Leading through strategic uncertainty
How well do we deal with uncertainty?
Could goal resilience management help?
As 21st century organisations and leaders, we love to control the future. Or least to pretend that we do.
The proliferation of risk management, modelling and forecasting gives the impression that our path can be charted. We say to ourselves, “When we set a course, we end up at the predicted destination, and anything which could get in our way can be controlled or mitigated. Organisations can set their five year plans, risks can be mitigated, and success is determined by meeting the goals identified years earlier.”
The reality is rather different. We live with uncertainty in every moment, whilst hoping that the past can be a guide to the future. See the bottom of any investment services advertisement as an example.
Three problems arise:
If long-term external trends impact our outcomes, the complex changes may be difficult to predict or plan. An example is the move from in-person to online, or perhaps the rise of China as an economic force.
Our models capture short-term past and future. There is more predictability in the day-by-day, and we convince ourselves of the future validity of the model on this basis. Any shocks are discounted from the model, particularly when their timing is indeterminate.
However, this human tendency to prioritise short-term past in assessing the future can be our downfall. We misrepresent the risk of larger impact events which are fairly likely in the long term. Nassim Taleb explores this in his excellent book “The Black Swan”.
The current Covid-19 pandemic is an example of this. We know a global pandemic is fairly likely in a 50-100 year period. We just don’t know exactly when, so we do not plan for it.We set in place plans which are based on predictability. Which sounds obvious, but over time, life is not predictable. Apart from death and taxes…
So what can we do as organisational leaders and decision makers? Is there another route? Can we deal with radical uncertainty well?
Service based resilience
“Making consistently good decisions in a crisis and under radical uncertainty is very hard indeed. Rather than a decisive big-bang approach, it requires a number of iterations and mid-course reactions in response to fast-moving developments on the ground.”
In a recent thought piece, Mohamed El-Erian talks about the need for strategic agility in praxis to maintain goal (outcome) resilience in the medium-long term. Whilst he applies this to policy responses to the pandemic, the lessons learnt can be relevant to business and entrepreneurial activity. A key point is agility: the ability to change position efficiently. This could apply to leadership and communications, but also to organisational structure, focus and delivery.
Practical applications have evolved through organisations with high requirements for business continuity, primarily focused on service continuity. Critical Infrastructure is one example, key public services another. Resilience or continuity management approaches recognise that the impact of a severe disruption in service once a decade can be as high as safety risks (incidents, accidents). The industry standards on business continuity management (BS EN ISO 22301 and 22313) and best practice (see The Business Continuity Institute) are evolving, and include a more comprehensive, systemic approach to enhancing resilience.
The work evolved from disaster or emergency response, helping to recover a system to its former output. But why should continuity only look at disruption-led events, with a focus on maintaining existing business services? A clear evolution would be to concentrate on the end goals instead of the services.
Moving to goal based resilience
“Resilience was defined by most as the ability to recover from setbacks, adapt well to change, and keep going in the face of adversity. ”
Some of the most interesting approaches have come in those industries with clear goals, outcomes or values. This could be public services, with unchanged goals over time, or a private enterprise transformational goal which is audacious enough to survive shifting contexts and trends.
The focus on goals has led to organisations not only seeking to recover services during disruptions, but also seeking to adjust their plotted course towards their stated goals. Agile organisations are designed to evolve through disruption and change. They expect it. There are three ways organisations can implement goal based resilience:
Plan for it. Put in place impact assessments to understand responses to changes. These can be disruptions - as in traditional business impact analyses which focus on business services - or could be changes in the mid-long term external environment, which has more usually been captured in scenario planning.
Don’t plan for it! As pointed out at the top of this piece, our plans are only as good as our ability to predict. And we cannot predict everything, in form or timing. Therefore, we should set up our organisations to be able to deal with the unknown in a way which ensures our goals and/or values are still the focus and compass. This is goal-based resilience management. More on this in future articles…
Recognise the role of objective data. More than ever, we are fed data with filters. The leader and organisation’s ability to strip away these filters and identify reality (truth) is key to ensuring true resilience.
In conclusion, this brilliant quote from Diane Coutu in Harvard Business Review (2002) still resonates well today, and can inspire further thinking.
“Resilient people possess three characteristics — a staunch acceptance of reality; a deep belief, often buttressed by strongly held values, that life is meaningful; and an uncanny ability to improvise. You can bounce back from hardship with just one or two of these qualities, but you will only be truly resilient with all three. These three characteristics hold true for resilient organizations as well.…Resilient people and companies face reality with staunchness, make meaning of hardship instead of crying out in despair, and improvise solutions from thin air. Others do not.”