Informed Uncertainty: The Strategic Value of Expanding Options.
In a world where unpredictability is the only constant, organisations are finding themselves in a paradox—how to strategically plan in an environment that defies predictability. The traditional strategic plan, with its roots in military and industrial planning, is by nature a commitment to a defined path, a deliberate set of actions meant to secure a preconceived outcome. In today's dynamic, complex, and highly interconnected world, the wisdom of such certainty is being questioned. Here, I argue for an approach to strategic thinking that acknowledges and embraces uncertainty. At insight & foresight we call it "informed uncertainty," and it's all about expanding your strategic options.
The Myth of Strategic Certainty.
At the heart of many existing strategic paradigms is the pursuit of certainty. Whether in developing a new product line, entering a new market, or executing a merger, traditional strategies aim to predict and control outcomes. Organisations construct models, project outcomes, and develop forecasts to minimise risks and secure results. However, the facade of strategic certainty is slowly crumbling away. Today, organisations must navigate a constant stream of disruptions—from technological advancements to economic downturns, from shifting customer preferences to changing regulations and geo-political turmoil. These uncertainties make it increasingly difficult and even impossible for traditional strategic plans to remain relevant and effective.
The Power of Options.
In a world of uncertainty, optionality provides a powerful advantage. By expanding an organisation's range of potential choices, optionality creates flexibility and adaptability, allowing for quicker responses to changing circumstances. Instead of being committed to a single path, organisations with a diverse set of strategic options can adjust their course as needed to stay ahead of the curve. Optionality also acts as a form of insurance against unforeseen risks and provides opportunities for exploiting emerging opportunities.
However, having access to a set of well thought through options does not deliver certainty. Ray Amara, past president of the Institute for the Future, posited in 1981 (1) that the field of futures studies is founded on three fundamental principles. Known as the "Amara's Law," these principles are:
Futures are not predetermined.
We cannot predict futures.
Future outcomes can be influenced by our choices in the present.
These laws recognise the inherent uncertainty of our futures and challenge traditional strategic planning that relies on predictability and control. In essence, futures are not something to be predicted or controlled but rather shaped through our actions and decisions in the present. This perspective opens up a world of possibility and potential for organisations looking to navigate today's complex and ever-changing landscape.
Optionality may provide some confidence that an organisation can better manage future disruptions, however the nature of futures as defined by Amara means that there will always be uncertainty. This is where the concept of informed uncertainty emerges. Informed uncertainty is the understanding and acceptance that we cannot fully predict or control our futures, but we can gather knowledge and insights to inform our decision making, even when that knowledge is incomplete.
For leaders, informed uncertainty is having confidence to make decisions whilst simultaneously knowing and not knowing. It is about being comfortable with ambiguity and embracing the unknown, while still taking proactive steps towards shaping your preferred futures. This approach allows for flexibility and adaptability in the face of uncertainty, empowering organisations to be more agile and responsive to changing circumstances.
Strategic Options.
Too many options can lead to decision paralysis, where leaders are unable to make a choice due to an overwhelming number of possibilities. High quality options are required built using quality data and proven methods. The art and science of foresight can assist in creating a range of quality options for organisations to consider.
Sensing, Shaping, Hedging Futures.
The acknowledgement of uncertainty in our futures does not mean that organisations should abandon all strategies and plans and adopt a laissez faire attitude to delivering results. Rather, it means that organisations should shift their focus from trying to predict and control futures to actively sensing, shaping and hedging them. This can be achieved through a process known as strategic foresight.
Strategic foresight is a proactive approach to sensing, shaping and hedging futures. It involves continuously scanning and monitoring the external environment, identifying trends and drivers of change, assessing impact and probability, creating and engaging with future scenarios and using this information to inform decision making.
Sensing futures involves understanding the external factors and forces that can shape our futures. This includes monitoring trends, signs of change and weak signals that may indicate potential disruptions or opportunities. By continuously scanning and sensing the external environment, organisations are better equipped to anticipate and respond to emerging challenges and opportunities.
Shaping futures involves actively taking steps to shape and influence the external factors that can impact our futures. This can include developing relationships and partnerships, engaging with stakeholders and shaping the narrative around a preferred future. By proactively shaping external factors, organisations can have more control over their futures and increase their chances of achieving their desired outcomes.
Hedging futures involves preparing for potential disruptions or uncertainties in the external environment. This can include creating contingency plans, diversifying investments or strategies, and building resilience within the organisation. By hedging against potential risks and uncertainties, organisations can mitigate potential negative impacts and maintain their ability to achieve their goals.
Strategic foresight is not about predicting or controlling futures, but rather about exploring, understanding and actively engaging with them. Immersing leaders in alternative scenarios and asking them to consider a wider range of possibilities can help them make better decisions and be more prepared for potential future challenges. By incorporating strategic foresight practices into their decision-making processes, organisations can increase their adaptability and agility in a rapidly changing world.
Foresight and Strategy.
If we think of strategy as having three stages - thinking, developing and planning - the traditional strategy process focuses heavily on the latter two stages. However, in today's rapidly changing world, organisations need to devote equal attention to the first stage: thinking. Thinking is about exploring and asking "What if?" questions to challenge assumptions and uncover new possibilities. This is where foresight comes in. It provides a robust framework for thinking about futures and creating space to explore a range of development paths for the emerging change and trends we see today.
Foresight is not a replacement for traditional strategic thinking but rather an enhancement to it. While traditional strategic thinking focuses on the present and near futures, foresight looks at longer-term futures to identify potential opportunities and threats.
For organisations we suggest "long-term" as being around 5 to 10 years ahead. This is a time horizon that enables enough distance to allow for significant change, while still being within the realm of comfort for organisations to make plans. It is a time line for which the set of possible, plausible and probable futures maintain some degree of connection to the current and emerging leadership's projected tenure and stakeholder's expectations.
Foresight, as an element of strategic thinking, aims to broaden the spectrum of understanding for available strategic options, thereby enhancing the inputs to strategy development. It provides a way to think about a range of futures, ask critical questions, and consider alternative scenarios.
The Power of Exponential Change.
The concept of exponential change is a key component in foresight thinking. It refers to the idea that certain trends, technologies and societal shifts are not linear but rather grow at an accelerating pace. This has been evident in recent years with the rapid advancements in technology, such as artificial intelligence and automation.
Embracing the power of exponential change allows us to:
Gain insight into how small changes in our current world could have big impact in our futures.
Implement mitigation actions to minimise the potential future disruption of exponential change.
Exploit the change we see now so that we are more able to benefit from large change in our futures.
Using foresight tools to create plausible development paths for emerging change can help organisations prepare for exponential change and make choices that enhance their future success.
Challenging Assumptions.
Another important aspect of foresight thinking is challenging assumptions. This involves questioning the status quo and critically evaluating long-held beliefs about the industry, market, or organisation itself. By identifying and challenging assumptions, organisations can uncover blind spots and see things in a new light. This allows for more effective decision-making when it comes to future planning.
Assumptions are often made based on our past experiences and knowledge, but in a rapidly changing world, these assumptions may no longer hold true. In fact chances are high that they will not.
Challenging assumptions involves being open to new perspectives and being willing to constantly reassess and adapt in response to changing circumstances. It also needs a safe space for individuals to voice differing opinions and challenge the norm without fear of retribution.
Integrated Decision Making.
Silos, which represent independent departments or teams within an organisation, are a defining characteristic of organisations of all sizes. Foresight thinking promotes integrated decision making by encouraging cross-functional collaboration and considering multiple perspectives. This approach allows for a more holistic understanding of the organisation and its future potential. By breaking down silos and encouraging collaboration, organisations can improve their ability to respond to emerging changes and challenges.
Embracing Experimentation.
Foresight thinking also involves embracing experimentation and being open to taking risks. In a rapidly changing world, it is important for organisations to continuously evolve and adapt to stay ahead of the curve. Risk management is a valued and necessary part of decision making. Foresight thinking encourages organisations to take calculated risks and learn from the outcomes. By embracing experimentation, organisations can gain valuable insights and uncover new opportunities that may have been previously overlooked.
Continuous Learning.
In addition to being open to new perspectives and taking calculated risks, foresight thinking also emphasises the importance of continuous learning. This means constantly seeking new knowledge and skills, both within and outside the organisation. By continuously learning, organisations can better prepare for future challenges and take advantage of emerging trends.
The Cost of Rigidity.
Even with a pragmatic acceptance of the benefits of foresight, leaders still cling to the comfort of predictability. Because to admit the degree to which we are flying blind would be to undermine the very foundation upon many business decisions are built. This rigidity leaves organisations unprepared for potential disruptions and unable to take advantage of emerging opportunities, ultimately hindering their long-term success.
Leaders who have built their careers on traditional forms of thinking and decision making may struggle to embrace foresight thinking, but the reality is that the cost of rigidity can be far greater. Rigidity and inflexibility affects organisations by limiting their ability to adapt, innovate and evolve in a constantly changing environment.
Adaptive Leadership.
Navigating the twists and turns of today's ever-changing world calls for adaptive leadership—a unique blend of keen insight, empathetic leadership, and a dash of daring experimentation. It's about getting comfortable with the uncomfortable, managing the rollercoaster of fast paced change, and embracing the unknown with open arms.
One key aspect of adaptive leadership is the ability to continuously learn and apply new knowledge in a practical way. The concept of informed uncertainty is crucial in this dynamic environment, where leaders must make decisions based on incomplete information and adjust as new data emerges. The days of standing at the front of an organisation and committing to a set path for the next five years are long gone. Instead, leaders must be willing to pivot and change course as needed, constantly reassessing and adapting to the ever-changing landscape.
Today, leadership is as much about displaying confidence with not-knowing and ambiguity as it is about projecting knowledge, certainty and control.
Informed Uncertainty.
Informed uncertainty is the acknowledgement that while we can't predict our futures with absolute certainty, we can make informed decisions based on a combination of data, experience, prospection and intuition. It's about making decisions with what we know, and don't know. This may sound oxymoronic, but in a constantly changing landscape, it's the most effective approach to decision making.
Comfort with Ambiguity and Complexity.
Informed uncertainty requires leaders to be comfortable with ambiguity and complexity, while still maintaining a confident sense of direction and purpose. It allows organisations to be adaptable and responsive, ready to pivot and evolve as needed. It is a new way of thinking about decision making, one that embraces the unknown and acknowledges that it is OK to not have all the answers.
As the world around us continues to evolve at a pace never seen before, it's imperative that leaders are equipped to steer through the nuances of constant uncertainty. They must possess the acumen to make informed decisions, grounded on the most reliable information accessible. This requires not only a keen understanding of emerging change and trends but also the foresight to anticipate future challenges and opportunities.
Optionality offers a strategic advantage by expanding an organisation's choices both in terms of quality and quantity, and enhancing flexibility and adaptability. Optionality is about creating alternative pathways towards futures, allowing for adjustments and changes as circumstances evolve. This approach empowers organisations to be more resilient, agile and prepared for whatever comes their way.
A key part of informed uncertainty is having a mindset that embraces learning and innovation. Leaders must continuously seek out new information and perspectives, but also be open to experimentation and taking calculated risks. With this approach, organisations can stay ahead of the curve, constantly evolving and adapting to changing circumstances.
At insight & foresight we help leaders and organisations embrace informed uncertainty and optionality by providing cutting-edge tools, techniques and data. Through our services, leaders can develop the skills to navigate complexity, make informed decisions and create a culture of adaptability within their organisation. In this ever-evolving world, informed uncertainty is not just an advantage but a necessity for survival.
References:
(1) Amara, R. (1981), ‘The Futures Field: Searching for Definitions and Boundaries’, The Futurist, 15(1):25-29.
