Business leaders may be focussing on the wrong areas by trusting optimists within the business, argues Marcus Beard, associate director, Arthur D Little

Best practice has traditionally been seen as ‘managing the complicated’. “In doing this we can measure cause and effect which is a form of assurance for risk managers. Targets are set and then achieved but is this enough?” asks Beard.

Looking at a classic governance model illustrates how a level of prescribed requirements can be balanced with the level of intervention. Intervening at all levels of the business, including those which give the illusion of running well will ensure nothing is missed.

“Businesses tend to think of themselves as complicated but with the increase in pace of technology and digitisation, traditional cause and effect models are a lot harder to predict. We need to change the model” Beard says.

He argues that people are inherently unpredictable and should never be trusted fully to do what is prescribed, even when clear established guidelines are in place. 

The underlying and fundamental shift, he argues, is the fourth industrial revolution and what has been missed by many businesses is the power of the individual. Beard gave delegates an example of a railway breakdown where instead of passengers following the set procedures of the railway, many turned to Twitter for information. Several passengers tweeted they were getting off the train and the rest followed 

To avoid an illusion of control, businesses need to understand that best practice may manage the complicated but it does not embrace the complexity of a situation. In the best practice model, there is a single leader who knows best but Beard argues that in this new world of working, people do not believe that a single influential leader is best.

“We need to start to empower the right individuals to lead, rather than relying on a single leader as we have traditionally done. That will help embrace the complexity within businesses.”