The Upside of Turbulence

Everyone agrees that the global economy is flying through a patch of extreme turbulence. Recall that Lehman Brothers, which was founded in 1850, successfully weathered the American Civil War, multiple recessions, four financial panics, two world wars, depressions, oil crises, and 9/11. But the storied firm could not survive the seizure of global capital markets in 2008.

The present economic crisis has been so dramatic, that many people think it caused the volatility roiling markets. If the crisis triggered turbulence, according to this line of thinking, then the global economy should return to a period of stability once the worst of the downturn is behind us. Not so fast. Turbulence did not begin on September 9th, 2008. And it will not end when the global economy pulls out of recession. The current economic crisis is not the cause of market turbulence, it is simply the latest symptom of the volatility inherent in global markets.

In January of 2000, I stepped into “the pit” to teach my first class on entrepreneurial management at the Harvard Business School. These were heady days for aspiring entrepreneurs. Some MBA students raised tens of millions of dollars with little more than a business plan. A few recent graduates had founded Internet start-ups and measured their net worth in hundreds of millions of dollars (on paper at least). Some venture capitalists prowled the student haunts hoping to discover the founder of the next amazon or eBay.

My most vivid memory of the dot.com boom is not excitement, but surprise. I was surprised when the

We need mental maps to guide action in an uncertain world, but these maps are always imperfect. They reduce complexity to simplicity, omit critical variables, underestimate rivals’ ingenuity, and tend toward stability in a volatile world. The more turbulent the market, the faster maps grow outdated. Keeping a map fluid requires the right data-i.e., real time, unfiltered, and shared.  My last post discussed real time data, while this one describes the importance of unfiltered information.

Many organizations deluge employees with more data than they could possibly read, let alone digest. To

Execution starts with when a team or organization forms a shared understanding of the overall market situation. A start-up’s business plan and an established company’s strategy are both examples of what I call mental maps, shared models that represent reality and serve to guide action. Mental maps can range from detailed plans in thick binders to a simple insight sketched on a cocktail napkin. Differences in form should not obscure similarity in role–all mental maps represent the environment, highlight important variables, and suggest a way forward.

Leading in turbulent times

This blog is no longer active but it remains open as an archive.

Don Sull is professor of management practice in strategic and international management, and faculty director of executive education at London Business School. This blog is dedicated to helping entrepreneurs, managers, and outside directors to lead more effectively in a turbulent world.

Over the past decade, Prof Sull has studied volatile industries including telecommunications, airlines, fast fashion, and information technology, as well as turbulent countries including Brazil and China, and found specific behaviours that consistently differentiate more, and less, successful firms. His conclusion is that actions, not an individual’s traits, increase the odds of success in turbulent markets, and these actions can be learned.

Don Sull’s blog: a guide

Comment: To comment, please register with FT.com, which you can do for free here. Please also read our comments policy here.
Contact: You can find contact information for Don on his website.
Time: UK time is shown on posts.
Follow: Links to the blog's Twitter and RSS feeds are at the top of the page. You can also read the blog on your mobile device, by going to www.ft.com/donsullblog
FT blogs: See the full range of the FT's blogs here.

Elsewhere on FT.com: Dear Lucy

Lucy Kellaway, FT columnist and associate editor, offers her solution to your workplace problems in a column in the Financial Times. In the online edition of her Dear Lucy 'agony aunt' column, readers are invited to have a say too.

FT Business School videos

Managing in an Unpredictable World
A series of video lectures by Professor Don Sull

Part 1: Fog of the future
Part 2: Future reconnaissance
Part 3: The strategic agility loop
Part 4: Executing with commitments
Part 5: Leading into the fog

Featured blogs

MBA blog

Business school students write about their experiences

Management blog

For leaders and managers