Analogy of Climate and Business Climate

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.

#59 Welcome back @Jean L. Serio CPC, CeMA and it is great to read your comments again.
Yes, and I agree with you. Volcanoes is a perfect example of the relationship between business and climate. The examples you give are valid and explore the strength of this correlation. I agree 100% with you.
Drought seasons is another example. However; to keep buzzes short I tend to give limited examples.

+1 +1

Thank you for another excellent post, Ali. And certainly so timely. For my part, I'll mention 3 issues regarding climate - which negatively impacted the U.S. in the past couple of decades -

1. The recent hurricane in Puerto Rico; who knows when they will move forward after such devastation.
2. The Hurricane Katrina in 2005; which all but decimated New Orleans, LA; rebuilding took years.

3. You did not mention volcanoes. But Mt. St. Helens, in the state of Washington, erupted in 1980 and an eruption column rose 80,000 feet (24 km; 15 mi) into the atmosphere and deposited ash in 11 U.S. states. At the same time, snow, ice and several entire glaciers on the volcano melted, forming a series of large volcanic mudslides that reached as far as the Columbia River, nearly 50 miles (80 km) to the southwest. Less severe outbursts continued into the next day, only to be followed by other large, but not as destructive, eruptions later that year. Thermal energy released during the eruption was equal to 26 megatons.

+1 +1

#56 Great ideas and are practical. You really make the theory an applied one. This is a very strong recommendation and I am going to use it with due credit to you.
The barometer of discussion will be mainly affected by the attendees and their engagement. Hopefully, few minds like yours shall be there.

+1 +1

#55 "Government has a tough job. Regulating a large group while staying out of the way of individual opportunity"- leaders live in a domain of business paradoxes such as the one you highlight here @Harvey Lloyd. Need go move slowly, but pressures on time and by competition call for fast moves. This is another paradox. Control to get results opposing with the need to release control so that creative ideas may emerge is another paradox. Balancing the individual needs while catering for the group interest is a major challenge. The predicament of leaders on this particular issue is huge. For example, aligning the individual goal with the business goal is made more difficult by the need to change directions sometimes. Should this happen the leader might lose the trust of the team and steering them to a new direction needs persuasion beyond normal levels. Yes, the burden is heavy.

+1 +1
Harvey Lloyd 29/5/2018 · #56

One thought you might consider as you prepare for your July presentation would be to consider the responsibility of Pareto's 20%. The 20% should be providing various opportunities for the 80% to become a part of the 20%, next cycle.

Have each attendee write down three things they will do to insure that they pass on from beyond the gate their wisdom.

-Each month they will hold voluntary classes where the patterns of success are discussed.
-They will write a note to specific peers that assist them in overcoming fear through courage development
-They will offer at least once a month for a peer to run the ball of their ideas and debrief afterwards.

to name a few.

Sounds like it will be a great presentation.

+1 +1
Harvey Lloyd 29/5/2018 · #55

#54 Government has a tough job. Regulating a large group while staying out of the way of individual opportunity. The two seem mutually exclusive in some points. There is one salient and pointed fact here in America. The individual is the king. Sometimes the group is dissatisfied with the outcome. The alternative is to sacrifice the individual at the altar of the group.

Both have issues. But once we turn to the group then we now have humanity at the end of a string. Who holds the string? When we glorify the rights of the individual towards opportunity then the we need not worry about who has the string.

Socially the individual is left to develop their own groups and identities without government intervention/homogenization. History bares this choice out in several iterations. The system must always be focused on the individual and their pursuit of happiness. Still a tough system but the the benevolence of those who rather group us and herd us will always turn to tyranny.

+1 +1

#52 Yes, and the four societal cycles are in line with what you said here.
I want to use a scientific reasoning in my response. The presence of voids of varying sizes is the issue. I recall discussing this issue here on beBee in a buzz title "Avoid Building Concrete Relationships"

The issue isn't having voids; it is far more having widely varying voids in size. Societal voids with large differences in size shall only lead to disruption. The question is how to make the voids close in size? Your idea of bringing sequentially 20% of the deprived 80% is a great one because it helps in reducing these differential voids. The more I think about your approach, the more I find it sensible and practical.

+1 +1

#51 You are of very few people I am aware of that discussed the need to deal wisely with the top 20%. You bring fresh thoughts to my mind and I need to digest them later tonight. Great insights indeed.

+1 +1