HOW AGILE ORGANISATIONS MANAGE UNCERTAINTY, COMPLEXITY AND RISK

A good decision cannot guarantee a good outcome. All real decisions are made under uncertainty. A decision is therefore a bet… Ward Edwards[1]

EVEN AN FBI DIRECTOR HAS IMPOSTER SYDROME

In his autobiography, former FBI Director, James Comey, describes his first meeting at the ‘top table’, attending President Bush’s daily terrorism threat briefing as (at that time) Deputy Attorney General: ‘It’s just us. I always thought that in this place there would be somebody better, but it’s just this group of people – including me – trying to figure stuff out… we were just people, ordinary people…’.[2] 

The economic and practical impacts of Covid-19 mean that Comey’s observation is now relevant to us all. There are no superheroes charging over the horizon. We need to find our own way out through a period of high ambiguity and uncertainty. Survival and success will be heavily reliant on:

• judgement in decisions made on limited data
• flexibility in execution, and
• the ability to learn and adapt quickly from experience. 

For many organisations, this combination will require a step change in approach. 

This note sets the scene for a series of posts to follow on ‘High Performance Under High Uncertainty’, that explore a number of tools and approaches for successfully navigating murky waters. 

AGILITY – THE NEW BLACK?

The concept of VUCA (Volatility, Uncertainty, Complexity and Ambiguity) emerged into the mainstream from the US War College in its work on describing a new uncertain post-Cold War world; however the concept was hardly new. The Roman Army was running campaigns and an empire without Google or mobile comms 2,000 years previously – uncertainty and ambiguity would have been unavoidable. The emergence of VUCA as a new thing might be explained by a (military) friend’s comments: ‘you don’t get to be a 4* General without re-inventing a few wheels...’

What is new is that many more people are now grappling with the implications of these concepts every day. Interconnectivity in the modern world carries a price – the potential for contagion – viral, political, economic etc. The combined effect of Covid-19 and its economic fallout means that while companies and institutions are planning and executing, they are possibly grappling with more uncertainty, complexity and risk than in individuals’ personal experience.

However, those issues are very familiar to me and many current and former members of the military. Contrary to Top Gun, success as a fighter pilot depended less on beach volleyball prowess than the ability to execute complicated missions in multi-national, multi-disciplinary teams under conditions of ambiguity, imperfect information and high-impact decisions made under intense time pressure. 

Now, learning from the military offers few panacea solutions for other environments but from the combination of my military, consulting, corporate and academic experience over the last 30 years, I offer some simple, core principles that I believe are broadly timeless and agnostic to sector in their relevance to performance under uncertainty. The anchor point is agility, defined in the Oxford dictionary thus:

Agility n. Ability to move quickly and easily; ability to think and understand quickly

A more practical interpretation might be something like this: 

The ability to react effectively to, and/or exploit, new information or changing situations…

I identify three key principles in building agility in any organisation: 

• Agile Thinking. Decision-making under ambiguity almost by definition implies that we are exercising judgement but we’re not as good at that as we like to think we are (for a detailed review of the impact of cognitive and motivational biases on risk and performance, see here). 
• Agile Execution. Even if our decision-making and planning were exemplar, it’s still unlikely things will work out because of bad luck, random events, the free will of individuals, changes in the macroeconomic environment and unpredicted actions and reactions on the parts of customers and our competitors. 
• Agile Learning. Even if we did exactly what we set out to do, we may still fail to produce the desired outcome for all the reasons above. 

In my follow-on posts, I will described tools and approaches to:

• Make better decisions and plans for situations where we have significant knowledge gaps,
• evolve our actions in real time during execution while still maintaining progress to our original intent, and
• be able to learn quickly, not as an abstract exercise post event, but to drive course corrections where required, in real time, while we can still influence the outcome.

HOWEVER, LET’S HOPE CULTURE IS NOT TOO HUNGRY

To paraphrase Peter Drucker’s famous quotation: ‘Culture eats tools and approaches for breakfast.’ In Donald Wheeler’s seminal introduction to data analytics,[3] in the lead-in to some 350 pages of analytical tools, he spends approximately 2 pages discussing when data analytics might not work. The answers might be summed up as ‘culture’ – the impact of leadership behaviour in diluting objectivity and thereby fatally undermining the prospect of ‘Continual Improvement.’ Wheeler pretty much glosses over this elephant in the room – it’s not the point of his book. However, the tools and approaches I will describe require a certain mindset, in particular from those in senior roles. That mindset includes some combination of objectivity, humility, evidence-based thinking, taking a long-term view and considering second-order effects. It might be summed up as dealing in reality. For each of the posts, in addition to highlighting the tools and approaches, I will also highlight the relevant cultural and behavioural pre-requisites, which, unsurprisingly, may prove to be remarkably similar throughout – a ‘dealing in reality’ culture…

If you got this far, I hope you’ll read the briefs. If you have feedback to date or would like to see other things included, just let me know.

[1] Edwards W. (1984), ‘What Constitutes a Good Decision?’, panel discussion in Acta Psychologia, 56, 7.

[2] Comey J. (2018), A Higher Loyalty: Truth, Lies and Leadership, 68. New York NY: Macmillan.

[3] Wheeler D.J. (2003), Making Sense of Data. Knoxville TN: SPC Press.