Friends,
I hope that all is well with you and yours, and that this e-mail finds you on a boat with shoddy connection, in the tropics, three months after I sent it.
Now accepting keynotes for 24Q1-24Q3
Every year, I create three main presentation decks. For 2024, they are:
What to Do When You Don’t Know What to Do: How to turn uncertainty into a competitive advantage. (Based on my new book by the same name.)
Regression Toward the Meme: Why modern leadership falls into old traps - and how to avoid them.
The Efficiency Illusion: How to uncover the hidden costs of digital commerce and create profitable growth.
If you want to book me for your event, corporate speaking slot, or workshop, merely send me an email. To make sure I am available, however, please do so at your earliest convenience; my availability is limited and the schedule is filling up fast.
All presentations are adapted to fit the event. Entirely customized presentations, including topic, are available upon request at an additional cost. More information may be found here.
A couple of updates before we go-go
I have not got much to add this week except for the fact that a Christmas break with a two year-old is a lot of Christmas, but not a lot of break. Do not get me wrong, it is great and I would not trade it for anything, but I would be lying if I wrote that it was not lovely to be back working. Alone. In silence.
Ahhh.. Solitude and silence.
I am sorry, where was I?
Oh, right. Moving on.
2024.1.a.
Managing everyday uncertainty
The inescapable nature of complexity
If you were to visit a business conference, pick up a copy of the Financial Times, or listen to a podcast on strategy, you would almost certainly see or hear someone describe the current times as “uncertain”. More likely than not, the characterization would be accompanied by purported instruction on how to “limit”, “clarify”, or perhaps even “master” it. And instinctively, you would be drawn to the promise.
For a plethora of reasons, not least evolutional, human beings highly dislike uncertainty. Ambiguity in all its forms comes with a need to expend mental effort trying to predict what outcomes there may be and how to best prepare for them. This, in turn, creates stress that, especially when prolonged, is among the most insidious stressors that we experience.
No wonder we seek to eliminate it.
At its most basic, uncertainty means that we are unsure of the correct course of action. Contrary to popular economic wisdom, however, we rarely seek to optimize the outcome. The moment that we are able to identify potential downside, the stress that we experience turns into anxiety. In order to alleviate it, “safe” is sufficient; we satisfice.
It is for this reason that consistent branding matters in marketing; consumers use cues, codes, and distinctive brand assets, to make decisions under conditions of uncertainty. Rory Sutherland has famously observed that McDonald’s is largely successful because the company is very good at not being very bad. If there are few options available, or the food variance from exceptional can be consequential, the golden arches provide a safe bet. Consumers are aware they will not get the best meal on the planet, but they can rest assured that they will not get food poisoning either, so they satisfice. Sutherland’s views mirror those of Richard Rumelt, who has stated that a brand’s value comes from guaranteeing certain characteristics of a product (though he recognizes that such characteristics are difficult to define).
However, the argument applies to almost any famous fast-food chain, not least McDonald’s main competitors such as Burger King, Pizza Hut and KFC. The quicker we recognize the (positive) option, the likelier we are to choose it.
The same mental process applies in strategic management for obvious reasons; ultimately, a human being makes the decision. And so, we do again that which worked before, what everyone else is perceived as doing, and whatever is believed to be “safe” by the risk management department.
Unfortunately, while the world of fast-food is largely ordered (no pun intended) - whoever is preparing your food is unlikely to experiment with it - markets feature agents with all kinds of reasons to do all kinds of things, and the contextual backdrop against which they act adapts to their actions just as they adapt to it. The system is dynamic and complex; there is always uncertainty. It is impossible to master it a priori.
As Ian Scoones has noted, the conventional managerial approach is to nonetheless construct strategic challenges as risks, where the probabilities of future outcomes are known, or at least are believed possible to be estimated (we have covered the reasons why at length before). It rests on the assumption that we may control the environment and therefore the future if only scientific management (in a broad sense) and technocratic-institutional governance are applied. But when the sample space, and by extension future possible outcomes, are not known, the approach fails.
The true danger, then, lies not in potential threats hidden in a fog of uncertainty, but in the flawed way in which we deal with them.
And so, given that uncertainty is, as Helga Nowotny once wrote, written into the script of lives, our theme for the first two months of 2024 will be how to better manage uncertainty. We will discuss what uncertainty is, how we can increase our capacity for adaptation, how to identify threats, and what frameworks can best aid us in our professional lives.
Next week, for premium subscribers, we will begin with the basics. Until then, have the loveliest of weekends.
Onwards and ever upwards,
JP
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