The 20th century’s ‘great acceleration’ brought global change at unprecedented scale. Medical advances spurred population growth; rapid urbanisation generated enormous consumer demand; and mass industrialisation and production, combined with technological advances, brought the capacity to exploit this. Yet, it also brought increased levels of complexity; the unruly off-spring of modernisation.
Today’s fragile global economy heightens the risks organisations face. Government attempts to mitigate these risks focus on regulation that may have prevented the previous crisis, but arguably not the next one. The effect of new regulation will be to increase short-term business costs and systemic risks due to a widespread failure to comprehend the role complexity plays.
Regulatory costs to business are well-documented: since 1998 the cumulative cost to UK business alone has been estimated by HM Treasury at 90 billion pounds; while compliance with even a few sections of the US Dodd-Frank law have been estimated at $100-150,000 per firm (The Economist, ‘Too Big Not to Fail’. Feb 18th, 2012). While costs are predictable, the risks of unintended consequences - of which history is worryingly replete - are not.
Designing the future to be an improved version of the past often has critical impact in the present:
The first ‘law’ of complexity is that hindsight doesn’t lead to foresight
Title is attributed to Niels Bohr, the renown physicist