Is Chaos the New Equilibrium?

“We’re waiting for things to return to normal.”  How many times in the past few months have we heard this?  But what if the situation we are in is now the new “normal?”  Many organizations are holding back, sitting on the sidelines, if you will, waiting for economic conditions to stabilize, to become more in control.  What if the control limits have greatly expanded?  Perhaps, now, we are “in control,” based on the new parameters? 

Listening to Wall Street analysts the other day on CNBC, several were referring to historical data on where they thought the market was heading, it was almost as if they were ignoring the events of the past 10 months.  A friend of mine sold some stock we both had bought because a friend of his, who is heavy into the technicals, told him he should sell.  The stock is up 15% since then.

The purpose of this is not to bash stock analysts or technicians, but to point out that using traditional methods and techniques without modifying them for the current situation may not be appropriate in today’s environment.  When a significant event, a Black Swan, like the financial meltdown in October of 2008 occurs, the rules of the game change.   To continue to apply old rules to a new situation will result in staggered growth at best.  It’s not just in the market where this is happening, it’s all around us.  Take IT organizations and Virtualization for example.

Virtualization is a transformative technology.  Not only does it allow for an IT organization to cut hardware costs, but it allows for a dramatic change in the way IT does business.  But this does not happen on its own.  The IT organization must recognize the opportunity and change accordingly.  Too often, IT organizations deploy virtualization technology, continue to apply the old rules of server management, and then wonder why things don’t seem to be improving.  The rules of the game changed; they don’t get the full benefits because they’re still playing under the old rules.

Customers and markets, that were once thought to behave very rationally, have shown quite a bit of irrational behavior over the past year.  Whether this behavior continues remains to be seen, but one thing is fairly certain, the economic landscape has changed significantly – e.g. the Government owns two auto companies.

So, are you waiting for things to return to ‘normal?’  Or are you adapting to the new environment and positioning yourself and your organization for success?  What events have caused the rules of your game to change?  Have you adapted?

Let me know your thoughts.

Glenn Whitfield

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5 thoughts on “Is Chaos the New Equilibrium?

  1. So there’s an old saying that the Chinese character for chaos is combination of crisis and opportunity. My Chinese friends tell me this is not true, but in American business, I’ll tell you that opportunities exist when there is a crisis. If things are going smoothly, market leaders hold their positions because of scale. It’s only when everything is thrown into chaos that the opportunities to change the status quo really exist.

    As for virtualization, we just got done talking to a series of companies. One company that you’re familiar with, really impressed us.

    We are not looking for things to return to normal. Normal was not so good for us. Unless you’re the leader of the pack, it’s much better to take advantage of the world resetting and define a new normal.

    We don’t know what the new normal will be yet, but we’re much more excited about the new normal then we were about the old.

    All my best,

    Andy

  2. I like your mention of the black swan – because Dr. Taleb also wrote that you cannot, cannot, cannot;

    “were referring to historical data on where they thought the market was heading”

    Which is why he is less than enamored with economists.

    Predicting the future by looking in the past – is like driving while only looking in the rear view mirror!

  3. Andy,

    Exactly! There’s lots of opportunity out there, getting people to “see” it and act on it is the challenge…

    Thanks for the comments!

    Glenn

  4. Good point, Glenn, and it emphasizes the need for more adaptability in the system — people, processes and technology — because while we’re not going back to the way things were before (too many trends have continued, recession or not); the “new normal” is temporary too. Things will continue to change, often in unpredictable ways. Companies than can respond quickly will do better than those that can’t.

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