Recently, we had a house guest who has raised substantial funds for significant institutions. He is both very conservative and clear headed about our economic condition. Not a pessimist, more a modeler of facts the way a physicist, which he was, might describe our financial crisis. As he said to me “It is a big non-linear system that has collapsed and will not come back as we know it.”
When might we re-coup I asked? “Well it took from 1928 until 1958 to get back to the same financial level.” Ouch! He is a big believer in Jay Forrester, The Prophet of Unintended Consequences and father of systems dynamics who pretty much echoed my guests words.
Those of us who work in organizations have all seen the unintended consequences of an initiative that had “so much promise” create utter turmoil. Forrester describes these manifestations as compensating feedback. Organizations often establish policies or may even have simple operating rules which create unintended havoc.
Vanessa Drucker, a financial writer friend was interviewed on the Kudlow Report, February 19th about Edge of Reason a piece she wrote for Fund Strategy Magazine. Her point made clear in print and interview is a seemingly simple decision by the SEC regarding leverage that may have been the simple rule which enabled massive unintended consequences to global financial ruin.
We have written about the dynamics of complex, self-organizing systems here before and hope that more organizations explore the simple rules in their organizations before they too suffer unintended consequences. What about the cockroaches? You'll have to watch the Kudlow Report to find out, but without being a spoiler, they're very good at adaptation.
~ Victoria G. Axelrod
