Organizations as well as individuals face various problems daily. Several problems are direct consequences of our actions or reactions to situations we face. When we fail to explore nuances also complexity of a problem, our response is not as flexible also not effective as it should be. Systems today are uncertain, volatile, ambiguous also complex also dominant dynamics are beyond our control. Making right decisions or responding optimally is therefore far more challenging than previously.
It is not very difficult to be a decision-maker - we all make decisions every day. Tricky part is to make right decision. As we have bounded rationality which means that while we are rational beings our rationality is limited. We do not have all information also cannot observe everything that makes it more difficult to make right decisions. Also, speed of execution is increasing constantly as well as markets also systems respond almost immediately which makes decision-making challenging - even perilous. Nevertheless, as politicians have also learned, this is not end of world. We can still control also predict some factors also make good decisions.
In today's world, it would be very optimistic to believe that a single effect causes a given problem. More troubling is assumption that addressing this effect would solve problem. Although we know there are different degrees of complexity, that different depths of knowledge are essential to understand a problem or identify an opportunity we blithely presume that a problem has only one cause. We often hear that if something is too simple also too good to be true, it usually is. Exactly!
If this were not case, it would be easy to answer following questions: What is happening? Why are we unable to find lasting solutions? Why are many historical companies, pride of nations, going bankrupt? Why nations are still failing?
Thus, it is important to always identify problem, to define boundaries of problem also to analyse future paths also impact. There is most certainly a relation between a system's histories, its present state also its future state but this does not mean that same solutions can be applied to same problem at different times in history. In addition, solutions often depend on changes in different parts of world. We should therefore build tailor-made solutions for each problem, each time.
Following are the steps to guide decision-makers also strategists who can help everyone to turn most complex issues into opportunities.
1. Identify causes also effects of problem across social, economic also environmental dimensions:
System is characterized by feedbacks within also across sectors which may create synergies or side effects. All these different dimensions should therefore be carefully analysed.
Collapse of Lehman Brothers was first event to focus world's attention on financial crisis. But it did not provide decision-makers with enough information about real cause of financial crisis. It was just a symptom, not cause. It was just one event in growing concerns about banking system's stability, slowdown of housing market also economies as a whole. These trends all provided valuable information about system's previous direction.
2. Use a multi stakeholder approach:
To account for a variety of points of view also to incorporate as much varied knowledge as possible in analysis. Solving complexity requires collaboration from actors (public, private, civil society) in different sectors (economic, social, environmental), levels (international, national, regional) also interests. Only diversity can solve complex problems such as global warming or unemployment. Each stakeholder brings different, often unique, assets to table. Companies, for example, have financial means, while NGOs have local knowledge also power that comes from working with volunteers.
One example of importance of multiple perspectives also ideas for business development is Procter & Gamble's (P&G) success with its open innovation programme Connect + Develop. It consists of an internet platform where companies also entrepreneurs can propose innovative business solutions to meet P&G's needs. This open approach provides P&G with a range of options. It then chooses most valuable options also develops them in collaboration with person(s) or Organization that proposed them.
3. Evaluate impact across sectors also find a balanced strategy:
Evaluate impact across sectors also find a balanced strategy to improve performance of entire system, rather than maximizing some areas at expense of others.
4. Evaluate impact across actors also find an inclusive strategy:
Evaluate impact across actors also find an inclusive strategy that will allocate costs consistently also distribute benefits equitably across key actors in system.
UNDP Guyana Low Carbon Emission approaches developed by a multi stakeholder steering committee, is one of the example. Steering committee was composed of agents from different levels, sectors also interests - including World Wildlife Fund, ministry of agriculture, Forest Producers Association also indigenous group associations. Range of actors also inclusive aspect to committee improved decision-making also made it easier to tackle local issues.
5. Think long term also prioritize resilience:
Success often relies on resilience in face of unforeseen events also a focus on increasing a system's capacity to absorb also adapts to change, with clear, long-term goals.
Here at World Economic Forum, we often use scenarios to provide insight into future of a specific sector or a country also determines strategies according to these insights. These scenarios enable relevant actors to set priorities also monitor performance of system. After identifying causes also effects of problem, Forum brings together different stakeholders from around world to discuss driving forces also evaluate their impact.
6. Monitor performance of systems:
To learn about many ways they respond to strategy also policy implementation. It also helps to improve decision-making by incrementally addressing causes of a given system's success or failure.