Summary, questions and exercise I Business Uncertainty series
We hate uncertainty almost as much as we hate change. It scares us. The unknown. To know helps us feel more in control. And a little less stupid.
Of the four parts of the VUCA model[1], the ‘known unknowns’ of uncertainty wreck the greatest havoc on our amygdala. Our brains are wired to interpret uncertainty as danger, greater than the danger itself. Studies have shown that we’re calmer anticipating pain than anticipating uncertainty, because pain is certain. British researchers discovered that study participants who knew for sure they would receive a painful electric shock felt calmer and less agitated than those who were told they only had a 50% chance of getting the same electric shock[2].
So as businesses we invest in data, in information systems, in analysis networks. We veraciously pour over our key metrics. As business leaders we consume more and more content, news, reports. All so that we can have more and more answers. And we feel good about ourselves because we’re more prepared. We’re doing precisely what the VUCA model of leadership recommends we do. And besides, we’re keeping up with the Jones because everyone else is doing exactly the same thing.
But we can often confuse data for knowledge. And confuse knowledge for wisdom.
To paraphrase, we can often be really good at tracking and tracing every tree, but miss seeing the woods.
As we feel the full force of uncertain times right now, and all that we thought we knew to be certain has gone a little wobbly, it can be helpful to broaden our perspective, to open our lens, and to flex our thinking. This is at the core of a Design Thinking and a Systems approach.
If you’re a business leader rethinking how you deal with uncertainty right now, there are four false constructs I’ve run into that underpin many of the rules around certainty in business. It’s helpful to be aware of them if you’re looking for opportunities.
The four false constructs I’ve run into:
We gain certainty from measuring what we see
We gain certainty from managing what we control
We gain certainty from planning the future
We think we can gain 100% certainty
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When we let go of our need to control, when we lose our attachment to certainty, when we give ourselves permission to fully embrace the now, we get out of any amygdala hijack that might be going on and we gain access to mastery. Mastery of the circumstances we find ourselves in. Mastery of ourselves. We get more in flow. We’re better able to see the opportunities. We’re better able to see the wood for the trees.
“Our present situation is neither natural nor inevitable…we consequently have many more possibilities before us than we imagine.” - Yuval Noah Harari, Sapiens: A Brief History of Humankind
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If you’re a business leader grappling with uncertainty right now, ask yourself and your team these four questions:
1. Given we respond to what we measure, how much organisational energy in our business is going to where the light is?
2. How much organisational energy is going into managing what we can control? How much do our risk registers and governance decisions reflect what we have control over? Vs what we don’t? How much organisational energy in our business is in managing the footpath?
3. How much of our organisational energy is caught up in 100% paralysis by analysis? Vs a more agile 80/20 approach?
4. How much of our organisational energy is spent in future thinking exercises vs exploring the possibilities of the present?
It can be helpful to re-frame your thinking of risk by reappraising your risk register (or similar) and do this 4 step exercise:
1. Identify each risk on a scale of most certain to least certain.
2. For each risk, identify the cost: Rank each on a sliding scale according to the amount of organisational Time, Energy and Money you put towards trying to control each
3. For each risk, identify the impact: Rank each one on a sliding scale according to how it impacts on the strength and sustainability of your business model.
4. Now stand back and appraise. Ask yourself: Where is the organisations energy going? More towards those things that are brighter, more certain, or easier? More towards those things are are darker, less certain, more difficult? HINT: You want to be putting more energy into shoring up your business model no matter how uncertain versus focusing on stuff because it’s easier. Move out of the light and be prepared to go into the park
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Thank you for taking the time to read. If you want more on redesigning business models, feel free to use my free tools page for useful models, tips and examples.
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[1] The VUCA model was based off the leadership theories of Warren Bennis and Burt Nanus. VUCA is an acronym standing for Volatility, Uncertainty, Complexity and Ambiguity. It was first used in 1987 by the US Army War College to describe the world after the Cold War. It has been widely touted in business leadership circles since.
[2] 2016 Study of 45 study participants as reported in Nature Communications. https://www.nature.com/articles/ncomms10996
[3] As an interesting aside, the US Indologist Wendy Doniger uses this parable in her book The Hindus: An Alternative History to illustrate that the “available light” on Hinduism tends to illuminate the perspectives of dominant groups. And the perspectives of marginalised groups, of women, of lower castes are relegated to the shadows. A parable in itself around how history, market systems and social class structures concentrate in the light of dominant forces.
[4] If you’re in the game of using big data, it’s worthwhile spending more time understanding observational bias and managing the very real systems-wide risks of false-positive inferences.
[5] The Pareto principle, also called the law of the vital few, was named after the Italian economist Vilfredo Pareto who noted the connection back in 1896 when he observed that 80% of land in Italy was owned by only 20% of the population.