Thursday, May 9, 2013

Is Uncertainty the New Normal & How to Deal with It

Uncertainty is a sign of humility, and humility is just the ability or the willingness to learn.        -Charlie Sheen 

The pace of change is accelerated both in business and society, either as an individual or an organization, uncertainty (of outcomes or occurrences) is inherent in almost every endeavor, are we reaching such an uncertainty era? How to deal with the new normal? From surviving to thriving, what’s your strategy?

1.    Uncertainty vs. Risks 

First, provide some form of classification for the different dimensions/aspects of the term "UNCERTAINTY
  • "UNKNOWNS" - Not Identified within the scope of the plan 
  • "UNKNOWABLE" - Beyond the knowledge and understanding of managers
  • "Stochastic Events" - Situations with the random distribution, as well as "unknown" distributions.  
Uncertainty vs. Risks: Risk is something one can plan and mitigate. Uncertainty is not something you can plan for or mitigate. Uncertainty is a component or a subset of risk (albeit something that cannot be mitigated), so within 'risk' there is uncertainty.

Uncertainty/Risk is inherent in the marketplace; Uncertainty/risk is inherent in every venture:  The impact of uncertainty can be, at least in part, addressed by research and knowledge. Whether a product can be delivered on time; whether a competitor will bring a similar product to market before you, the risk is going forward with incomplete information. Essentially, from a business perspective, the difference between Uncertainty and Risk is that Risk is quantifiable while Uncertainty is not quantifiable (or hasn’t yet to be quantified).

2.   The Leadership Role Playing in Dealing with Uncertainty 

Of course, leadership plays an important role in dealing with uncertainty. Leadership is an element of management that can help mitigate the impact of uncertainty/risk by enabling a team to encounter uncertainty and deal with it strategically and systematically...the belief in a vision, or in the leader. That makes sense!

Leadership supplies the framing context in understanding uncertainty and it needs to have a culture of leadership that encourages optimism, planning tries to incorporate the uncertainty (perhaps using modeling tools, scenario planning)

Translation of "how to deal with uncertainty" into "how to change uncertainty to certainty or reduce the degree of uncertainty":
(1) There are several kinds of training for uncertainty....uncertainty about the extent or limitations of current knowledge.
(2) Uncertainty about one's mastery of current knowledge
(3) Uncertainty about how to distinguish between the two.
(4).Uncertainty suggests a state of mind; cognition
5) Uncertainty is to overcome in action and in view of the potential for errors.

3.    Organizational Capacity to Manage Uncertainty 

There's nothing to be done about uncontrollable situation although a good plan can identify the external factors, and the process can enable a company to work around the externals. Thus, besides leadership, strategic planning, and process play a role in reducing risk and deal with the issues of 'uncertainty' within major projects, enterprise scope, and ecosystem.
From industry experts’ view, that 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). If you can plan beyond the first point of uncertainty in a project, if you cannot see past that point, but admit to this helps to reduce the risk of uncertainty. So the approach is to plan in a short time and takes incremental effort, allowing the acquisition of new information along the way. Put simply, the Agile philosophy.

What this means in terms of the ability to manage Uncertainty is the following:
(1) First, you have to be able to visualize and identify the Uncertainty;
(2) Second to identify that it is necessary to convert the Uncertainty to Risk through the application of quantification methods in order to be able to manage the Uncertainty as Risk. 
(3) Take Entrepreneurs’ spirit to turn the status quo upside down as corporate planning in large organizations may concern more about not disturbing the bureaucracy and keep inertia to the change and uncertainty.

Therefore, insightful leadership, agile planning, and incremental effort, etc. those are key factors in dealing with uncertainty, so adapt to it and thrive on it.


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