The Secret to Working With Uncertainty

When planning for the future in uncertainty, look for cycles, patterns and perfect storms

Changes are distressing, but they are necessary and, most of all, natural, on this planet anyway. If you meet every wave of change with disappointment or fear, it does not help to navigate to safety or find new opportunities that were not there before.

Everything is cyclic in this universe. Changes happen all the time. There are patterns within patterns, cycles within cycles. But at the end of each cycle there is a great deal of uncertainty. The old patterns no longer work and new patterns have not formed yet…

It pays to have a system to work with ending cycles, big or small

The good news is that rapid changes happen rarely. Usually, there are signs preceding big and small changes though people still find themselves surprised when it happens. We saw it in 2008, in 2020 and in 2021… If you have your indicators set up properly, you will know that the temperature will start to change way before you feel anything. In business, it is keeping track of the speed of doing business, customer sentiments and cash.

Being involved with forecasting, projecting, predicting and predetermining financial outcomes of various businesses, after 22 years in finance departments, I have learnt one thing… The only way to predict the future is to … create it.

Every forecast will be wrong

If you are trying to predict and beat a trend you will be economically punished for it, sooner or later. This is true of internal or external predictions. 

The main reason for it is that, sooner or later, every trend will change. It will slow down first then either reverse or reduce significantly. Contrary to the common belief in planning departments, the more something is happening the lesser its probability of repeating itself without changing its form. Everything is a part of a pattern within a bigger pattern within a bigger cycle. Those patterns are helpful but it pays to know when the first signs of change show up. In business, exceptions are more important than rules. If you are managing anything in a business, i.e. people, processes or numbers, look for exceptions before you look for patterns. Very often they are the signs of a coming change.

When you pay attention to signs, you can create a less uncertain future

Important:

• Look for patterns that have repeated in the past (the more they have repeated the more likely they are to change soon)
• Look for exceptions (they are indicators of risks and opportunities of the future)
• Test for common fallacies in your thinking before making any conclusions from the above (check for small sample sizes, prospect fallacy, commitment and other unconscious biases no one is immune to) – get my free guide here

Uncertainty is not a moment in time, it is always there

Often once we have detected patterns we get a false sense of security and start acting on it as if things never change. They will, and, the truth is, no one knows what happens tomorrow. We should stop trying to predict.

At the same time, we need a roadmap to follow if we want to arrive somewhere, equally in life and business, covering financial, operational and mindset aspects of any journey that need to be taken. No ship will leave the port without a destination, a reliable crew and a navigation system that can guide the path.

Everything will change, but you’ll have a warning if you know where to look for it. No one knows how things will be tomorrow. We need a flexible roadmap to go fast. Maps will need to be updated as roads change.

5 Steps To Create Future When Uncertainty is High

 
1. AWARENESS

• Embrace the fact that everything will change. Cycles will conclude but we don’t know how fast. Patterns will emerge but we don’t know which ones. 
• Assess where you are in a cycle (business cycle, product cycle, people cycle, market cycle, macroeconomic cycle or as applicable)
• Assess what you have: your assets (what you have), your liabilities (what you owe) and your capabilities (intangible assets that are not on the balance sheet, e.g. relationships, connections, customer lists, know-how, proprietary frameworks, people you are with)
• Assess where you want to be, why it is important and what success will look like

2. OPPORTUNITIES

• Examine what you will have to work with to get there and the smallest parts of the ecosystem you will need to manage to get a good return on efforts
• Break it down to its smallest components and work out dependencies. If you know how the system works, you can control it. What can you control? 
• Create a roadmap with short-term and long-term milestones, based on where you are at and what success looks like for you.
• Embrace the fact that you cannot manage the entire system but you can manage some components you have control over. Find the bright spots. Separate assumptions from the facts. Quantify the facts. Test the assumptions. What are the smallest changes you can take today that will make the most difference when moving you in the right direction towards your north star? Cost them in terms of resources and time.

3. CAPABILITIES AND CAPACITY

• Look at your capabilities and capacity. Calculate the maximum. What is the maximum you can deliver based on the resources you have? What is the maximum you can sell based on where you are at? What is the maximum you can produce? What is the maximum you can accommodate? What is the maximum you can service? Cut excess and bridge the gaps to optimise resources and focus.
• How close can you get to the result you want with what you already have? 
• What measure will indicate if you are on the right path to the end result you want?

4. THE ODDS

• What will be your headwinds and tailwinds (things you cannot control that can affect the results)? How should you adjust the sails (what can you control to mitigate headwinds and catch every tailwind you can)? What would your perfect storm look like? Is there insurance against that?
• Who needs to know? Who needs to help? Who benefits more than you if you are successful? Who loses more if you are unsuccessful?
• What are the odds of different outcomes based on what we know and the hand we’ve been given?

5. THE PLAN

• Select the path you believe in and want to take. Make the first small step.
• Measure the difference
• Reflect, rinse and repeat

Contrary to all planning methodologies, the more something is happening the more it is likely that the trend will exhaust itself soon. 

What is your insurance policy for the perfect storm?