When faced with unprecedented uncertainty, we need to find ways to make our predictions more reliable, which assumes understanding the
difference between risk and uncertainty. Companies that can make this
distinction usually perform better than others. In practical terms, they are
more capable of narrowing the gap between plans and reality and can tolerate
uncertainty with greater ease.
So what is the difference between risk and uncertainty?
On the basis of risk, you can decide whether or not to take a gamble. In the realm of uncertainty, though, it’s much harder to make decisions. The terms risk and uncertainty are as frequently mixed up as cappuccino and latte macchiato – with much graver consequences. You can make calculations with risk, but not with uncertainty. The 300-year-old science of risk is called statistics. A host of professors deal with it, but not a single textbook exists on the subject of uncertainty. Because of this, we try to squeeze ambiguity into risk categories, but it doesn't really fit.'
(‘The Art of Thinking Clearly’, Rolf Dobelli)
Even if we learn how to differentiate between risk and uncertainty we still need to transform this understanding into business decisions. To do that, we need to also acknowledge the existence of self-induced uncertainties and learn how to 'read' them. It is about discovery of changes in interactions between people and processes when things don't work as expected.
In aviation, this comes through Reality Check and Opportunity Scan
techniques described in the second edition of my book 'Beyond Airline Disruptions Thinking And Managing Anew'.
Grasping this knowledge at times of growing self-induced uncertainty can make the difference between business survival and failure.
Let’s spend some time to rethink the way we work and start doing the rework.
Let’s spend some time to rethink the way we work and start doing the rework.
We should aim at creating a systemic framework for decision making that ensures less risky and a more certain future.
