Risks affecting organization design

Earlier today I was looking at McKinsey Quarterly's Risk Roundup for 2010. They ask the question "where will the greatest risks-known and unknown-flare up on the global business landscape this year?"

Looking at the three sets of information (the Economist Intelligence Unit, the Eurasia Group, and the World Economic Forum) they present it is alarming to see the wide ranging nature of the risks, and this is before the 66 (so far) people who have left comments weigh in with the additional risks they've spotted. It's all very gloomy and depressing.

But the Eurasia Group Report reminds us that 2009 has, in fact, been quite ok. So looking forward into bleakness we can remember happier times. It opens with the paragraph:

"We've just been through a year of enormous economic turbulence, and yet in most ways 2009 was mercifully quiet. The financial crisis hit the previous September and most things that could have gone wrong didn't, allowing the world to focus on the digging out. 2009 saw no big geopolitical crises, no tussles with North Korea or Iran. The war on drugs in Mexico didn't spill across the American border in a big way. Iraq didn't blow up. There were no massive terrorist attacks (though Christmas saw a close call in the United States). No killer hurricanes, no huge earth¬quakes, and the H1N1 virus didn't prove that threatening a pandemic after all. Govern¬ments around the world focused overwhelmingly on the domestic, putting tough policy decisions on hold. (And when they didn't, as with Obama's Afghanistan and healthcare plans, the results were seriously watered down, and actual policy risk was limited.)"

I couldn't access the Economist Intelligence Unit report on Key Issues for 2010 (because of an insufficiet subscription level) which I'm assuming is the one the McKinsey Quarterly was referring to. Although I see that the EIU does a very nice Global Forecasting Service so I took the tour of that – but again it's a subscription service. However, there are bits that can be read in the EIU without a subscription and I read the article on the New Normal. Back to feeling gloomy as I'm told that:

"In the "new normal", growth will be constrained by high debt, by irrecoverable losses in capacity, and by a weaker and more heavily regulated banking sector. It will be a tougher world, in short."

The third report mentioned in the McKinsey Quarterly roundup was the World Economic Forum's Global Risk Report. Like the others it is not encouraging

"Warnings of the long shadow of the financial crisis The result of extensive input throughout the previous year by experts from business, academia, and the public sector, Global Risks 2010 highlights a number of slow-moving risks exacerbated by the financial crisis and global economic downturn, and stresses the continued need to further enhance global resilience to risks. Global governance gaps, an issue already to the fore in Global Risks 2009, continues to be at the nexus of global risks and the need for coordinated global action is increasingly urgent.

Fiscal crises and unemployment, underinvestment in infrastructure and chronic disease are identified as the pivotal areas of risk over the next years. At the same time, the Report warns that there are also a number of risks to keep on the radar, including the economic and social costs of transnational crime and corruption, biodiversity losses and risks to critical systems from cybervulnerability."

What I'm wondering is how business enterprises are dealing with all this. And what does it mean for the design of these organizations. Having the list of what needs to be dealt with is one thing. Having the wherewithal to deal with it is another. I don't have any answers on this – although in the last few days I've been looking at some companies that appear to be looking at their design afresh i.e. not 'better sameness': Cisco and Nokia are two, and Tata Group seems to at a stage of thinking it through. It would be good to hear of other organizations who are thinking very differently about their business models and designs in as they prepare for the future.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s