Can enterprise uncertainty stabilize in 2023?

By:
Dotan Sagi
7.9.2022

We live in an era of uncertainty. This uncertainty threatens the stability of the global business community.

The things we rely on today could vanish in the blink of an eye tomorrow. The way to best prepare for unpredictable and possibly blighting outcomes is to develop the right strategies, anticipate unexpected events, adapt quickly by adopting innovative methodologies and tools, and ask ourselves the right questions to portray an accurate and relevant reflection of reality.

Control - illusion or reality?

While looking at crossroad shaping over a period of time, strategy and planning are often used as the same constructs for potential impact prioritization. Both concepts are tools for controlling uncertainty - the enemy of corporate management.

While planning offers a way to reduce uncertainty by calculating the actions and their desired outcomes, strategy confronts risk. Given the volatile, uncertain, complex, and ambiguous (VUCA) conditions in which organizations exist and operate, envisioning the corporates' future is a process in which change is balanced. The VUCA world is present in all of the environments surrounding the corporate, including the economic, socio-political, geo-political, and technological.

The VUCA conditions might also lead to cascading effects if one event causes another or when extreme conditions collide. Under these conditions, making strategic decisions or planning is much more than setting goals and defining measures to track them. It is, above all, the acceptance of dealing with the unknown.

Decision making adaptivity in the face of uncertainty

Under the mentioned VUCA conditions, there is a need for constant awareness and apprehension of what is happening in all of the environments and appropriate adaptation.

Failing to obtain awareness and adapt accordingly could enable industries like Healthcare, Telecom, Utilities, Consumer Goods, and others to experience repercussions such as

  • Loss of customer confidence due to a data breach.
  • Critical vulnerabilities and supply chain risks.
  • Disruptions from insider threats.
  • And many more potential hazards.

These uncertain conditions could damage mid-sized and enterprise companies unless they adapt to changing realities with innovative methodologies and tools.

The main question is: how will we become aware of the shift in the environments that demands the switch?

The natural human tendency is to seek the familiar, to learn from experience, and even to learn from others' experiences - and this limits the organization’s rapid adaptivity to change.

Executive boards make decisions based on reports containing data analysis with forecasts in various confidence levels. These include data on investments, business developments, mergers and acquisitions, key projects, production, and logistics.

All are based on statistical and economic analysis, which is limited in the ability to include and calculate various significant events in these VUCA environments.

 

As much as global events like the COVID-19 pandemic, the Russia-Ukraine war, and climatological disasters might not be anticipated, their effect could be critical.

There are two significant factors of change to be considered during strategic decision making and planning processes (figure 1): 1) the "amount" of changes that might occur in the sector, markets, or environment, and 2) the level of predictability of these changes. Making strategic decisions in cases expecting "few" changes will be more predictable compared to an environment with the potential of many changes, with at least some also unpredictable.

 

 

Process uncertainty figure 1

 

The comprehensive fact base enterprise reflection

Strategic decision making is managing risk in hostile environments, where many changes can occur that will likely be unpredictable. That said, one should continuously raise a question: "what if?"

By asking "what if," the corporate creates potential alternatives to common, familiar, "comfort-zone" decisions. Recognizing and being aware of the various "branches" of the decision tree can lead to improved root-cause decisions and an understanding of how reality evolves to detect real-time changes that must occur to avoid undesired outcomes.

Such "what if" methodology not only puts a realistic mirror on what happens and what can evolve in the surrounding environments but also examines the internal process through which the corporate makes decisions.

Using this methodology challenges current decision making habits, which might be standardized ("one size fits all" or "doing A will lead to Z") or conventional ("this is how we do our business").

Straightforward steps to increase resilience through awareness

Asking "what if" should require decision makers to answer four questions:

  • What is happening?
  • What are the known facts?
  • What does this mean?
  • What should be done about it?

Understanding the answers to these questions raises the situational awareness of the organizational leaders beyond their perspective of what they think is happening. These answers enable quick mapping and execution of subsequent measures to control the situation.

Creating a strategy and a plan necessitates awareness of as many facts, details, intentions, and possibilities as possible. The mission is to reduce uncertainty by mapping and portraying as many potential circumstances as possible.

Daring to ask those difficult "what if" questions will not only allow the corporate to choose the most realistic and relevant strategy but will also lead to a better planning process, in which the actions to achieve the strategy as being implemented.

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