Uncertainty brings Prosperity

We all strive for certainty – we look for the magic formula that will make our businesses work better and secure our futures. We look to the business gurus, we read their books, we find the “Seven Steps to Success”, or whatever the latest one is called, we become inspired, we try to emulate. And we fail.

Their context is not your context. Stop wasting your time and money. Stop trying to find the magic formula which does not work for anybody apart from the writer. Every business needs its own secret sauce – it can’t just copy someone else’s and expect the same results in a different environment. Stop trying to think about how to do it, and start trying to think about how you think about why you do what you do and what you are trying to achieve and for whom.

Think deeply about your customers and their needs and what jobs they are seeking to get done which you can help them with. Start analysing how you think about your business rather than what to do in it so that you understand yourself, understand your customers and your team better. That way you can serve them better and they can reward you better.

Don’t look for certainty in business. You don’t achieve it in other areas of your life, so it is strange logic to expect it in business. It’s an understandable wish, but unachievable, so stop wasting time on it. Don’t expect to be able to control every aspect of your business, because you won’t succeed. You can’t analyse it scientifically, and you can only control some of the internal functions – the overheads, the staffing levels etc. The critical areas are outside your business in the real world and in the way your business interfaces with the real world – customers, suppliers and other stakeholders. Those interfaces are by their nature uncertain. You already know this, but you don’t always want to know this. Accept and even embrace it.

These uncertainties are your greatest levers and opportunities. If everybody has certainty, no one has an advantage and you will not be able to turn a profit. All firms in your field will be the same because there will be a level playing field, and no point of differentiation worth talking about. Because your uncertainties are different to others, this can produce opportunities and that is where you will derive economic value for your customers and your team so that everybody benefits – including you. This can be how you differentiate yourself from your competitors. Think about it – we all want to create a differentiator, which by its nature must create an uncertainty in your market place, which we are aiming to exploit. The difference that makes the difference!

The issue we all have is how to understand and manage these uncertainties so we can exploit them, rather than being damaged by them. The good news is that you have most of the key tools already. You certainly don’t want to start making complicated mathematical models, measuring any number of variables, scrabbling around for data. It will cost a lot, there will still be gaps, and it will take time. Time in which you will watch the opportunity slip by.

Managing the uncertainties means understanding how you think and behave in certain circumstances, so that you can understand and rely upon your judgements and be able to measure their results quickly and easily. That way, you can exploit opportunities and rein back any problems so that you can fail fast, and recover without failing catastrophically.

Most of it is judgement – gut instinct, and specific rules and trip wires you set up so you can’t go too far off track.  Judgement shouldn’t be too fast – you need to reflect to ensure that the same call you made on a similar topic some time ago still holds good today. You need to avoid common failures of logic, like the Gambler’s Fallacy. It’s explained here, along with most of the common logic failures. Most gut instincts are some sort of rules of thumb – short cuts, also known as heuristics. We all use them – you need to know if you are, and if the heuristic you are using is appropriate – you need to sense check. It might be a little slower than you are used to, making unconscious judgment as most of us do often, but it is better to give it a moment’s thought so you are clear why you are doing something and what you expect to occur and when, than just blunder on. And it’s a lot quicker and cheaper than big maths! Big biz is starting to move away from big maths towards heuristics now, as there’s plenty of science to prove it’s just as effective. So if it’s good enough for them, it might be good enough for you.

One of the differentiators for successful entrepreneurs is their ability to make small, fast steps, measure the outcome, and retreat to a place of safety or expand and exploit the opportunity. They can’t do that with full information and certainty. They can with heuristics and simple decision tools; tools we have available.  That is how uncertainty can be embraced and exploited.

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