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5 rules for managing uncertainty

16th Nov 2022
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The world is crazy. There's a war in Ukraine. The UK has a cost-of-living crisis as energy prices are rising, and loads of people are moving into fuel poverty. There's inflation, strikes, and the looming threat of a recession and catastrophic climate change. 

The current environment I describe is very stressful, with many things you cannot control, which makes a few things on the path forward uncertain. So, to help us all cope with the road ahead, I thought we could discuss the 5 Rules for Managing Uncertainty we shared on a recent podcast and our YouTube channel

I thought maybe my interpretation of the world was just me getting old. So, I put it out there on LinkedIn to find out what some of you felt about everything with a poll question, "What are you expecting the business environment will be over the next year?"

 

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The results were fascinating. I thought it would be worse (and I'll explain why), but 42 percent of you thought it would get better. Another 37 percent agreed with me it was going to get worse, and 21 percent said it would be the same. 

I feel things are getting worse because I have been in the UK for the past two or three months. Energy prices here have tripled. Also, we are a lot closer to the war in Ukraine and Russia, so that is a stressor we feel more keenly here than we might over the Atlantic. (Of course, Hurricane Ian just hit my Florida home, and now there's a rise of flesh-eating bacteria there, so it's not like being in the states is worry-free.)

Some of you felt differently than me. For example, René Bomholt said it depends on where you are and your business. For instance, if you work in a company in northern Europe that provides an alternative to using imported gas, the environment will likely be better. If, on the other hand, you're in a low-paying segment, Bomholt says you might say it will be worse because you are struggling to find people to fill open positions. Also, Asia still has restrictions due to COVID, which impacts the mobility of the workforce. Once those restrictions lift, it might be better there. But, ultimately, Bomholt says he settled for answering it will be the same. 

Some of you thought how we think about things is how things become, like Andrew Safnauer. Safnauer believes that the general populace's mindset will determine how the business environment goes. It could get worse if we decide things are bad and react that way. On the other hand, if we are cautious but still "engage in commerce," it might not get worse. In other words, Safnauer is saying if we think there will be a recession and stop buying things, then there will be a recession. 

Economists agree with Safnauer that a significant part of recessions is psychological and sociological. First, we all decide that there will be a recession, and then there is one because we all pull back on our spending. So it becomes a self-fulfilling prophecy.

So, we always have uncertainty, which isn't a great feeling. So, let's talk about how to manage uncertainty, starting with these 5 Rules:

  1. Recognize uncertainty is uncomfortable. 
  2. Remember, the upside of uncertainty is that it provides opportunity. 
  3. Control the controllable. 
  4. Be alerted to be prepared. 
  5. Hope for the best and plan for the worst. 

Now, let's take a closer look at each of these, shall we?

Rule #1: Remember uncertainty is uncomfortable.

Human beings like certainty. Plus, we're creatures of habit, as we've spoken about many times before. First, however, we must recognize that uncertainty makes us uncomfortable.

This discomfort has a lot to do with the psychology of decision-making. For example, many shortcuts in decision-making (i.e., heuristics) are things we do to make ourselves feel more confident or that we have more data than we do. 

Perhaps this concept is why we like to use the phrase, "Well, that's a no-brainer." If we see an obvious best choice, you don't have to feel uncertain about your decision, and you will feel more comfortable moving forward. 

However, you can't always have a no-brainer, which can be stressful. Moreover, I have often said you can deal with one part of your life being off kilter, but not all of them. When more than one part is causing you stress, it can increase uncertainty. So, recognize the source of it and try to prioritize your actions to manage them in turn—and try not to torture yourself over them. Many decisions we make are not as significant as we think. 

Instead, let it go and focus your effort on the stuff that might be relevant. That will help. Confronting uncertainty around insignificant decisions is something you can pull an Elsa on and just let it go. 

I used to buy my managers a book called One Minute Manager Meets the Monkey by Ken Blanchard, which is about prioritizing things as a manager or leader. One of the premises in the book is that, as a leader, you think it's your responsibility to do everything and to make every decision. However, you end up overloaded and, therefore, unable to prioritize.

Rule #2: Remember the upside of uncertainty is that it provides opportunity.

People don't like reorganizations. They worry they will lose their job or get a new one they don't like. However, my view when I was in corporate life was that reorganizations provided me with an opportunity to move ahead and change my current job to one I wanted next. That worked out for me much of the time. 

Therefore, I recommend not assuming uncertainty will be all negative. It can be, of course, but it is also an excellent time to disrupt things. 

The natural reaction is to withdraw, to be conservative, and not to take risks. So, as we enter a recession, organizations should look for ways to disrupt the market. Is there an opportunity? Has the competition become large and cumbersome and unable to respond to market changes? Is there a way to maneuver around them in some way? 

Recessions can reveal opportunities for those who are willing to take them.

Rule #3: Control the controllable.

If you look at the YouTube version of the podcast where we shared these rules, you will see I am wearing my Luton town football shirt. I wear it because I love my team even though they are not very good these days. I can't make them win, but I can show my support for them through my apparel choices. I can't do anything more than that. 

Luton Town Football club's former manager used to say in the interviews after the game, "Control the controllable." I always thought that was a good lesson for life, especially surrounding uncertainty. 

Another phrase that goes along with this is, "I've had several crises in my life, but few have actually happened." This phrase does a brilliant job of pointing out that we often think everything will come crashing down on us, but it doesn't always. It rarely does.

So, when you're in times of uncertainty, focus on things you can control or influence. There's no point in worrying about the rest of it. The reality is I can't determine if there's going to be a recession or not. There's very little I can do about the war and energy prices. I can't control those things. I can control the way I react to those things. I manage how we plan. With energy prices rising, I can control how we deal with those things.

It's a bit like chess. You've got to think two or three steps ahead, not only short-term.

Rule #4: Be alert and prepared.

Rule number four builds on the third one by encouraging you to go to different sources to understand what is happening. As a result, you might have a better idea of what will happen over the short term and what those effects could be long-term. Again, getting more information allows you to prepare.  

For example, how long is it likely to be if we enter a recession? What sectors will it hit? Then you can build some plans.

Uncertainty is psychological, and it can be paralyzing. Getting more information helps because we feel less uncertain and build confidence, which can be empowering. Perhaps most importantly, having more information can motivate us to move forward.

Rule #5: Hope for the best and plan for the worst. 

We hope that things settle down and uncertainty and the rest of it go away. However, you've also got to plan that it won't. You've got to prepare for the worst things or at least think them through. If you don't, then you're going to be caught unawares. So instead, be as prepared as you can be.

Remember, humanity's been able to climb out of every hole it's found itself in thus far. So let's prepare and plan around what we can while we figure our way out of this one.

If we can recognize uncertainty makes us uncomfortable and identify the opportunities it creates, we will be in a better mindset to weather the storm. Also, if you seek to control your reaction to things and be alert to changes so you can prepare, you will be in a better spot. Finally, be prepared for the worst, but don't lose hope that things will be okay. They always have been before, so why would this time be different? 

Over the past 21 years, Beyond Philosophy has weathered three recessions. They are not pleasant, but there are opportunities. If you can look at things from a positive perspective and see things differently, you could come out even better on the other side. 

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