Our world is continuously faced with unexpected events that could potentially have enormous consequences. From the financial crisis to the Arab Spring to the Tohoku earthquake and Fukushima disaster, they characterize the type of events that throughout history have challenged and changed the structure and functions of the ecological and social systems that we have created and participate in.

The consequences of these events are more and more determined by the interconnectivity of our world. Unexpected events will continue to hit us, their effects expanding through the interdependency of the natural, social and artificial systems our societies rely on. And, although we do not know where the next one will be coming from, or how it will affect us, we do know – because of the growing number of people in the world and the rapidly growing density of connections between them – that ever-increasing numbers of people will be impacted by it.

To be discussed in-depth at the World Economic Forum Annual Meeting 2013, this reality presents a new leadership context, shaped by adaptive challenges as well as transformational opportunities.

The challenge

A major challenge for leaders from the public and private sectors is to prepare our natural, social and human-engineered systems to be able to quickly recover from the next unexpected event. As we do not know the nature or time of the next major event that will hit us, we cannot build a conventional static defense against it. Rather, we need systems that will adapt their functions and responses to the respective events as they happen in real time.

Practically, this means that governance systems need to detect the earliest signals of such events and adapt their analytic focus and responsive functions accordingly. It also points to the need of designing redundancy in governance as well as the capability to replace functions that are disturbed or destroyed.

If many functions are redundant, such disruptions may not lead to a system collapse. In that case systems are tolerant with respect to a certain shock. If a system tolerates many different shocks, we refer to the system as robust.

When the shock to the system is greater than the system can tolerate, the number of functions the system can perform may decrease dramatically. An example is the temporary disappearance of the lending capacity of banks following the meltdown of the financial system in 2007. Another example is the loss of civic services after a natural or man-made disaster.

When the shock is over and the system recovers its functions re-emerge, but may do so in different ways. It might have explored different options and co-evolved, and new or modified functions may have emerged. The measure by which that happens is a measure of the resilience of the system. When a function that has broken down recovers, the actors and the underlying constituents providing that function may also have changed.

The leadership imperative

Problems like peak oil, exponential resource use, corruption, poverty, inequality, climate change, urbanization, youth unemployment, terrorism, unreliable fiscal and financial systems are challenges to the system’s ability to be resilient. At the same time these problems provide us the opportunities embedded in the dynamics that lead to these problems, as well as to the continuous transitions that shape our world.

From the perspective of improving the state of our world, the objective of such a resilient governance and institutional structure is to minimize the extent and duration during which the normal functioning of the system is affected. In other words, we need to adapt our systems to be maximally resilient in a dynamic and unpredictable world.

For that to happen, we need to build the capacity of our leadership to understand the underlying dynamics from which new unexpected events may destroy the system’s ability to function normally, and what creates resilience of systems. This implies the urgent need to establish a new study direction of complexity science globally at all major universities.

This article builds on a longer paper prepared by the World Economic Forum’s Global Agenda Council on Complex Systems, exploring the practical application of complexity science.

Author: Geoffrey B West*, professor and past president of the Santa Fe Intitute and current chair of the World Economic Forum’s Global Agenda Council on Complex Systems. 

*Representing the Forum’s Global Agenda Council on Complex Systems

Image: A fire truck is driven through flood water REUTERS/Darren Hathern