“Uncertainty is Kryptonite to Corporate Decision Making”

Something for the frameworks category. Lifted, and some of the context shaken off, from John Robb’s Global Guerrillas.

In the original context this was about how to attack the supply chain of the modern military. In the second world war opposing sides spent resources on destroying the other side’s supply chains; blowing up railroads and supply depots for example. Given that the modern military has become deeply dependent on corporate outsourcing the locus of attack shifts from the physical to the organizational.

So John summarizes this list of three things that can lead to the failure of a large firm.

  • Moral. A company is morally isolated when it cannot meet its obligations to its stakeholders. These include profits to shareholders and safety/morale to employees. Management teams that don’t meet their obligations to these stakeholders are either summarily replaced or held legally/financially liable.
  • Mental. Uncertainty is Kryptonite to corporate decision making. Too much uncertainty and corporate valuations fall. If an operation introduces new uncertainties that taints daily decision making, it will likely terminate it.
  • Physical. In order to do business, corporations enmesh themselves in a deep web of connections. If a corporation’s activities put their relationships with suppliers, financiers, and partners at risk, they are obligated to cease them.

That’s a great list. Those only get more important as you rise up Maslow’s hierarchy of needs.

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