Wednesday, March 7, 2018

CIOs as “Chief Insight Officer”: How to Master the Art and Science of “Uncertainty Management”

The leader of the future is not the charismatic prophet capable of seducing the masses but as the scientific guidance for steering the business in the uncharted water.

With the exponential growth of information and volatile business reality, as we all know the only "Certainty" or a "Constant" is "CHANGE" now. Uncertainty is a given, just as it has always been and always will be. To use the common term, uncertainty is the lack of certainty, a state of having limited knowledge where it is impossible to exactly describe the existing circumstance. At the dawn of the digital era, organizations face an unprecedented level of uncertainty, what are the practices and logical scenario to master the art and science of uncertainty management?

First, you have to be able to visualize and identify uncertainty: Now with the uncertainty around with increasing pace of changes, the volatile market situations, extreme competition, emerging digital technology trends, modernization, so many factors need to be considered in order to both understand and handle uncertainty. Though there are both opportunities and risks in uncertainty, somehow, it is affecting the short-term business goals and are often forcing the companies to act differently for adapting to the emerging property and varying circumstancing with the rapidly changing market scenario. Digital leaders today have to check up frequently whether products or services can be delivered on time, on cost and on most importantly on value; whether competitors will bring similar products to market before you because the risks are going forward with insufficient information or misread the business conditions. To master the art and science of uncertainty management, business management needs to know which factors contribute to uncertainty. Is it caused by “unknown” factor -not identified with the scope of the business planning;  or is it caused by “unknowable” -beyond the knowledge and understanding of management; or is it caused by “stochastic events”- situations with random distributions as well as “unknown” distributions. To put simply, there are both known unknown and unknown unknown. While there is always some remaining uncertainty, if the management can truly have humble attitude to collect information and feedback, doing enough homework for planning (not just make the plan) with necessary adjustment on the way to fit the emerging situation, and broadly involves the organization for adaptation, they are on the right track for managing uncertainty systematically.

Second, to identify that it is necessary to convert the uncertainty to risk through the application of quantification methodology in order to be able to manage the uncertainty scientifically: Uncertainty is essentially a lack or void in the current knowledge base." Uncertainty," is a future event that can be mitigated by the acquisition of new knowledge (facts) The best practice to handle uncertainty is about the translation of “how to deal with uncertainty” into “how to mitigate uncertainty or deduce the degree of uncertain” via collecting information or gaining new knowledge. The next problem to be solved is how to deal with the mountain of information with both technical methodology and human know-how skillset, and then how to convert useful information into valuable knowledge in calculating risks and handling business uncertainty more effectively. Selecting the right measurement to quantify risks is also important, but keep in mind, you must make the adjustment all the time, otherwise, your business is going to be driven by that specific set of performance indicators, you are going to focus on them only with ignorance of the bigger picture of the dynamic business reality.

Take the “Entrepreneurs’ spirit to turn the status quo upside down for dealing with uncertainty via interdisciplinarity of art and science: Organizations no matter large or small, all face the unprecedented change, uncertainty, and accelerated business dynamic. There is no magic formula to either handling changes or dealing with uncertainty. As corporate planning in large organizations may concern more about not disturbing the bureaucracy and keep inertia to the change and uncertainty. But intrapreneur-leaders deploy new ideas, new processes, and new adventures to adapt to change. Handling uncertainty effectively is fundamentally the ability to adapt to the business dynamic. Uncertainty in the business or in any situation is a smoke cover for the opportunist to take the risk to advance in the direction of the goal. Intrapreneur leaders can leverage both logic and intuition, expand their thinking boxes and get a better understanding of the current boxes, figuring out which of them makes sense to deal with the challenge of uncertainty, with the right dose of risk tolerance. Business will be more successful when they realize that one of their greatest strengths will be their change capability to deal with “VUCA” business new normal. The business leaders and their team cannot afford to be unprepared for the challenging task of facing an uncertainty. The problem is not uncertainty rather it is unpreparedness towards the efficient handling of uncertainty. And it takes an entrepreneur's spirit for envisioning, exploring, learning and advancing towards the future confidently.

The rate of change has accelerated, indicating that business leaders must learn how to strike a balance between managing the top prioritized business problems today and predicting the uncertain issues of tomorrow. The leader of the future is not the charismatic prophet capable of seducing the masses but as the scientific guidance for steering the business in the uncharted water. In fact, one of the most important tasks of business is to deal with the uncertainty while moving forward steadfastly.

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