Managing Uncertainty: Different Viewpoints

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The litmus test of a robust organization is its response to the most uncertain scenarios. The quest for evolving techniques to cope with the vagaries of the business environment has forever occupied the management strategist. The very fetish of inventing a permanent process for every environment has led to the debacle of many organizations.

It has always been a certain human tendency to model the successful. However prudent the approach of the winner might be, the very fact that is ignored in all such models is the role played by randomness of environment i.e. precisely what works for Microsoft may not work for Infosys.

Flexibility though a certain clue may not be an absolute approach to every situation. In the article Strategy Under Uncertainty the authors Hugh Courtney, Jane Kirkland, and Patrick Viguerie in their attempt to explain uncertainty first identify the varying degrees of uncertainty, from level 1 where the future is clearly visible to level 4 where ambiguity is all pervasive, in an increasing order. Then the authors come up with list of responses to each and every stimulus. Though this works perfectly as a broad classification but in an extremely varying and chaotic environment there is scope for overlapping among different levels of uncertainty and even in approaches to each trigger of the environment. However it does provide a framework for an initial analysis or kickoff.

My alternative take on the issue of dealing with uncertainty would be to first make a correct identification of the randomness inherent in the uncertainty of the environment. It is a prominent problem with management consultants and practitioners to search for a definite answer when the question in the first place is not exactly defined. To illustrate my point further, many a times the best possible solution is achieved but that does not necessarily ensure success, not because of a strategic flaw but because of the role played by randomness in the situation, it would be a capital mistake to find a new solution that fits the successful event in a post event analysis. So a step further would be to first identify the randomness involved in the uncertain environment and choosing the least risky approach might work out for survivability of the organization if that be a goal.

Some novel approaches to managing uncertainty stem from the stream of complexity theory where uncertainty is viewed as originating from highly complex system. In the article Managing Uncertainty in Innovation: The Applicability of Both Real Options and Path Dependency Theory the authors hint at using a problem centric approach rather than an optimistic solution centric approach. The authors are also strong propagators of understanding the role of societal influence on problems. Some of the uncertainties in the environment exist from different perceptions of the same problem by different parties.

Another clue for managing business uncertainties could come from the uncertainty management in the field of creative media arts. Most art and media productions are prone to a vicissitude of scenarios, as the productions span months and years. This makes them highly prone to uncertainties as the changing tastes and fads of the public determine the outcome of the production. A widely used approach is the use of pilot testing with sample audiences, but the key again is whether the sample audience would be a representative of the population. A regular sampling ensures that the producers are continuously aware of the changing environments.

References:

1.) Hugh Courtney, Jane Kirkland, and Patrick Viguerie (1997).Strategy Under Uncertainty, HBR (November – December 1997)

2.) Anna M. Dempster(2006).Managing Uncertainty in Creative Industries: Lessons from Jerry Springer the Opera,The Author Journal compilation,Volume 15 Number 3,Blackwell Publishing.Retrieved September 07, 2008, from EBSCOhost Web ,Xavier Institute Of Management

3.) William H.A. Johnson(2007).Managing Uncertainty in Innovation:The Applicability of Both RealOptions and Path Dependency Theory,The Author Journal compilation,Volume 16 Number 3 2007,Blackwell Publishing.Retrieved September 07, 2008, from EBSCOhost Web , Xavier Institute Of Management

4.) Alice MacGillivray(2008). A Review of Managing Uncertainties in Networks: A Network Approach to Problem Solving and Decision Making written by Joop Koppenjan and Erik-Hans Klijn,published by Routledge,Book reviews E:CO Issue Vol. 10 No. 2 2008 pp. 129-135.Retrieved September 07, 2008, from EBSCOhost Web , Xavier Institute Of Management

5.) Nassim Nicholas Taleb(2004).Fooled by Randomness: The Hidden Role of Chance in the Markets and in Life, Second Edition