However, uncertainty, which presupposes undefined outcomes, is much more difficult to navigate. Too often, leaders treat uncertainty as a risk to mitigate. This results in overly stringent strategies and plans, which lead to underperformance.
Leaders often think of strategy and decision-making as a game of chess. The analogy of a chessboard represents opposing players who try to outwit each other by anticipating their next moves. Strategy and life are nothing like that. Instead, decision-making involves many unknown opponents and collaborators who play on a constantly adapting landscape, with limited pieces, while fog obscures the changes happening elsewhere on the board.
In plain sight, we see a world of intensified economic hostilities, unpredictable cyber risks, and a new, unknown reality introduced by the possibilities of artificial intelligence. Closer to home, the business landscape continues to present the almost predictable risks of a challenging economic environment, skills shortages, or supply chain disruptions. These are known risks, with embedded opportunities, and can be navigated through calculated contemplation of where to focus and what to do next.
The deeper dimension of the decision-making landscape is much more obscure. It is the space of uncertainty and unpredictability. It appears to many that the level of uncertainty has increased due to the proliferation of misinformation that is hard to distinguish from fact. Since a character like President Donald Trump has given free rein to his power, we all face a new world that uproots trusted institutions and relationships. This affects strategic leaders who are uncertain about which markets or opportunities to pursue, and leaves families wondering if their investments will be secure. It is no longer a game of escaping risks, but one where the forces of the world have shifted the landscape so much that many don’t know what to do next.
South African businesses are also profoundly aware of the risks that the local landscape presents. However, they are also facing more questions that are difficult to answer. In a recent conversation with Pete Wharton-Hood, CEO of Life Healthcare, he describes the uncertainty of the healthcare landscape as a “black swan in advance”. This shows an awareness of how regulation will disrupt the industry, but that how change will impact individual players remains obscure. Wharton-Hood recognises that changing legislation introduces not only risk, but more importantly, opportunities. He believes that there could be a more expansive role for private sector healthcare providers to play in the overall healthcare environment of the future. However, changing policies and governmental stances introduces many questions that are difficult to answer. The uncertainty lies not in change or the risk that change brings, but in how to optimise opportunities in a changing world. We all face the same challenge to use the tumultuous and uncertain world as a catalyst for new opportunities.
In my strategic decision-making classes, our MBA students have also learned to appreciate that it is not enough to analyse all the challenges that are visible on the board. It is that which is not seen – unknown opportunities, new unforeseen competitors, unpredicted environmental disruptions, and new rules set in the world – that present the real space for strategic thinking. Similarly, our everyday decisions should recognise the untapped potential of opportunities within disruptions that we have not yet considered.
The fog of uncertainty
Uncertainty, unlike risk, represents situations where we cannot calculate the probability of future events or the outcomes of our actions based on available information. Yet, our success depends on how well we respond to uncertainties. We need to prepare for the world of tomorrow, but ironically, the future personifies uncertainty. We think we know what tomorrow will look like, but we cannot be sure. A common mistake in business is planning around today’s customers, preferences, markets, and realities, rather than those that are emerging or unknown.
Moreover, decision-makers do not know if their customers will desire the same products or services in the future, when and how technological innovations will disrupt their world, how their competitors will react to their plans, or how long their customers will value what they offer. Likewise, very few people have adequately considered how artificial intelligence will affect their lives. A second common mistake is to act as if nothing will change, and to pretend that today’s reality will still be there tomorrow.
For this reason, I’ve noticed a growing sense of anxiety about uncertainty in my classrooms. Students also grapple with adapting their strategies and foreseeing the future, often describing technological realities that already exist when they project what the world will look like in ten years. A third common mistake is assuming that the capabilities that bring success today will bring success tomorrow.
Clearing the fog
How, then, does a decision-maker respond to uncertainty if it is unknowable?
I believe the answer lies in developing a different mindset. It requires, first and foremost, the recognition that uncertainty exists in the decision-making game. Without this recognition, everything will be managed like a risk.
1. The “there will be signs” mindset
From strategy scholars, we learn how important it is to look out for signals that show how the world will change. David Teece defines this as the sensing dynamic capability. This is the ability to timeously see opportunities, threats, and changes in the environment. Paul Schoemaker, a scenario-thinking expert, calls this vigilance. It refers to noticing signals around us early enough. We may not be able to see the entire future, but elements of future realities are presenting as small signals around us. Due to biased thinking, we tend to default to discounting or ignoring signals of change. Instead, an uncertainty-ready mindset is alert to these signals as clear possibilities for the future.
2. The urgency mindset
Dr. Musa Motloung, group risk officer at Absa Group, and I published a paper on strategic indecision. It shows that fear and complexity can delay even senior leaders’ decisions. In other contexts, I’ve heard leaders in boardrooms discussing the same market-entry challenges for decades without resolving their questions. Therefore, I believe that in large firms, there is a greater likelihood of putting decisions off, believing that the opportunities will still be there tomorrow. This is a fallacy.
Instead, life requires adaptive speed because delayed change can prevent future adaptability. A benefit of uncertainty is that it may spark an urgency to grasp new opportunities. The uncertainty-ready mindset claims the advantages of timely moves.
3. The “many moves” mindset
One of the most important lessons that scenario thinking has taught us is that we need to prepare for multiple potential futures, a capacity that I call divergent readiness. Another article I co-authored with Danielle Meyerowitz and Goran Svensson is worth mentioning. Our work on scenario thinking has shown the importance of developing corporate reasoning that embraces new mindsets and multiple pathways into the future. The lesson for developing an uncertainty-ready mindset is not to become attached to a single life or strategic plan, but to develop diverse approaches to life. The uncertainty-ready mindset is flexible.
4. The “we are in control” mindset
The difference between an effective and ineffective response to uncertainty is the degree to which we take charge of the future that unfolds. In uncertainty, it is often easier to see the world as something that happens to you rather than something that you can shape. The most recent perspectives on strategy emphasise that companies can reimagine the world and create ecosystems that enable them to thrive. An uncertainty-ready mindset believes that we do not wait for life to happen to us, but we shape the environment that allows us to thrive. This is equally true in everyday life, where we need to learn to build systems and collaborations that allow us to grow.
Where to start
A mindset change requires developing a deep reflection on one’s life, either with a coach or through journalling. Here are some questions that align with the principles of developing an uncertainty-ready mindset:
- “What emerging patterns could affect my life in the coming months or years?”
- “What small signals around me may indicate that there are bigger changes ahead?”
- “What changes should I immediately make to be ready for the future?”
- “How will the world change, and who would I like to become in such a world?
- “How can I work with others to create the future I would like to live in?”
At a collective level in business, a mindset change requires regular strategic conversations:
- “What unexpected or overlooked trends or patterns might affect our strategy?”
- “What small changes or signals are we noticing in our environment and in other industries?”
- “What adjustments should we immediately make to enable adaptation to future opportunities?”
- “How will the industry and world change?”
- “What changes could we collaboratively influence in our industry or ecosystem to create the conditions where value creation is more likely to emerge?”
KEY TAKEAWAYS:
- The level of uncertainty in the world is likely to increase.
- We should not approach uncertainty in the same way we approach risk.
- A strategic response to uncertainty requires a change in mindset.
- Personal readiness for uncertainty follows from self-reflection and thinking about the future and change.
- A mindset change can be established through future-oriented collective conversations about adaptability, strategic urgency, divergent readiness, and how to shape the industry and ecosystem.
Prof. Charlene Lew holds a doctorate in psychology and is a GIBS professor, teaching on strategic and ethical decision-making, behavioural science, and change leadership. Her consulting firm, PsyQuenza, focuses on behavioural change interventions and customised assessment and intervention development.
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