Right now, our world is stumbling from the pandemic crisis into a full-blown supply shock crisis. One crisis is chasing the other. The financial crisis of 2007/08 and the Great Recession fueled the Greek debt crisis, which in turn led to the refugee crisis. The climate crisis has been supplanted by the pandemic, only to return in the form of the supply crisis. If we take a closer look, we see that all these crises are interconnected.

The reason is that our global systems are interconnected, and this interconnectedness is both a blessing and a curse. A curse, because it adds exponentially more complexity. A blessing, because it provides us with the tools to mitigate the crises, and perhaps even solve them.

Globalisation is the most prominent label we apply to the interconnectedness of our global systems. And digital (i.e. networked) technology has been a harbinger of globalisation, while also exacerbating tribalism and fragmentation. In most crises, we’re no longer dealing with single, separate issues that we can treat and possibly solve as such. Instead, we’re dealing with complex ecosystems, as Andy Polaine reminds us:

The more we connect everything together, the more ecosystems become exponentially more complex. Covid is the most obvious example of this – you get social, environmental, economic, legal, scientific, ethical, political issues all interacting with each other.

On the surface, there’s a simple, elegant solution to the pandemic: vaccines. It’s a great achievement of science. If we could vaccinate enough people, the pandemic would end. So why do so many countries struggle with their rollout, despite having more than enough vaccines in stock? It all comes down to social, economic, legal, ethical, and political issues. There are problems of acceptance, access, disinformation, fear, negligence, or understanding.

The crisis has spread

Like a litmus test, the pandemic has highlighted a multitude of critical issues in our global, interconnected ecosystems. The crisis has spread, like the virus itself, giving birth to more, interconnected crises. It has challenged globalisation and raised the question of how much globalisation humankind can survive. It has made clear how fragile our global supply chains really are.

The supply shock has been brewing for a while. In hindsight, the initial turbulence in early 2020 looks like a quickly absorbed one-time disturbance. But in late 2021, we’re seeing lots of ripple effects. The climate crisis has stepped in as well, pouring oil on the fire. There’s a severe energy crisis in China. Global supply chains are at risk of collapse.

I don’t think the problem is globalisation per se. Rather, it’s about a failure to view, manage and optimise the whole system, or systems, instead of creating local optima. Climate change, the pandemic, or the supply crisis – all of this is about the re-internalisation of externalised costs. Collectively, we’ve shifted costs to future generations, or other parts of the world – only to find out that these costs are still there. We just swept them under the carpet for a while.

This is nothing new. What is novel is that these costs are now showing up. And this means that someone has to foot the bill. In many markets, this leads to rising prices. And when prices rise across the board, the result is inflation. That’s what we are seeing right now, and the question is whether it’s a one-time spike or a long-term change. (Hint: it’s both. Energy prices will continue to rise.)

Management is stuck in the industrial age

There’s a deeper cause at work here, and that’s our management model. Again, let’s quote Andy Polaine:

There is always a push to over-simplify these things, which includes thinking of digital services as “products” because the complexity view makes our heads hurt. Businesses, whose management mentalities are still stuck in the industrial factory model, despite all the trendy variants, are not set up to understand or manage for complexity.

So you have this tension between those two mindsets – one that is striving to understand complexity as complexity, another that wants to break it all down into simple blocks and make those blocks shiny as fast as possible and call it Agile.

We’re continuously optimising our small piece of the puzzle, while losing sight of the whole picture. This breeds all kinds of interconnected crises, which we fail to recognise as such. This is a failure of management. We need systems thinking and systems design to avoid those pitfalls. Andy Polaine doesn’t get tired of reminding us that

most digital “products” are actually services and that slippage of meaning has consequences.

Granted, we’re guilty of contributing to the conflation. We need to admit that digital products are in fact complex digital service ecosystems. We need to design, develop and manage them as such. That way, they can be powerful tools to solve – or at least mitigate – today’s interconnected crises. These are systemic crises, and we need to treat them as such. However, most people muddling through with an attitude of business as usual is still a highly likely outcome.

That’s because changing systems is hard and risky. Hence the “never change a running system” mindset. But this mindset itself turns into a huge risk in times of interconnected crises. Systems must adapt to changing environments. However, this doesn’t mean we should or even could abandon them. Our systems are surprisingly resilient. It’s not unlikely that we’ll find ways to design sustainability into our systems. But we cannot treat our crises as single, separate issues.

Photo by NASA on Unsplash