VUCA 3/4 How to handle Complexity? How to mention 'ceteris paribus' without oversimplifying.
- mrpeterelek
- Nov 13, 2024
- 4 min read
Updated: Oct 8
If you nervy to navigate through complex situations, read this first. Do not worry, try these methods!
Before diving into evaluating a complex situation, it's advisable to take a moment to pause. Stay calm, breathe deeply, and switch your mindset to problem-solving mode. Alternatively, seek guidance from a certified project manager to navigate the scenario. In the Banking industry, particularly in Project or Program management, you will encounter numerous instances that require critical decision-making. Whether it pertains to architecture, prioritization, timelines, or even budget and cost considerations, the complexity can be overwhelming. Obtaining precise information can be challenging, and making errors in a high-pressure environment can be detrimental.
Complexity in project management
Complexity in a program, project, or its surroundings poses challenges in management due to human behavior, system behavior, and ambiguity. It arises from a multitude of interconnected influences that manifest in various ways. In such complex environments, the combination of individual elements can result in unexpected or unintended consequences. The unpredictable nature of complexity makes it difficult to accurately forecast potential outcomes or anticipate emerging results. Dealing with complexity involves various approaches, including system-based methods, reframing strategies, and process-oriented techniques.
System-based method #1:
Decoupling: involves separating parts of the system in order to simplify it and decrease the number of interconnected variables. Understanding the functionality of individual components helps to reduce the complexity of the entire system.
Simulation: sometimes, unrelated scenarios can be utilized to simulate various aspects of a system. For instance, a project is developing a new alternative channel development with many interconnected architecture can gain insights from non-banking markets customer servicing channels by examining data from them.
Reframing strategies #2:
Diversity: In complex systems, it is essential to consider a variety of perspectives. This may involve engaging in brainstorming sessions with the project team to explore different ways of understanding the system. Additionally, employing Delphi-like processes can facilitate the transition from diverse to unified thinking. Consider utilizing various stakeholders' perspectives and endeavor to empathize with their viewpoints.
Balance: Ensuring a balance in the types of data used, rather than solely concentrating on predictive or lagging data, offers a more comprehensive viewpoint. This approach may involve incorporating elements with variations that are anticipated to mitigate any potential adverse impacts on each other.
Process-oriented technique #3:
Iterate: build iteratively or incrementally. Add features as minimal features as you can at a time or iterate more regularly. After each iteration, identify what worked, what did not work, get customer reaction, and what the project team learned. Keep in mind that in an agile environment, other projects are also progressing alongside yours. Make sure to regularly look out and collaborate with colleagues if you encounter any obstacles.
Engage: build in opportunities to improve stakeholder engagement. This reduces the number of assumptions and builds learning and engement into the processes. Especially where ESG projects are not the center of the business - is inevitable.
Fail safe: for components within a system that are crucial, incorporate redundancy or features that allow for a graceful degradation in functionality if a critical part fails. This is critical in Banks, when there are client data on on-prem servers or if you move your server's location to another country.
How not to oversimplify and the usage of descriptive terms. The Latin phrase ceteris paribus, meaning “all other things being equal” or “holding other things constant,” is commonly used in economics and other social sciences to indicate that a specific variable is being examined in isolation. Here are examples of how to use it correctly:
1. Economic Analysis:
“An increase in demand will lead to higher prices, ceteris paribus.”
This means that prices will rise if all other factors - such as supply and production costs - remain unchanged.
2. Comparative Statements:
“If the interest rate decreases, ceteris paribus, the level of investment in the economy should increase.”
Here, the statement assumes that all other influences on investment, like economic growth or government policy, are held constant.
3. Business Context:
“A company’s profit margin is likely to improve if it reduces production costs, ceteris paribus.”
This implies that profit margin improvements are expected only if other factors affecting profits stay the same.
Using ceteris paribus emphasizes that the outcome or effect being discussed assumes a controlled scenario where no other variables change, providing a clearer focus on the relationship between the primary variables in question. But be careful and let's be honest dear readers, have you ever seen a complex changing environment, where you change only one thing and even one thing is being unchanged for long time? No, neither do I, this is the system's normal behavior. Do not fall in the trap of oversimplification - use ut carefully. One more thing before we close soon the VUCA topic, a decision is inevitable, even it's good or bad take it. No decision is a decision too, and has price too.
Manage your projects carefully and employ a certified project manager, contact here. Thanks for reading!
Source: PMBOK 7th edition
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