organizational success, failure and uncertainty

Many important problems involve decision making under uncertainty - that is, choosing actions based on often imperfect observations, with unknown outcomes.

Thoughts from an online course

Uncertainty and risk are not the same thing. Whereas uncertainty deals with possible outcomes that are unknown, risk is a certain type of uncertainty that involves the real possibility of loss.

Risks can be more comprehensively accounted for than uncertainty.

Uncertainty is a state of having limited knowledge of current conditions or future outcomes. It is a major component of risk, which involves the likelihood and scale of negative consequences. Managers often deal with uncertainty in their work; to minimize the risk that their decisions will lead to undesired outcomes, they must develop the skills and judgment necessary for reducing this uncertainty. Managing uncertainty and risk also involves mitigating or even removing things that inhibit effective decision-making or adversely affect performance.

One cause of uncertainty is proximity: things that are about to happen are easier to estimate than those further out in the future. One approach to dealing with uncertainty is to put off decisions until data become more accessible and reliable. Of course, delaying some decisions can bring its own set of risks, especially when the potential negative consequences of waiting are great.


Items you might read to prepare your thinking

Though you don't have to read them now, you might want to read them after the session, or at some relevant future time.

  1. Three Proven Ways To Navigate Uncertainty by Alison Randel in The Ready, 28 July 2016
  2. 6 Strategies For Dealing With Uncertainty In Business by Don Peppers in Fast Company, 13 March 2012
  3. Failing by Design by Rita McGrath in The Harvard Business Review, April 2011

We will have a group exercise in class

Each group will be presented with a problem to solve using both the materials provided and, if you wish, any other techological tool at your disposal. The specific task for each group will be presented along with the materials.