Uncertainty in Business

This article, authored by Peter Cairo, David Dotlich, and Stephen Rhinesmith, discusses how uncertainty and ambiguity are a key challenge for business leaders today. Organizations are finding that they must increasingly plan for contingencies in the future instead of focusing primarily on short-term goals. In the past, many business leaders believed their organizations’ long-term goals could wait until they had dealt with the current crisis. In the current business environment, this is no longer the case. The rate of change has accelerated, indicating that business leaders must learn how to strike a balance between managing complex issues today and predicting the uncertain issues of tomorrow.

Leadership Characteristics

In general, leaders can be classified into three categories. “Head-only” leaders rely on analytical tools to make quick decisions. These leaders face the challenge of balancing paradoxes in today’s ambiguous business environment. “Heart-only” leaders tend to establish a strategy through being open to a wide-range of opinions, which may hinder their ability to identify future trends. “Guts-only” leaders place a great deal of faith in their instincts, which may prove problematic if their instincts about the future are incorrect. The key for leaders is to attain strengths from all three categories in dealing with an uncertain future.

Leaders also need to be aware that the applicable time frame expands as one moves up the corporate ladder. While line managers can focus on current results, the CEO must look much further into the future. Senior management has typically been taught two contradicting lessons about leadership. The first is that a good leader should make a decision and stick with it, which discourages flexibility. The second is that adaptability is vital, which discourages sticking to the original plan. The crucial lesson here is that organizations must prioritize the allocation of attention and resources with regards to both short-term and long-term issues.

Priorities

Today, leaders face the challenge of prioritizing in order to deal with both the present and the future. As a guideline, the article highlights three “don’ts” that every leader should keep in mind. First, don’t get caught facing the future with a purely internal focus. Leaders cannot be consumed by immediate issues without considering the external environment. Leaders should always be aware that the potential impact of future events could greatly disrupt internal operations.

Second, don’t fail to challenge your assumptions. Many organizations assume that their product or service will always be relevant to the customer. For every business, whatever is assumed based on the past is likely to be wrong for the future. Leaders should be conscious of the trap of determining priorities based on past experience.

Third, don’t allow arrogance to creep into your view of the future. Leaders have a tendency to believe they have the winning formula. In reality, the variables are always changing. If the variables have changed, the winning formula has also changed and leaders need to adapt accordingly.

Conclusion

The business environment is becoming increasingly complex and business leaders are challenged with an uncertain future. In the past ten years, numerous events have occurred that many organizations never considered, leading to many business failures. Business leaders can avoid this in the future by simply prioritizing their attention on both short-term and long-term issues. Leaders who have the correct mindset will be able to track multiple variables and global events in order to face an uncertain future head-on. It is these leaders who will succeed in our ever-changing economy.

Original Article Source: “Embracing Ambiguity: Making Judgement Calls When the Future is Hazy“, Peter Cairo, David Dotlich, and Stephen Rhinesmith, 2009