant parts of the world. Risk travels as fast as a fast wind. The greater the velocity is, the greater the resulting turbulence is. Mad Cow disease is another example in which news risky news travel as fast as a fast wind. We still remember the losses of farmers who invested in cows and how rapid the “seed of the news” traveled.
Business climate has its cascading effect that is analogous to the rippling effects of the climate. The examples are many and specially those resulting from technological advances. For example, the advancement of publishing e-books has almost disrupted the print industry. Newspapers are being phased out. Even conventional teaching and training have been negatively affected. The development of dynamic teaching material enriched with simulation coupled with the advanced teaching technologies have paved the way for remote teaching and training. The need for highly trained teachers to cope with the needs of the new generations who care for technology has placed heavy burdens on conventional trainers and coaches. The organizational structures of teaching institutions have become inferior and demands are increasing to make them more resilient and agile. Printed academic books must compete now with easily-updated e-books that are more apt to evolve and meeting the ever-changing demand of the new generations. One change is causing waves of new changes.
The risks the climate places on us are analogous to the risks that the changing business climate places on businesses. The eruption of volcanos has the same effect the volcanos of changes impose on businesses. Some of these risks say appear intangible; however, their impact isn’t. The need to move in small steps is paradoxical with the need to do business fast. This paradox and many more constrain our minds and stress them. To be under stress for long time will cripple our creativity.
The above-mentioned trends are happening at times when the need for generating creative ideas to stay away from competitors or disrupt them creatively become more difficult. The age of contradictions and paradoxes we live in is crippling at the time we need to be creative. Therefore, having business leaders and talents is of utmost importance. This is becoming dearer as we encounter the age of interruption and finding antifragile people is getting less.
Where are we heading? I hope your comments remove the fog in my way.