This is how you handle uncertainty without getting stuck in indecisiveness.
The Danish philosopher, mathematician, inventor, and general genius Piet Hein once said ”Knowing what thou knowest not, is in a sense the omni-science”.
Should we just accept uncertainty?
Given all the turmoil in the world around us, with energy price increases, a war in the Ukraine, supply chain issues and rising inflation rates, it seems the best hope for us all might be to become omni-scientists and accept that there are many things going on around us that we simply can neither control nor influence.
But in business, that ambition – however worthwhile it may seem from a philosophical perspective – does not solve most companies’ management challenges. Because in business, management needs to manage, despite the chaos around us. And executives need to execute, operators need to operate and so on.
Fear and anxiety doesn’t help
The more uncertainties we have around us, the more uncertain most managers tend to be about what decisions they ought to make. And the more concerns there tend to be about possible consequences of bad decisions or wrongly framed choices.
No decision at all is the worst choice
The result is, at best, an ill-informed decision, or even worse, and perhaps more common, no decision at all. And as anyone who has ever sailed will know, as long as a boat makes speed through the water you can steer it, but without any speed there is no momentum and no ability to set any course whatsoever.
The solution: look for decision options
What then might the antidote be? Clearly nobody will be able to predict what might happen to energy costs, inflation levels or the developments between Putin and Zelensky. But one thing we can do, at least with the proper tools and processes, is to look for decision options. And not just any option, but options with predictable outcomes based on the way key indicators are behaving.
Developments are often connected
Historical data analysis will tell us that many developments in business are connected, directly or through two or more layers. And because of those connections we can plan ahead, even when parts of the world around us is chaotic or develops in odd ways.
Start using the data you have
The key is of course to have those models and tools in place so you can track key metrics, predict the consequences of different options and act early and with confidence. But it is never too late to start to work with predictive analytics and decision intelligence tools. Building a decision intelligence framework starts by looking backwards and adding data sets with internal and external data points.
Make predictions with machine learning
Then the system begins its iterations, using machine learning to identify links, correlations, and dependencies, and then fine-tuning these by comparing predicted historical outcomes against actual figures until you get a best-fit version with an accuracy of prediction close to a perfect 100%.
Look at your options
Now you can start to test scenarios and look for options, even in situations where you’re not sure about the present and even less so about the future.
- How do the scenarios look like when you apply different potential outcomes?
- Are there indicators you can use as proxy for the unknown/unreported data and monitor instead of these?
- What are the best options for different developments of the uncertainties?
- The least risky/most stable?
Get ahead of competitors
By developing these predictive scenarios and corresponding action plans you enable your organisation to be agile, to move faster and with better precision that your competitors.
Start acting – adjust as you go
And keep in mind that business is less about having perfect data and 20/20 vision and more about acting faster than the competition based on relevant insights. Setting the course and taking action also enables you to fine-tune the actions and adjust the course en route.
Avoid the fate of the boiled frog
In some ways the current chaotic global economy might even mean that we make better decisions. When things are stable there is always the risk of “the boiling frog”, i.e. that things are changing but do so only gradually and hence escape under our radar until it might be too late. Just like the fate of the frog who was overtaken by the gradual increase in temperature in the water and therefore never managed to escape it.
Become open to new insights
We often think we know the market from experience, but fail to track key developments and miss spotting new trends or changes in timelines, because they look small and insignificant. But when things are chaotic and unstable, we have to accept that there are things we won’t be familiar with and developments that don’t follow standard curves.
If we apply predictive analytics and decision intelligence and keep an open mind, it can help us understand how the market is behaving and what the best course of action might be.
So maybe it is time to rephrase the words of Piet Hein: “Acting on what thou knowest not, is in a sense the omni-ability.”
