Tuesday, 9 July 2013

The World is Becoming Not Only More Complex But Also Significantly More Uncertain

The financial crisis is just one of many examples which have recently evidenced why the excess of complexity is a condition to be avoided. The excess of complexity can generate unexpected situations which often require painful and drastic actions if one is to regain control of the situation.  The required effort and time are, in addition, very relevant. Furthermore, due to the turbulent times in which we live, the consequences are greater than they would be in a stable environment. The added value of having a system that is able to warn, in time, about the possible consequences of excessive complexity, is quite obvious.

Anyone who wants to survive and evolve in the current turbulent era must include complexity as one of his metrics and must consider it as a component of any decision process. Therefore it is mandatory to move from a perception or impression of complexity to a quantification of  complexity based on objective measures.

For example, everyone is aware of the fact that the World is becoming increasingly complex. But how much is this growth? everyone has an opinion. But opinion is one thing, scientific facts are another.

Is it possible to measure the complexity of the World? Of course it is. In the present study we have utilized 1200+ factors available at the World Bank(http://data.worldbank.org/).

Based on this data, the complexity of the World (see figure 1) has doubled over the last past 25 years (1986-2010) with a annual compound annual growth rate (CAGR) of the 2,8% (see figure 2).

But the complexity growth is mainly due to the relevant increase of uncertainty (entropy). Indeed, uncertainty has increased by 350% (see figure 1) over the past 25 years and its CAGR is equal to 5,3% (see figure 3), double of the complexity CAGR.

These figures show that the World as a system is not able to treat the excess of uncertainty by creating new structure. This massive uncertainty might not be sustainable for long and therefore there might be the need to eliminate it through painful measures (or natural events, which invariably make life simpler, will do so for us) or through new important innovations which have an impact on the structure with which the world evolves.