How do you feel about uncertainty? Let’s have an honest conversation…
Uncertainty means there are many possible future states and outcomes (positive and negative), which are hard to predict or quantify. The greater the number of potential outcomes, the higher the uncertainty. Uncertainty often feels uncomfortable, but because those potential outcomes can be positive as well as negative, it offers us opportunity - so long as we’re honest and clear about the level of uncertainty we’re working with.
Many organisations are not only uncomfortable with uncertainty (which is an entirely normal human reaction), but don’t have either the skills or the motivation to navigate it. The consequence of this is reduced ROI or impact as well as the unintentional creation of new organisational risks.
The Difference and Relationship Between Risk and Uncertainty
Many use the terms risk and uncertainty interchangeably. Whilst there’s an undeniably close relationship between the two, they are different. Whilst uncertainty is hard to predict or measure, risk can (and should) be quantified and managed. Risk is the probability of an adverse outcome, and we can assess the likelihood of that outcome occurring based on previous experiences and similar contexts.
Some avoid innovation and uncertainty because they view them as high risk activities. This thinking prevents us from exploring the opportunities and perpetuates the status quo. But it’s important to recognise that our in-action poses risk in the same way as a decision to take action and try something new. We might feel more comfortable in the short term postponing a decision to act and keeping things as they are. But that in itself is a decision, and one that could cost you or your business opportunity for growth.
A more effective way to navigate uncertainty, and find the opportunities that uncertainty offers, is by identifying, managing and seeking to reduce (where possible) innovation risk. But first of all, we need to be clear in our own minds and in our conversations with others where the uncertainty lies.
Acknowledging Uncertainty
I’ve spent 20 years working with traditional, bureaucratic and fairly risk-averse organisations. Where these organisations are dealing with change or transformation, I’ve seen a recurring pattern whereby management pretends there is certainty where the reality is there is very little, or even none at all.
Sometimes, uncertainty is quite willingly and brazenly ignored - think ‘back-of-a-cigarette-packet’ bids for funding or 5-10 year business plans with time and financial estimates plucked out of thin air. Everyone involved knows they’re utter BS, but still we insist on them and derive significant comfort in their existence.
Other times, we’re simply unaware of the level of uncertainty we’re working with. We’ve unwittingly made a series of untested assumptions that lead us to have more confidence about the likely outcome than we should. A classic example of this is building a product to solve a problem very few people (besides us) care about.
In either case, our inability to take our heads out of the sand and our capacity for self-delusion is extraordinary and a high risk strategy (whether intentional or not). It’s hard to see how, through anything other than good luck, a positive outcome can emerge from ignoring uncertainties and risks.
The potential adverse outcomes of ignoring uncertainty are significant. Mostly, we are likely to miss genuine opportunities to have impact or generate new ROI because we’ve invested most of our money, time and people in a big bet on a completely untested and unproven idea. Then there’s the impact on employees who end up feeling uncomfortable and demotivated - everyone knows when they’re working on a dud but to have to pretend otherwise and continue anyway is not anybody’s dream job. We also risk damaging the company’s reputation and brand.
So why do we do it? Because it’s rare for large organisations to reward their employees based on the impact new products and services have. Instead, we reward them for delivery then lose interest before the launch party has even been cleared away. By the time the true impact is realised, the person in charge has been promoted and is long gone. Sound familiar?
But doing the right thing, holding yourself accountable for impact even when your organisation won’t, doesn’t have to be that hard. As a leader, you can choose to keep your head down and deliver low-impact work, or you can step up. Make your choice and be honest (with yourself at least) about what type of leader you are.
Navigating Uncertainty by Managing Risk
People often perceive innovation as being a risk-taking activity. Disciplined innovation, however, is quite the opposite. So, if you choose not to bury your head in the sand and ignore uncertainty, but to be proactive in identifying and navigating it, here’s how.
1. Surface all of the assumptions (beliefs) you have about the project and its context. Engage others involved as well as people not closely involved to help identify these because often we can’t even recognise our own assumptions.
2. Categorise them. With regards innovation, there are three main types of risk which once identified we can actively manage and reduce, thereby helping to navigate the inherent uncertainty. These are: Desirability (what problem is this solving and for whom?), Feasibility (can we do this and how would we do this?), and Viability (should we do this, is it worth it?).
3. Assess them. Our assumptions are based on our knowledge and experience and also, hopefully, evidence. Which ones are we more confident are right? What’s the evidence for that? And which ones are we less confident about? Which ones are fundamental to the next stage of our project and will stop us progressing if we’re wrong? Open up the conversation on this and invite challenge.
4. Prioritise them. Focus on the assumptions you’ve identified as most uncertain AND most important to the next stage of your project. Eric Ries calls these ‘Leap of Faith Assumptions’ (LOFAs). A simple 2x2 is a quick and impactful way to map and prioritise your assumptions (see below for an example and click here to download a PDF of the Assumptions Map).
5. De-risk them. Turn your highest risk assumptions into questions and ask: “How hard is this question to answer?” Focus on answering those you think are easier to test - the aim is to reduce as much risk as possible as quickly as possible so that you can move forward (or not) with greater confidence.
This isn’t about eliminating all risk. That is rarely, if ever, possible. Instead, it’s about having an honest conversation on where we have uncertainty, then managing and minimising the risks associated. This will not enable you to move forward on a project with complete certainty of success. But it will enable you to make informed decisions with your eyes wide open. And it will enable you to move forward with greater levels of confidence and a higher chance of achieving the outcome and impact you desire.
Key Points:
Choose to be the type of leader who cares about the impact of their team’s work. Stop producing stuff no one wants. Hold yourself accountable.
A decision not to take action is still a decision, with consequences and risks attached to it.
Acknowledge and be honest about the level of uncertainty you’re working with.
Proactively manage the risk associated with a new project or idea to help you navigate the uncertainty with greater confidence and a higher chance of achieving impact.
Be prepared to co-exist with some continuing degree of uncertainty - but do so with your eyes wide open and embrace it as an opportunity.