Ok…really its two different topics, so I’ll take holistic thinking first.

So I do HR consulting, and we are always talking about the big picture…creating a holistic transformation, etc, etc.  Let’s think about holistic.  Its means whole.  You’re thinking about the whole thing.

Why is this is pipe dream?  Two reasons:

  1. Employees, no matter how high up in an organization (other than the CEO/COO) only have a certain purview.  The Executive VP of Compensation….deals with compensation.  If s/he were to think about the effect of compensation, it is just one piece of what keeps an employee at a company and motivated to perform (there is also benefits, manager competence, even the comfort of the chair s/he sits in at work).  In short, the VP of Comp can’t afford to think holistically about “total rewards” or “employment brand”….their purview is too limited.
  2. Some companies now have “total rewards” managers, or some other role, trying to get around this paradox.  Its a good idea, and likely works better than roles with more limited scope.  2 issues here:
    1. Its hard to find someone that knows a fair amount about everything related to Total Rewards or Employment Brand (It was hard enough to know just about Compensation).  Competence at this level will be difficult to come by….by definition.
    2. Here is the main issue, and my main issue with Holistic thinking….even in the best case scenario:  Complexity is hard to sort out.

People are not smart enough to deal with real complexity.  No one is.  The human brain cannot deal with an unlimited number of variables.  If you make a manager’s scope too limited, they are not holistic.  If you make the scope larger, they run into the issue of complexity.  Ok….what’s the real issue?

They call it the Butterfly Effect or perhaps more accurately the Law of Unintended Consequences.  Bottom line, we are unable to predict the outcome of systems that get too complicated.  The weather is an example.  Businesses are another…at least currently.

I think business/management will eventually become more scientific.  The human brain often fails at modeling complex systems (no person can predict the weather), but science can do a little better given time.  Of course, we still can’t very accurately predict the weather…even with science.

Any advice for businesses?  Yeah, I do have some.  Its a vote for the next-best, iterative solution.  The great Holistic strategy is not forthcoming, and if it were…..it would be too complicated to implement.  Be willing to start something today that you know is a step, and isn’t perfect, and is full of holes.

Companies already do this.  They’re good at it.  Where then do they fail?

Short-sightedness.  They start on a step 1…by the time step 2 is supposed to happen, they’ve had turnover (the original planners are now gone), the business environment has changed….they’ve already come up with another plan.  Plan 1 isn’t anywhere near done, and they’re already on Plan 3.

There is an abundance of strategy in corporate America.  There is not a ton of execution/follow through.  Even I recognize this.  By the time I’m good enough at my current job to have real effect….I’m off to something else.  Sustained effort is gold.


And then there is inflation.  I explained here what the US is doing with its monetary policy (printing money), and how we might bail ourselves out of this mess (other countries will finance our ir-responsibility).  It seems the Chinese know it too.

Another short bit on inflation:  I’ve heard the business press say wage pressure causes inflation (if people get paid more, then prices go up).  That’s shit.  Inflation is primarily caused by a change in the money supply.  The money supply is controlled by the Federal Reserve.  The Fed causes inflation.

What the Fed tries to do is even out the business cycle, to prevent inflation, to prevent boom and bust by slightly rigging the system all the time to ensure even growth and stable prices.  We get back to Complexity though (and weather prediction).  No one can predict economics.  The Fed gets it wrong….and thus causes our business cycles, not prevents them.

I’m not down on the Fed….I’m sure Ben is one of the greatest economists ever to live….but that don’t mean shit.  The greatest weatherman is still just some clown pointing at clouds on a map…..failing against Complexity.

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One Response to “Holistic thinking, Complexity and Inflation”
  1. Test says:

    I’m trying to leave a test comment on a post, because someone told me they no longer work.

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