How to Thrive in Uncertainty
Of what are you certain?
We can count on the sun rising in the morning but go beyond that and uncertainty is present. Despite constant ambiguity, strong leadership ensures we are generally prepared for the probable and impactful. Both of those change over time.
Common and familiar data provide comfort but can seriously mislead. As Keynes once said, it is better to be approximately right than precisely wrong.
Few predicted a pandemic for 2020, despite the name being Covid-19. Some manufacturers reacted to Covid short-notice government-ordered shutdowns with the memories of 2007/2008 burned into their minds. Believing they waited too long to react then, many overreacted this time.
A worldwide recession and a worldwide pandemic may seem the same, but they have fundamental differences inadequately considered. We knew that we knew little to nothing about the potential range and change of government public health responses to a pandemic. We knew that we knew even less about how individuals would respond to tornadic uncertainty, and how that would impact our business demand and operations. Identifying unknown critical factors is an important first step; learning about and observing them is next.
We can’t predict, but we can prepare. Warren Buffett shared his “Noah Rule” over 20 years ago. It simply says: "Predicting rain doesn't count, building an ark does." The details change, but the fact that surprises will impact your current plans is totally predictable. We must master dealing with that certainty.
First, while it’s easy to judge families that live paycheck to paycheck, many businesses do the same. Cash may be King but relationships with high quality lenders is the Ace. Have you selected a financial institution appropriate for your anticipated mid-term needs? Do you regularly communicate honestly with them in advance, building trust? Have you developed relationships beyond your assigned commercial officer? Do you ensure a mutually beneficial association year-round? Waiting for an emergency is poor strategy.
Next, while today you must decide something that will impact an uncertain tomorrow, it is crucial to think through various tomorrows. Ongoing sensitivity analysis and scenario planning processes are built into the successful manufacturer. Continually identify vulnerabilities and develop new capabilities before they are needed.
People, sales, supplies are all potential challenges. It doesn’t really matter what hits them hard, only that we be prepared. Ignoring secondary and tertiary variabilities is an expensive oversight. Are you beginning to see the value in a digital twin of your supply network? Remember, that goes two directions.
Effective leaders provide calm and confidence, while acknowledging unknowns. Confidence in your team and other constituencies, each of which is counting on you to have your hand on the wheel, should reassure all that you’ll figure this out together.
Thriving in uncertainty can and must become a core competency. Tomorrow will certainly bring you a new surprise. Be prepared.