How to deal with ineradicable uncertainty?

Margaret Heffernan is a former CEO of five businesses, author of five books in which she explores business and effective leadership, and a part-time lecturer at the University of Bath School of Management in England. She gave a series of TED talks that touch so much of what I found to withhold people from giving their best, that I feel I have to share these presentations with you.

The Human Skills we need in an Unpredictable World

We know since Frederick Taylor that standardizing and allocating tasks is very likely to raise operational efficiency and that we could even further increase it by means of digital transformation ─ having an algorithm decide on submitting and managing these tasks. However, “the problem is that efficiency works very well if you know exactly what you are going to need. But when the anomalous or the unexpected comes along then efficiency is no longer your friend – especially when the unexpected becomes the norm.”

Today, “experts and forecasters are reluctant to predict anything more than 400 days out. Over the past 20-30 years, much of the world has gone from being complicated to being complex. This means that there are patterns but they don’t repeat regularly. Very small changes can make a disproportional impact. And it means that expertise won’t always suffice because the system just keeps changing too fast.”

We live in an age of ineradicable uncertainty: “In an environment that defies so much forecasting, efficiency won’t just not help us, it specifically undermines and erodes our capacity to adapt and respond.” It is worth to pause and repeat these words in your mind.

So, Margaret continues, “If efficiency is no longer our guiding principle, how should we address the future? What kind of thinking is going to help us? What sort of talents must we be sure to defend? In the past, we have been thinking about just-in-time management, now we have to start thinking about just-in-case ─ preparing for events that are generally certain but specifically remain ambiguous. This means we have to plan for events that might not occur, which isn’t efficient but it is robust.”

Planning for multiple scenarios increases our responsiveness.

A few years back I was hired by a company as their Chief Digital Officer. The company sold 95% of its products over a third-party digital platform. I asked the CEO: What would happen if this platform would no longer allow us to sell our products on their platform? The CEO laughed and told me that very unlikely. Even so, I was able to convince him to prepare for such an event. A few months later an e-mail confirmed what I had feared: we were no longer allowed to use the platform and sales dropped by 95% ─ overnight. Fortunately, we came prepared. Responsiveness in action.

Banks today hold more reserve capital than they would in the past. It makes them less fragile, therefore, more robust. Or antifragile, as Nassim Nicholas Taleb would call it ─ although he would claim that antifragility is beyond resilience or robustness: “.. resilient resists shocks and stays the same; the antifragile gets better”.

We can no longer afford to plan for one future, even though this is the most efficient way to allocate resources. We have to account for multiple futures. And yes, it is time-consuming and firms will waste valuable resources, but again, this is not the time to place all of your bets on one horse.

Margaret offers various suggestions to move from an organization that finds itself trapped in the efficiency-dogma to an organization that celebrates unpredictability: “Preparedness, coalition-building, imagination, experiments, stamina, and bravery ─ in an unpredictable age, these are tremendous sources of resilience and strength. They aren’t efficient but they give us a limitless capacity for adaptation, variation, and invention. And the less we know about the future, the more we’re going to need these tremendous sources of human, messy, unpredictable skills.”

“But”, and I agree, “in our growing dependence on technology, we’re asset-stripping those skills. Every time we use technology to nudge us through a decision or a choice or to interpret how somebody is feeling, or to guide us through a conversation, we outsource to a machine what we can do ourselves, and it’s an expensive trade-off ─ the more we let machines think for us, the less we can think for ourselves.”

The next few statements resonate with my earlier Case for Customer Compassion: “The more time we spend with people that we’re predicted and programmed to like, the less we can connect with people who are different from ourselves. And the less compassion we need, the less compassion we have.” Hear, hear!

And despite being an adept of information technology, I bow to the following: “What all of these technologies attempt to do is to force-fit a standardized model of a predictable reality onto a world that is infinitely surprising. What’s left out is anything that can’t be measured which is just about everything that counts. Our growing dependence on technology risk us becoming less skilled, more vulnerable to the deep and growing complexity of the real world.”

Ending her talk: “The future is uncharted. We can’t map it until we get there. But that’s OK because we have so much imagination ─ if we (are encouraged to) use it. We have deep talents of inventiveness and exploration ─ if we (are encouraged to) apply them. We are brave enough to invent things we’ve never seen before. Lose those skills and we are adrift. But hone and develop them and we can make any future we choose.”

 

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