“I’m the guy in the organization… who says, ‘Okay, we’ve talked through this enough. Let’s do it and see what happens.’ By taking on the risk, I free the organization to act.”
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The term “mastering uncertainty” is a dangerous one. It can lead managers to think that they can analyze their way through the fog or control the environment in which they operate. This points efforts in the wrong direction, as what should be mastered instead is the ability to respond.
Uncertainty will never disappear, say Professors Jean-Louis Barsoux and Preston Bottger, however, business can develop responses to it.
The reality – and this is clear from the study of complex biological and social systems – is that surviving and thriving depends on an entity’s ability to generate fast and powerful responses to environmental volatility. To match unforeseen disturbance, a system needs what the psychiatrist W. Rose Ashby called “requisite variety”. Simply put, the entity must cultivate sufficient internal variety to cope with the complex and discontinuous external challenges it faces. Applying these insights to business, the company must build capabilities, resources and mindsets to deal with unknowable challenges.
Developing responsiveness
The ingredients of business systems that adapt and prosper over time are: the right approach to learning; the right people; and the right focus on quality. Success is mostly just doing what we all know must be done and being ready to do it. Smart executives repeatedly tell: it’s all about method, not magic. In order to help executives assess if their companies are alert and in shape to react, we will take a closer look at these three essential capabilities.
Incisive learning:
Much of the learning that goes on in companies is relatively superficial. It involves the accumulation of new knowledge, facts and techniques.
At a deeper level, learning is the capacity to develop a fresh perspective. The term “incisive learning” is used to denote learning that is fast and pragmatic, but also deep. This is vital to help executives see connections between emerging signals, to appreciate their significance and to work out responses.
In many companies, incisive learning does not occur because the senior executives are:
The right people:
To build a culture that is going to deal well with uncertainty, the company needs to look for people with a track record of resourcefulness.
More generally, the company also needs people whose personalities fit its culture. Business needs to identify people who can deal with conflict. Companies can cultivate this capability by exposing high-caliber people to diverse experiences that will help them to see things from multiple perspectives.
Rotation between different areas and assignments gets executives used to dealing with the unexpected, forcing them to frame and resolve novel problems. However, there is also a cost-benefit issue. Too often, executives are rotated through assignments at short time intervals, such that they become experts at only two things – firefighting and starting new initiatives. Executives need a chance to develop robust solutions and see something through from start to finish.
Quality focus:
A focus on quality provides a shared language for executives to recognize, debate and decide on wealth-creating activities. It gets people focused on hard facts and effective, efficient actions, provides methods for diagnosing upside opportunities and for reducing, if not eliminating, weak processes.
Fact-driven discussions in which there is total respect for data help to protect professional debates against possible fogging by personality clashes or turf-inspired blindness, and discourage senior executives from overruling juniors on the basis of their “experience” or “instinct”. They also promote a robust assessment of the benefits and costs of possible new courses of action. In turn, this assists decisions on where to devote scarce resources.
Critically, the respect for facts also helps to ensure that bad news quickly works its way through the company’s networks, and gets the attention it deserves. If a particular project is not working out, a good process will make sure that the plug is pulled to minimize further losses.
A focus on quality further enhances response speed by building up reserves of capabilities and assets that allow the company to take a hit and immediately bounce back. With a quality-imperative in its culture, the company is fast and efficient in its daily current operations, and is very rarely in “catch up” mode.
Conclusion:
Dealing with uncertainty should come down to this: employees must respond quickly and creatively to the unexpected, and devise counter-moves and initiatives under crisis conditions. They are best prepared for this when individuals and the company’s processes are “up to date”. This means that executives must relentlessly review existing projects and processes and discard those that have lost relevance.
Stripping out non-essentials provides more spare resources to respond forcefully to uncertainty. It frees up time, allowing executives to remain in a vigilant state so that they can respond quickly to change.
The more people are thinking about and acting on these three essentials, the better the company’s chances of spotting and reacting to whatever the environment throws up. The rest is up to the CEO who absorbs environmental uncertainty by committing to a course of action when conditions are volatile.
As George Conrades, former CEO of computer service company, Akamai, once put it: “I’m the guy in the organization… who says, ‘Okay, we’ve talked through this enough. Let’s do it and see what happens.’ By taking on the risk, I free the organization to act.”
Uncertainty will never disappear, say Professors Jean-Louis Barsoux and Preston Bottger, however, business can develop responses to it.
The reality – and this is clear from the study of complex biological and social systems – is that surviving and thriving depends on an entity’s ability to generate fast and powerful responses to environmental volatility. To match unforeseen disturbance, a system needs what the psychiatrist W. Rose Ashby called “requisite variety”. Simply put, the entity must cultivate sufficient internal variety to cope with the complex and discontinuous external challenges it faces. Applying these insights to business, the company must build capabilities, resources and mindsets to deal with unknowable challenges.
Developing responsiveness
The ingredients of business systems that adapt and prosper over time are: the right approach to learning; the right people; and the right focus on quality. Success is mostly just doing what we all know must be done and being ready to do it. Smart executives repeatedly tell: it’s all about method, not magic. In order to help executives assess if their companies are alert and in shape to react, we will take a closer look at these three essential capabilities.
Incisive learning:
Much of the learning that goes on in companies is relatively superficial. It involves the accumulation of new knowledge, facts and techniques.
At a deeper level, learning is the capacity to develop a fresh perspective. The term “incisive learning” is used to denote learning that is fast and pragmatic, but also deep. This is vital to help executives see connections between emerging signals, to appreciate their significance and to work out responses.
In many companies, incisive learning does not occur because the senior executives are:
- Overconfident Many senior executives miss emerging threats through excessive faith in the current assumptions and ways of doing things. They fail to heed or investigate the early warnings coming from those on the front lines. All too often, key knowledge exists somewhere in the company, just not in the hands of those who must formulate the response. To respond quickly and effectively, companies need methods to track what is going wrong, to transmit and amplify distressing information and ensure that it gets to those who must act on it.
- Overstretched To make sense of faint or confusing signals and to develop new responses and initiatives, executives need time out from regular activities. This requires discipline. Executives must assign time in advance and ensure it is fixed in everybody’s schedules. Otherwise, the demands of the moment always win out. A new physical environment can help insulate from the distractions and immediate time pressures.
- Overanxious Executives sometimes come up with new ideas but then fail to follow through quickly enough. They want complete information before setting off in a new direction, and feel intimidated by the level of resources required and the risk of failure. “Quick prototyping” provides a way through this problem for both products and services.
The right people:
To build a culture that is going to deal well with uncertainty, the company needs to look for people with a track record of resourcefulness.
More generally, the company also needs people whose personalities fit its culture. Business needs to identify people who can deal with conflict. Companies can cultivate this capability by exposing high-caliber people to diverse experiences that will help them to see things from multiple perspectives.
Rotation between different areas and assignments gets executives used to dealing with the unexpected, forcing them to frame and resolve novel problems. However, there is also a cost-benefit issue. Too often, executives are rotated through assignments at short time intervals, such that they become experts at only two things – firefighting and starting new initiatives. Executives need a chance to develop robust solutions and see something through from start to finish.
Quality focus:
A focus on quality provides a shared language for executives to recognize, debate and decide on wealth-creating activities. It gets people focused on hard facts and effective, efficient actions, provides methods for diagnosing upside opportunities and for reducing, if not eliminating, weak processes.
Fact-driven discussions in which there is total respect for data help to protect professional debates against possible fogging by personality clashes or turf-inspired blindness, and discourage senior executives from overruling juniors on the basis of their “experience” or “instinct”. They also promote a robust assessment of the benefits and costs of possible new courses of action. In turn, this assists decisions on where to devote scarce resources.
Critically, the respect for facts also helps to ensure that bad news quickly works its way through the company’s networks, and gets the attention it deserves. If a particular project is not working out, a good process will make sure that the plug is pulled to minimize further losses.
A focus on quality further enhances response speed by building up reserves of capabilities and assets that allow the company to take a hit and immediately bounce back. With a quality-imperative in its culture, the company is fast and efficient in its daily current operations, and is very rarely in “catch up” mode.
Conclusion:
Dealing with uncertainty should come down to this: employees must respond quickly and creatively to the unexpected, and devise counter-moves and initiatives under crisis conditions. They are best prepared for this when individuals and the company’s processes are “up to date”. This means that executives must relentlessly review existing projects and processes and discard those that have lost relevance.
Stripping out non-essentials provides more spare resources to respond forcefully to uncertainty. It frees up time, allowing executives to remain in a vigilant state so that they can respond quickly to change.
The more people are thinking about and acting on these three essentials, the better the company’s chances of spotting and reacting to whatever the environment throws up. The rest is up to the CEO who absorbs environmental uncertainty by committing to a course of action when conditions are volatile.
As George Conrades, former CEO of computer service company, Akamai, once put it: “I’m the guy in the organization… who says, ‘Okay, we’ve talked through this enough. Let’s do it and see what happens.’ By taking on the risk, I free the organization to act.”
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