"Everything flows, it never stays that way"

Article by Lolis G. Ioannis, Economist, MBA, M.Sc., President & Managing Director of SIGMA S.A.

 

The article was published in the June issue of STIGMA under the title "COVID-19 ... a new relationship model".

The phrase was first uttered by Heraclitus (535-475 BC) in Ephesus and means, everything is fluid and nothing remains the same. Constant movement and change is the fundamental feature of reality, which the philosopher expressed with the image of a river that remains the same, while the water that flows inside it is constantly changing. That is why no one can enter the same river twice...

Everything is a matter of perception. There is a story that unfolded about ten years ago and concerned a geologist, who after a major disaster (hurricane) that unfolded off the east coast of the United States. , asked a journalist during the evolution of the phenomenon "what do you expect to see when the storm stops?" Reflectively on the question you assume (as it really happened to the journalist), that he would mention a large number of disasters. But he surprised him with his answer. "I'm waiting," he said calmly, "to see a new coast."

We live in the same world as this man, but in the companies where I work as a consultant, change is an enemy we fear. We accept the changes after we have previously prepared, planned and organized. We would say that at first it is a normal reaction because no one likes a negative surprise. But how many times have we not received this surprise?

We exist in an age of great and shocking turmoil, some of which are natural and some of which are man-made. All these disturbances shake what for over a century has maintained the leading and administrative - management mentalities of companies and organizations. Today, the concepts of Plan - Organize - Manage - Control and Evaluate (P.O.D.E.A.) tend to become utopian. Experiencing the health crisis caused by covid - 19 and which in the second phase begins to develop into an economic crisis, highlights as never before the futility of an organization, a planning and a strategy insured back to what we knew from the past (history) and we use it as a given to predict tomorrow. In short, this knowledge I gained today MAY be valid tomorrow.

I confess it is extreme…

What have we been experiencing for the last twenty years and how do companies react to various forms of crises (Greek stock market and "bubble" shares, easy access to lending, artificial price increases, toxic loans, government debt eruption, immigration, coronavirus ...). Organizational crises, the "sudden accidents" that happen without me being prepared, like the ones we mentioned above, are formidable forces that can destroy the deliberate and sustained progress for which we all work hard.

It is an almost universal phenomenon to treat a crisis not as a turning point and decisions that will affect the body's DNA but with a fatalistic way of thinking, with feelings of inactivity, FEAR or otherwise with a SHOCK. As a result, we usually react "shallowly" and after we leave (if we leave) the role of the victim, we treat her in the same way as we would treat a damaged machine. We use simplification in order to diagnose the problem. We expect to find a unique and of course simple cause of our troubles, the damaged "component", an unsuitable partner, consultant, boss, a team that is malfunctioning or inadequate.

Research has shown that the top executives of companies report that 75% of change projects do not bring the desired results. How can we expect something better if we do not stop treating organizations like machines?

In economics, the characteristics of homo economicus, the perfectly rational man, who seeks to maximize his individual benefit, based on purely economic criteria, were supposed to apply. But because the Aristotelian saying "(1) one (+) plus (1) one, it MAY equals TWO (2)" is becoming more and more relevant, this very rational human type was supplemented and enriched by the newer conceptions of behavioral economics and financial.

It has been proven that man does not always make rational decisions, influenced in many cases by psychological factors that lead him to wrong decisions e.g. following a herd behavior, overestimating his abilities, avoiding cognitive disagreement between beliefs and up-to-date information, etc.