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Countercyclical Strategies


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Introduction

The research on the concept of counter-cycle building is based the development of the unicist ontology of evolution and its application in the social and business fields that was developed by Peter Belohlavek at The Unicist Research Institute. Counter-cycles are used to manage structural crises and introduce structural innovations in an environment.

The past and the future are not symmetric, unless the environment is not adaptive. Counter-cycles imply installing a new complementary solution that drives towards a new situation.

It has to be considered that counter-cycles are a human creation, because they do not exist as such in nature. The unicist counter-cycle building process is an emulation of countercyclical effects that happen in nature but have no causal relationships. The first application of this concept occurred at Diners Club in 1981 and the completion of the applications occurred during the financial crisis of 2008.

About Structural Crises

A structural crisis is a turning point that introduces a structural change. Social and economic crises are turning points that change comfort zones. That is why social and economic crises trigger fallacious responses that allow denying the consequences of the turning points.

The coronavirus crisis is a structural crisis. Structural crises are those that change customs or habits in an environment. The change of customs or habits is driven by crises that unavoidably affect the security and safety of the members of an environment.

Crisis management includes two aspects:

  1. The elimination of the root causes that generate a crisis. (Root causes might be limit causes that cannot be managed)
  2. The management of the consequences of the crisis

This work is focused on managing the economic and social consequences of the coronavirus crisis that began in 2019. It has to be considered that millions of jobs are directly affected or endangered.

It can be said that there is a majority of people who cannot manage the consequences of the crisis. This drives them naturally to a survivor stage where extreme individualism is necessary and unavoidable.

On the other hand, there are others who can accept that this is a new stage and will be able to face the crisis and develop counter-cycles that drive towards a new functionality of customs and habits.

About Structural Crisis Management

Managing a crisis is like sailing a small boat in a stormy sea. It requires knowing that the storm will end and where one will be and how the sea will look like when the storm ends. In the case of the sea, it will look like before. In the case of social and economic crisis, it will be different, because the “storm” will be included as part of the new environment.

Therefore, in the case of structural crises, it is necessary to know the possible specific future scenario of the environment affected by the crisis. To access this knowledge, it is necessary to know the concepts and fundamentals that drive the behavior of the specific environment, its restricted context and its wide context to understand which aspects of these fundamentals will evolve, involve or mutate.

This understanding, in concrete terms, will give you a horizon to aim at, while you manage the storm of the crisis. But to arrive to that horizon, it is necessary to install palliatives that allow overcoming the crisis and not sink in the storm.

The Change Process

 Structural crises are turning points that introduce structural changes in the environment. The change of customs and habits they introduce might be operational or structural.

While operational changes deal with the customs of people, structural changes deal with the habits that underlie these customs.

The reference group that catalyzes the introduction of countercyclical solutions in an environment needs to build a new comfort zone that drives the environment towards new underlying trends.

Structural Innovations and their Counter-cycles

Structural innovations are breakthroughs. They are those where a new credibility is installed in the environment, a new function begins to exist, or a mutation of an entity occurs.

There are far more counter-cycles used to introduce innovations than to overcome structural crises. The invention of the printing press, the airplane, the smartphone and the internet are examples of structural innovations that allowed developing counter-cycles to accelerate their introduction in the environment.

This is just the evidence that the introduction of breakthrough developments in business requires the use of countercyclical strategies to ensure their success. Without countercyclical strategies the introduction will demand years and decades until it is fully installed.

At this stage, the introduction of the technologies of the 4th industrial revolution can be promoted developing counter-cycles or can simply evolve following the natural pathway.

The inverse affirmation is also true, a structural innovation is necessary to introduce a counter-cycle. This is the case of the countercyclical strategies to overcome crises.

Unicist Countercyclical Solutions Building

Countercyclical solutions are “complements” that cover real weaknesses of actions that are needed to compensate either for the lack of adaptation to an environment or for changes in it.

This complementation is installed through functional innovations, that allow adapting to a superior stage, and requires the use of expansion catalysts that ensure the “multiplication” of the solution. The lack of catalysis inhibits the functionality of countercyclical solutions.

Countercyclical solutions are needed to:

  1. Introduce breakthrough innovations in an environment
  2. Manage structural crises

The Introduction of Breakthrough Innovations

Breakthrough innovations are those that change the customs and habits in an environment.

They imply the introduction of a new paradigm that establishes a new stage in a specific field. In this case, the development of countercyclical strategies requires being based on latent needs and being the drivers towards a superior level of functionality in the environment.

Thus, the reference group that introduces these innovations needs to be integrated by people who have experienced the innovations and are the avant-garde in the environment.

The Synthesis of Countercyclical Solutions

Countercyclical solutions are “complements” that cover real weaknesses of actions. These complements are needed to compensate either for the lack of adaptation to an environment or for a change in the environment.

This complementation is installed through functional innovations that allow adapting to a superior stage and requires the use of expansion catalysts to ensure the “multiplication” of the solution. In this scenario, the lack or insufficiency of catalysis inhibits the functionality of a counter-cycle. 

Counter-cycle building is the natural pathway to deal with crises. Paradoxically, it is also the pathway to introduce innovations that generate a breakthrough.

On the one hand, counter-cycle building requires understanding the roots of the crisis, which are not defined by the triggering causes but by the root causes. On the other hand, it requires being able to forecast the evolution of the environment one is dealing with.

After this stage has been achieved, it is necessary to define the resources needed to face the crisis. In most of the cases, a change in the mindset needs to be made in order to develop a counter-cycle.

The process of counter-cycle building is based on the intrinsic functionality of the counter-cycles considered as an object. This functionality is redundant with the functionality of the use of counter-cycles.

It has to be considered that the counter-cycle pretends to influence the future, which requires testing in homologous fields. The most difficult aspects of the counter-cycle building process is the pilot testing in homologous fields that allows confirming its functionality.

Conclusion

Counter-cycles are needed to manage structural crisis and breakthrough innovations. They are more visible when dealing with technological breakthroughs. This becomes evident if one researches the history of technological breakthroughs and their dissemination.

The unicist approach to countercyclical solution building is based on the management of the conceptual structure of the solutions, of the scenarios and of the catalysts that need to be built.

The process can be synthesized in the following synchronic steps:

  1. Define the possible future scenario.
  2. Build a reference group to develop and sustain a strategy.
  3. Design the strategy to manage the crisis to make the future scenario happen.
  4. Define and build the necessary countercyclical processes, objects and actions.
  5. Define and install the necessary palliatives to use during the crisis.
  6. Establish the necessary binary actions that will be developed.
  7. Develop the necessary pilot tests to confirm the functionality of the process.

This implies using the unicist evolutionary approach and the framework of a constructivist approach that allows establishing the stages of the introduction of counter-cycles.

It has to be considered that the development of counter-cycles is a must to deal with breakthrough innovations and the management of structural crises.

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