Success in business is not usually the result of a single element, but rather a number of contributing factors. Depending on the industry, it could be a combination of products or services, marketing, production, people, raw materials, location, etc.
One thing all industries face today is increasing uncertainty created by the rapid changes taking place in the world of business. Successfully managing this uncertainty requires a three-prong approach; strong leadership, quality decisions, and an integrated process. I call it the Managing Uncertainty Trifecta.
It starts with the tone from the top. This may be the most critical of the three elements because if it is lacking, any project will be doomed for failure. It includes clearly stating roles and responsibilities and how they will be measured, as well as a commitment to providing the necessary resources. It also includes communicating and consulting with internal and external stakeholders, including subject matter experts when necessary, to ensure that all areas of expertise and views are considered in the process.
Good decision making starts with understanding the difference between risk and uncertainty. Risk is defined as the chance or probability of injury, loss, or harm. Chance relies on knowing the odds – the mainstay of a casino. Probability relies on knowing the statistics – the mainstay of an insurance company.
Most businesses however operate in a world of uncertainty, where probabilities don’t apply, and the best we can do is consider the possibilities. Many decisions are based on beliefs concerning uncertain events. Research in the field of judgement and decision making psychology shows that decisions under uncertainty are quite different than those about risk, and not understanding this can create errors and overconfidence on our decisions.
If we are to protect and create value, then we need to follow an objective-centric process that considers the effect of uncertainty on our objectives. This includes anticipating events that could threaten the achievement of our objectives as well as identifying opportunities to exploit for a competitive advantage.
That is why I created the Managing Uncertainty System, a structured series of five conversations you and your team engage in to ultimately make the best informed decisions that support the achievement of your organizations objectives. And like most systematic processes, it assures consistent and reliable results.