Are we truly entering an age of disorder rather than just a temporary disruption? Deutsch Bank’s Jim Reid recently wrote that
“… and we think the world is on the cusp of a new era – one that will be characterized initially by disorder … beginning in 2020”.
Keyword here is “era” – “age”. This suggests to me that what we are entering is not an event, with a clear start and finish, nor a temporary phase that will go away in reasonably short order. It describes an extended period of disorder.
Deutsch Bank (DB), one of the world’s largest financial institutions, is unlikely to release a report of this nature without pretty solid evidence. Banks don’t typically flag bad news unless the news is very bad. And very likely.
Describing what is coming as an “age” should be most concerning to any business. One of the most important pieces of planning data is likely duration. Even if it is impossible to figure out in detail what is actually happening, it is still valuable to have some idea of what disorder duration means in practice.
If DB is right, we are in for a lengthy period of disorder. But what exactly is “disorder” in practical terms?
Disorder ‘R Us
Looking back over even the past 100 years, when has not some kind of disorder plagued us? Perhaps life itself is disorder. Maybe it is order that is rare. Is life itself an age of disorder?
Looking again through the article that prompted this post, it seems clear to me at least that the “disorder” being referred to is simply major change. Big changes in the “normal order” of things.
We do not live in a stable world. Something is always changing. Change is life. Disorder is life. Not all change (aka disorder) is bad. Some changes – big ones – are extremely valuable. Think of the internet. How did we manage to survive without the web and the virtually instant communications that it enables?
Wonderful Disorder vs. Nasty Disorder
You are reading this piece thanks to the wonderful disorder of the web and almost magical desktop publishing technology. Mechanics for doing so change almost monthly to some degree. This creates a serious burden for those of us that work with the underlying mechanics but so often, the changes are welcome.
Recent COVID lockdowns are among the nastiest of changes. Definitely disorder of the highest magnitude for many of us. Hard to think of a positive aspect of these. But they may well be here to stay in some form. Huge opportunities exist however in this “disorder”.
Reid speaks of globalization that began in the 1980s as an “… era [that] was win-win for most of the globe, and everything fell into place over the next three to four decades.”. Huge changes occurred but they created happy days for many major businesses and institutions. For them, a wonderful disorder occurred.
These happy days, for some at least, eventually gave rise to overwhelming global debt, huge income inequalities, and inflation/deflation (jury is still out on this one). This is the beginning of nasty disorder in that a happy ending seems virtually impossible. Worse yet, the duration of nasty seems to be quite lengthy.
Coupled with the COVID lockdowns, is the stage set for catastrophe?
Change (disorder) = opportunity
The term “disorder” appears to be used quite loosely in the Reid report. My sense is that it really means major change – unpredictable to some degree and generally unstable compared to the past happy days.
A primary theme of this blog is that change creates opportunities for those that are ready. Calling changes “disorder” really doesn’t affect this interpretation. Even “catastrophe” may be a bit excessive. While the lockdowns are certainly catastrophic for many small business owners, they are creating huge opportunities for nimble companies like Amazon. And probably also for many other small and new businesses.
In quite a few cases, the current change has simply exposed and punished businesses that had fundamental weaknesses long before. The current catastrophe was just the final straw. Something was going to take these weak businesses down eventually, and for them, eventually seems to be now. Catastrophe is not the primary cause but simply the trigger for an inevitable reckoning.
Many bad management decisions have set the stage for eventual failure. A good number might be classified as lack of resilience or excessively rigid structures. Being able to manage your business successfully through a period of nasty disorder requires explicit attention to resilience and adaptability.
Uber and Lyft are being tested now by change
These money-losing (Uber and Lyft went public in 2019 but posted huge losses — Uber lost $8.5 billion and Lyft, $2.6 billion), fast-growing ride-sharing businesses appear to have hit some deep potholes in their paths. The ingenious concept of employing (but not officially) drivers and cars to avoid the huge costs of building a company-owned fleet and employing full-time drivers, plus the use of a powerful platform technology to link riders with drivers, was a sure winner. Until it wasn’t.
What they have learned so far is that there is a huge driver turnover requiring constant, costly recruitment of replacement drivers. Traditional taxi businesses, though decimated by Uber, Lyft and others, do not have these costs. Adding to their disordered world are governments pressing for them to reclassify drivers as employees. A costly business killer if successful.
A recent California vote on Prop. 22 bought at least a temporary breather for Uber and Lift as reported by Curbed:
“But the push behind Proposition 22, which California voters passed this week, was like nothing I’ve seen before. In all, Uber and Lyft spent almost $200 million to convince voters that paying their drivers a fair wage with benefits would kill their companies. And it worked.”.
The battle here however appears far from over.
Regardless, is this an example of what the “age of disorder” looks like?
The Age of Disorder is always here
It seems not. What this looks to me like is an example of age-old competitive pressures, politics, and business condition changes. New for Uber and Lyft but not new to the business world in general. Will they survive?
They are dealing with big, rapid change that has happened before – often. Competitors may see opportunities in the struggles of Uber and Lyft to overcome their current difficulties.
Convenient public transport is an essential market that began as hackneys – horse-driven carriages and carts. Pretty stable, substantial market in most times. The only place for competitive advantage here is in innovative ways to improve convenience and to lower ride fares. Ride-sharing companies did both, which hit taxicab operators very hard. Good change for Uber, bad change for local cabs.
Will this current public transport “disorder” persist? Or will the cabbies win in the end, whenever that occurs?
The big threat is duration
Since it appears that “disorder” is just major change that has always occurred, what part of the “age of disorder” should we worry about? Clearly, it is the duration aspect. Brief changes and slow-moving changes are manageable in most cases. Fast, big changes that become permanent are the real threat.
If we knew that lockdowns were definitely going to end completely within a “short period”, then whatever changes that they caused may be reversed in at least some cases. However, the initial short period of two months has morphed catastrophically into a “maybe never” situation. The disorderly lockdowns may end, eventually, but the impacts will remain.
“Maybe never” may actually mean that impacts are unlikely to go away and will probably be irreversible. This is a truly big deal.
The disorderly changes that are driving things may smooth out and stabilize to a degree but the associated business environment seems likely to be changing permanently. If so, then businesses are going to have to make permanent adaptations, not marginal or temporary adjustments.
“Disorder” is not changes but impacts
The age of disorder businesses face is likely to an extended period of impacts. Change drivers such as lockdowns (and ride-sharing) may well disappear but the impacts they cause will not. Just like a rock thrown in a still pond can generate a long-lasting pattern of waves.
This suggests a focus on impacts rather than on the causal forces.
Lockdowns are going to drive many existing businesses into oblivion but the vacuums created, coupled with the still-remaining creativity of businesspeople generally, will surely lead to a wave of new enterprises. Disorder for those who fail but great opportunity for those who adapt, survive, and move ahead creatively.
Change (disorder) means opportunities
Our “age of disorder” seems to mean in practical terms that many businesses will fail and that many new businesses will be generated. This is what change has always meant.
The biggest changes always create the biggest opportunities.
So maybe we should welcome the current disorder rather than being threatened by it. Doing so requires a very positive outlook and a strong focus on innovation. Tough to manage this right now but it is so important.
You especially want to be watching for changes in your marketplace that may be early indications of an emerging or changing customer need. Failed competitors leave supply vacuums that carry a message about changing markets. But these will be visible only if you are looking carefully and daily.
Lengthy periods of relative stability tend to produce few significant business opportunities. It is change – or disorder in Deutsch Bank’s terms – that creates the truly great opportunities. Even though such changes are usually painful, they can be made golden if you see this period as opportunity rather than catastrophe.
We are in for a period of major, extended change, which might appear “disorderly” to some. Many changes will permanently impact and alter your business environment. Marginal adjustments and temporary wait-it-out fixes will likely not succeed. You will almost certainly have to make fundamental changes to your business in order to survive and prosper. Timeframe for this adaptation is probably quite short.
Umair Haque saw the age of disorder beginning in 2016:
“We’re entering a truly dangerous time in global history. I will simply call it the age of disorder. What is striking about this age is that the liberal global order, probably humanity’s single greatest achievement, responsible for a true golden age of peace and prosperity, is beginning to fracture.”
Joshua Cooper Ramo got on board even earlier – in his 2009 book “The Age of the Unthinkable: Why the New World Disorder Constantly Surprises Us And What We Can Do About It “. From the book overview:
The traditional physics of power has been replaced by something radically different. In The Age of the Unthinkable, Joshua Cooper Ramo puts forth a revelatory new model for understanding our dangerously unpredictable world. Drawing upon history, economics, complexity theory, psychology, immunology, and the science of networks, he describes a new landscape of inherent unpredictability–and remarkable, wonderful possibility.