Why the Digital Age Calls for a New Approach to Leadership and Team Management
Why the Digital Age is unlike Any Other Previous Transformation in History With the Digital Age well and truly upon us, it is time for practitioners of leadership and management to re-envisage a new approach to leadership and management. This is because the Digital Age which is unfolding now is unlike any other transformation in […]
What is Bureaucracy? – Definition and its Purpose
Definition and Purpose of Bureaucracy What comes to your mind when you encounter the term bureaucracy? More often than not, you would think of slow moving, obstacle filled, and tedious processes that do not get your job done but instead, make you run around from pillar to pillar for your work. Though most of us […]
Importance of Workplace Ethics
Workplace ethics ensures positive ambience at the workplace. Workplace ethics leads to happy and satisfied employees who enjoy coming to work rather than treating it as a mere source of burden. Employees also develop a feeling of loyalty and attachment towards the organization. Organizations need to have fool-proof systems to measure the performances of individuals. […]
Network Society – Rise of Digital Networks
Introduction A network society refers to the phenomenon related to the social, political, economic and cultural changes that have occurred due to the spread of the networks of digital and information technologies that have engendered the changes in the areas mentioned above. The rise of the network society has brought in its wake newer modes […]
Political Systems Around the World
Different Political Systems around the World There are many different types of political systems around the world. Whereas the political system in the United States follows a mixture of direct and indirect election, the UK with its Westminster style of democracy is another type of political system. Most of the former colonial countries follow the […]
Managers in contemporary organizations are confronted with uncertainty and ambiguity in their everyday lives. Not only do they have to contend with rapidly changing trends and fluid situations, the data they get from the ground or from market research becomes redundant with no time. This has given rise to confusion and chaos in the way organizations approach the future. This situation can be remedied by the use of scenario based decision-making where the managers draw up possible scenarios that the company might have to contend with in the short term, medium term, and longer term.
By drawing up scenarios that consist of simulations of the best-case situation and the worst-case situation, the managers would be better able to take the right decision when the situation manifests itself.
The point here is that looking into the future is impossible except for oracles and clairvoyants. Hence, some sort of grip on the future must be firmed up by planning for all possibilities.
Over the last couple of years, global businesses had to contend with multiple economic shocks starting with the bankruptcy of the investment bank, Lehmann Brothers that nearly brought down the global financial system. Next, the Eurozone crisis erupted that threatened to bring entire governments to their knees. Now, we have the specter of diminishing resources and runaway inflation. In this context, it becomes important for managers to draw up scenarios that would happen with a certain degree of probability. For instance, it would be better for managers to think of the eventuality of Greece leaving the Eurozone and then planning for it accordingly. For managers in sectors that do not have exposure to financial instruments in a major way (after all, which sector is immune from financial shocks?), they can simulate models and scenarios where a war in the Middle East is predicted and then base their strategies accordingly.
The point here is that when there is so much uncertainty, it becomes tough to anticipate events. Hence, by drawing up scenarios that simulate the worst and the best as well, decisions can be taken that would derive advantage to the organizations. When one adds complexity to the uncertainty and ambiguity that pervades the current world, one is even more muddied and muddled to take decisions. For this, managing the present, it is a challenge and hence many organizations leave future forecasts to consultants and management experts. However, this need not be the case and in-house expertise can be developed to deal with emerging scenarios.
A case in point is NASSCOM (the Apex body of IT and ITES companies in India) that has been advising IT companies in India to plan for the downturn and the possible aftershocks from the Eurozone crisis and the upcoming “fiscal cliff” in the United States. NASSCOM has also been asking IT companies to draw up scenarios for these events that if not planned for have the potential to blow up on everyone’s face. Unfortunately, many organizations are rushing into the future without any thought or idea on how they would deal with “Black Swan” events. A Black Swan event is a low probability but high impact event that can surprise people with its occurrence.
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