Riding a permacrisis

Riding a permacrisis

The Collins English dictionary has come up with a new term to describe a world where being comfortable with uncertainty is the only option.
Are organisations ready?

The English dictionary has been rather busy recently adding freshly minted words to describe a world that seems to be in a perpetual state of chaos. A few weeks ago, the Collins English dictionary enriched itself with the new-fangled term ‘permacrisis’ to describe a world where being comfortable with uncertainty was the only option before us. And now we have another term ‘polycrisis’ from a discussion paper published by The Cascade Institute, a Canadian research centre addressing humanity’s converging environmental, economic, political, and technological crises.

A global polycrisis occurs, according to the authors of the paper Scott Janzwood and Thomas Homer-Dixon, when crises in multiple global systems become entangled in ways that significantly degrade humanity’s prospects. These interacting crises produce harms greater than the sum of those the crises would produce in isolation, were their host systems not so deeply interconnected.

A polycrisis

As the COVID-19 pandemic and Russia’s invasion of Ukraine have demonstrated, systemic risks do not remain confined to the global systems in which they originate. Putin’s aggression, for example, has disrupted global food and energy systems, reinvigorated the NATO alliance, exacerbated domestic ideological cleavages in many countries, and threatens to divert international resources from climate action. What may appear to be separate crises in different global systems in fact interact, exacerbate, and reshape one another to form a conjoined “polycrisis” that must be understood and addressed as a whole. The causal linkages by which one global crisis triggers or exacerbates another represent a growing danger to humanity.

Since the 2008 global financial crisis and subsequent European debt crisis, economic and political uncertainty has been rising. It surged in 2016 and reached all-time highs in 2020 with the pandemic. It waned a tad in 2021 when COVID-19 had started to become endemic in many parts of the world but has surged again as Russia invaded Ukraine in February 2022. The harsh reality is that these shocks are here today.

Track geopolitics

Organisations are grappling with the convergence of a cascade of crisis that is often leaving the leadership blindsided as firefighting every day, threatens to push back strategy, and leave goals unattended. But it does not have to be this way. Instead of feeling rudderless, companies should invest in people to track geopolitical currents and prepare contingency plans. The truth is that organisation today are caught in geopolitical crossfire and are having to take positions, even though they might like to feel that business is not in the business of politics.

These teams must understand when risks are likely to turn into a crisis and how global risks are interacting with one another. Risks do not occur in isolation. They can have compounding effects that amplify the impacts when two or more risks co-occur and they can also have cascading impacts, where the likelihood of further risks occurring increases once one particular risk manifests, creating a domino effect. Understanding the interconnections between global risks – including building awareness of interdependencies and feedback loops – and which groupings of risk present the greatest threats, is thus a key part of improving risk assessment and discussing potential solutions, since strong interconnections need to be taken into account in mitigation planning.

Build flexibility

When risks are coalescing, triggering more crisis, and each feeding on the other, organisation should try to build in as much flexibility as possible. For instance, create plans with several options should the first one fail. Flexibility could involve going in for short-term leases instead of investing in property; hiring more contractors and regular staff; renting instead of buying equipment; avoid situations that require long term commitments; reconfigure supply chains; and re-examine make-or-buy decisions. Perhaps the most important aspect of facing a fluid future is creating a new kind of leadership that speeds up decision making through delegation to empowered teams.

Create resilience

Self-sufficient, empowered teams foster resilience The actual work of the organisation should be carried out by teams that, when faced with new and imperfect information, feel motivated and empowered to act. To cultivate organisational resilience and to ensure adaptability, companies will need to think differently about how teams are structured and managed, as well as how they’re connected across the organisation. What’s more, companies will need to provide support systems that allow employees to engage in creative collisions and debates, give and share feedback honestly, and continually incorporate that feedback into their routines so they will be better able to adapt to any future challenges.

Step back

Rather than continually tell teams what to do, leaders in resilient organisations minimise bureaucracies and foster entrepreneurship among and within teams. They nearly always put decision making in the hands of small cross-functional teams, as far from the centre and as close to the customer as possible. They clarify the team’s and the organisation’s purpose, provide some guardrails, and ensure accountability and alignment – but then they step back and let employees take the lead.

Another characteristic of resilient organisations is their ability to break down silos and use “tiger teams” to tackle big business problems. These are groups of experts from various parts of an organisation who come together temporarily to focus on a specific issue and then, once the issue is addressed, go back to their respective domains.

Provide psychological safety

Leaders must remember that employees are unlikely to change their behaviours if failure is not an option—instead, they will respond to crises or transformational opportunities by hiding problems that will inevitably arise when trying new things, averting the risks that come with innovation and change, and being afraid to ask questions. Organisations that have cultivated a resilience response emphasise psychological safety (or the idea that taking some personal risks can be OK) and continuous learning.

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