Leadership Operates in a Constant State of Uncertainty
Photo by Naser Tamimi on Unsplash
In the introduction to The Art of Uncertainty: How to Navigate Chance, Ignorance, Risk and Luck, David Spiegelhalter reminds us that living in a "constant state of uncertainty is an essential part of the human condition." The degree of uncertainty varies across time and place. Different groups can have perspectives on uncertainty.
As leaders, we must never forget that our plans and their execution directly affect the lives of everyone who works for us and those who trust us to run the organization. Effective leaders rely on multiple data sources, consider how they process information to avoid bias, and can admit mistakes.
One of the interesting concepts the book explores is Cromwell's Rule. This principle states that every possible outcome is possible for any given situation.
Shedeur Sanders
A recent and excellent example is what happened with Shedeur Sanders in the NFL draft. Sanders' entry into the draft was a central topic of consideration. Most pundits projected him to be drafted in the first round. A few experts thought he could be a top-five pick. Some thought he would be picked later in the first round. A small number thought he might fall to the second round. No one thought he would fall entirely to the later rounds or out of the draft.
Sanders made a calculated decision. In his shoes, most of us would have done the same. It just did not work out as he expected.
Tariffs
Tariffs are front and center in many of today's business conversations. The range of potential outcomes is varied. The implications for strategic business planning are profound. Let's consider these possible outcomes:
Little to no immediate impact on the economy, resulting in dramatic growth in American manufacturing.
> Short-term inflationary impact with no drop in the overall American economy.
> A short recession in the United States results in medium to long-term economic growth.
> A modest global recession occurs as the global economy undergoes a dramatic shift in global trade.
> A deep recession if the realignment experiences unexpected challenges.
> An economic depression.
Each of these possibilities can happen. Every company must perform its own analysis to define the assumptions it will use in its business planning. This evaluation is essential to business planning. The second dimension complicates the planning process. To date, tariffs have been announced, deferred, and changed. This additional uncertainty makes long-term planning incredibly difficult.
Companies considering moving manufacturing onshore are making a 30-year bet on the future. Building a plant takes years and significant capital. A new plant has to generate profitable products for decades to achieve the necessary return on investment. Uncertainty will make these decisions difficult, if not impossible.
Companies can interpret uncertainty differently for many reasons. Each will have different knowledge, perspectives, and objectives. There is no such thing as perfect analysis. It is best to think of the models as impressionist paintings. Different artists will paint the same subject with varying levels of detail.
"All models are wrong, but some are useful." – George Box
"Far better an approximate answer to the right question, which is often vague, than an exact answer to the wrong question, which can always be made precise." – John Tukey
Related Articles
Pence rebuffs Trump on tariffs, Russia and January 6 pardons | CNN
A golden age of tariffs? We've been here before. | Marketplace
U.S. trade is already falling amid dire warnings | Axios
A US-China Beautiful Rebalancing | Ray Dalio
The Age of American Unilateralism | Foreign Affairs
The Tariff Wars Just Upended Your Supply Chain. Here's How to Adapt. | Harvard Business Review
Navigating Asia's new trade reality after the US tariff shock | World Economic Forum
Navigating tariffs with a geopolitical nerve center | McKinsey & Company
Chips and Salsa: Snack-sized news and posts
The National Medal of Honor Museum opened its doors last month.
National Medal of Honor Museum welcomes veterans | Fort Worth Report
In many ways if feels like everything could topple over.
Six-Chart Sunday – Unbalanced | Bruce Mehlman's Age of Disruption
From personal experience, I cannot stress enough the importance of long term care insurance. These policies enabled us to provide quality care for my in-laws.
There's 1 Thing No One Seems To Be Talking About Regarding Gene Hackman's Death | Huff Post
To make sense of uncertainty, we must understand our data and use it wisely.
Making Data Indispensable | MIT Sloan
Take time to experience life's unexpected pleasures.
A Simple Conversation Kurt Vonnegut Had With His Wife Says It All | Medium
Make plans. Just don't make this so detailed that you blind yourself to unexpected opportunities.
Bobby Weir: 'I've Never Made Plans. I'm Too Busy’ | Rolling Stone
AI has a long way to go.
Pentagon admits to mistakes in campaign against ‘DEI’ content | Politico
For some time now, I have been expressing my concern that the size of the federal debt is a serious threat to our future. (Check out my newsletters - Subscribe on LinkedIn The Leaders Journey )
1 big thing: The multitrillion-dollar debate over "zero" | Axios
A few academic articles.
The stagnation of physics | Aeon
Evidence Grows That Dark Energy Changes Over Time | Wired
The Physics Isn’t Impossible — It’s Just 65 Million Years Ahead of Us | Medium
Scientists think they discovered what existed before the Big Bang | Brighter Side of News
Dark Matter Might Lurk in Its Own Shadow World | Scientific American
Humor
Quotes
“It’s hard to engage with people who disagree with you, but it’s an essential practice to develop.”
- Claudia Sahm
“There are no sure answers, only better questions.”
- Dick Van Dyke
“It's tough to make predictions, especially about the future.”
- Yogi Berra
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I write about leadership in business and life. I am a certified M&A Specialist and Leadership coach. My perspectives are based on my 40+ year career working with leaders from around the world at more than 100 companies.
