Patrick Nelson, LEADERSHIP AND STRATEGY SPEAKER
Not being able to predict with any certainty important elements of our short-term future is the new normal. And it’s is playing havoc with business (as usual)!
Are we already in a global recession? Will we be by Q2 or Q3? Will North Korea’s Kim Jong-un launch a missile this year? Will India and Pakistan kick-off into war? Will Trump be impeached, win a Nobel Peace Prize or another 4 year term? Will millions of migrants be allowed to stay with their families or be kicked out of their homes? Will the Conservative Party and the Labour Party survive 2019 intact? Will the Republicans or Democrats implode before next years elections? Will there be huge tariffs on major manufacturing parts and raw materials? Will Brexit be hard, soft or disappear? Will there by deadly heatwaves, fires, and tornados this summer? Is the writing in the wall for our profession or business model given AI, automation and blockchain? Will any Brit be able to travel to Spain or France this year for their vacation?
More personally, will you get sick this year and face unaffordable medical costs? 62% of US citizens are one medical bill away from disaster and the enormous costs of ill-health is the greatest cause of bankruptcy in the USA.Will you lose your job and/or face the stagnation that has made real wages drop for most people over the last decade? For the millions in the “precariat“—those with zero-hour contracts, sole trader or freelance set-ups, or Uber-style gig economy livelihoods— not knowing how one will pay one’s bill from month to month is just the way things are. Such quotidian matters are utterly uncertain as the human body is an organism, and not an algorithm: acute ill-health is utterly unpredictable, as I found out recently when I broke my thumb the night before giving a keynote speech and then running a 2-day leadership program!
As economist Frank H. Knight made clear in the 1920s: this kind of uncertainty is not risk. With risk—business and personal—the probability of future events occurring can be estimated with some degree of certainty. Risks are known unknowns that can be mitigated against and planned for. Potential adverse effects can be minimized by good strategies and tactics. Uncertainties are unknowable unknowns. No amount of intelligence or data can iron out the complexities and chaos of uncertainty and make things predictable. But some advanced leadership and innovation practices can help us engage with unknowability and use it to innovate.
What this means is—and this is important!—no genius economist, poker player, data analyst, Silicon Valley coder, Nobel-Prize winning scientist, Google AI algorithm or any other maths-driven expert can diminish the challenges of uncertainty to every human being. So every person in a leadership position has to make important decisions, more or less daily, against a background of hundreds of vastly complex uncertainties that could make the difference between great success or massive failure.
What makes this perhaps the greatest challenge facing today’s business professionals is that our brains evolved to deal with making simple decisions during long periods of relative ecological and cultural stability. The environment did not change much between generations. We worked out which berries were toxic, learnt how to stand upright, and eventually became Homo sapiens sapiens without a great deal changing in our external reality (bar the odd Ice Age). But we now have to cope with a very different geological era, named after a species for the first time—the Anthropocene—where major environmental changes occur year to year (and even month to month) and reality is profoundly complex. In other words, the existential risks on our damaged planet and the exponential technologies of our digital networks have to be dealt with using our Neolithic neurons. We need to consciously upgrade them now—something that I have committed my life’s work to cracking.
These neurons have evolved to crave certainty and they feel real pain with uncertainty: neurologically, uncertainty is agony and the pain of it lights up similar brain circuits to those that activate with physical pain. In recents experiments, people are more stressed out by the threat of an electric shock (that may or may not be given) than by knowing for sure they will be zapped. Most of us would rather know for certain that we’re going to encounter an issue than to not be able to predict whether it will happen at all. This is why rats prefer predictable pain than uncertain pain; and those that choose the predictable electric shock develop fewer stomach ulcers because they are less stressed. In fact, all stress might well be caused by the brains inability to predict effectively. Merely expecting uncertain but potentially “bad” news increases our sensitivity to stimuli that aren’t even painful in themselves.
We are wired to avoid uncertainty like the plague. So most of us experience the fast-paced VUCA (volatile, uncertain, complex, ambiguous) world as a constant painful threat. Unless we are fully awake and aware and so able to tolerate uncertainty well, radical and relentless uncertainty triggers knee-jerk reactions—cancel that leadership program, stop hiring for growth, freeze the innovation fund, (forget the external keynote speaker!)—not creative responses… just at the point that we need to adapt with agility most to stay in tune with the fast-changing environment our business must survive/thrive within. If we can stay tuned to “unexpected uncertainty” and not become too stressed out and reactive with it, we can use it to activate a part of our brain—the locus coeruleu?—that switches us into strategic problem-solving mode.
However, when faced with uncertainty, it often seems easier to retreat into things we can control, like spreadsheets and plans. We can be seduced to hide behind the great 20th Century illusion that numbers about the future are any less uncertain than ideas about it are. In fact, the management “science” we inherited from the Industrial Age emerged to minimize inefficiencies and maximize outputs in periods of stability and predictability. Our management processes simply cannot cope with radical unknowability. This is why so many businesses, and so many leaders, are paralyzed by “black swan” events like Brexit or Trump’s Trade Wars.
“Purpose… is your greatest anchor in the tsunami of these uncertain times.”
However, look deeper and with uncertainty comes radical possibility. As systems dissemble, and many companies hunker down, halt investments and freeze innovation efforts, breakthroughs can occur much more frequently (as can breakdowns). So as we are all leaders that have to deal with relentless uncertainty, we can use this reality. We can always be poised to seize the opportunities on offer with agility, velocity and commitment, diversifying our offer to serve emerging needs and deal with potential disaster.
To help, here are some profoundly powerful brain-based yet wisdom-wired techniques?—?all of them teachable, learnable, and so master-able— for leading with creativity and confidence in an uncertain world:
1) Find Purpose Fast And Ground Your Decisions In it
Purpose – why you lead and why your business exists – is your greatest anchor in the tsunami of these uncertain times. Purpose is something that can be defined, refined, and unfolded by leaders as part of our deepest reflections on the meaning of life, leadership, and enterprise. This is not just a vague cause or exciting mission but a compelling way to serve society; something rooted in your very understanding of your individual and collective existence. Purpose is how you contribute to solving problems that really matter in our damaged and disrupted world, full of global risks to the existence of our species.
As detailed in this book: Purpose has been show to reduce sleep disturbance and cortisol levels (the corrosive stress hormone), generate a faster brain processing speed, more accurate memory and a 400% increase in being engagement at work. Purpose is a commitment as much as a calling and it helps us keep going, step after step, with clarity and resolve no matter how VUCA the VUCA world gets. As purpose stays consistent throughout our life, albeit it shifting and growing as we expand our potential, we can ground all our decisions in our purpose, especially those that need to be made without perfect data: i.e. all of them!
2) Stay Open Even When You Want to Shut Down the Most
It is tempting in crazy and chaotic times to shut down and withdraw from decision making and noise. This the the flight or freeze stress response to perceived threats. But if we do as the Stoics suggested, and stay open to possibilities even when we want to hide, it allows us to metabolize every change in the environment into value. This is the core to the master of transformational leadership.
Openness to experience, one of the Big 5 Personality Traits, has been linked to innovativeness and life fulfilment. As written in Scientific American: “Openness, which measures cognitive flexibility and the willingness to entertain novel ideas, has emerged as a lifelong protective factor. The linchpin seems to be the creativity associated with the personality trait?—?creative thinking reduces stress and keeps the brain healthy.”
As I share in my book Switch On, on personal transformation: everything is workable. Everything can be used for growth as a leader and as a business. This is why the Taoists suggest we “think like a mountain”: open, stable, committed. Studies show that effective self-mastery, which lies at the core of my company’s work performing “consciousness upgrades” for transformational leaders, can help people become far less intolerant of uncertainty and be able to stay open to the inherent adaptive possibilities in every uncertain environment.
3) Give Yourself & Your Teams Space, Time & Permission to Reflect
Many recent research studies on creativity show that our brain needs down-time to have breakthrough ideas that can solve unprecedented challenges. If we do not give ourselves time and space to “Reflect and Connect” (the dots), we get locked into repeating old habits and expecting different results rather than engaging with the fast-changing reality on the ground. This can happen at the scale of a global enterprise (Kodak) or national government (Brexit Britain).
It’s not because we aren’t smart that we fail. Its because uncertainty demands wisdom as much as intelligence: the wisdom to let go of old habits and assumptions and embrace new ones as time flows. We need to challenge our cognitive biases and expand our minds in order to deal with uncertain and unknowable curve balls. This can only happen when we have rested our brain and feel psychologically safe enough to speak up with new ideas and insights. We can learn how to cultivate psychological safety in ourselves and others; as well as how to hold space for people to sense, reflect and adapt.
4) Master Forecasting By Practicing Constant Belief Updating
Although most predictions by experts are not successful, research into super-forecaster shows that we can all be trained and developed to be much better at predicting possible futures than those who do not practice. We can use advanced futuring tools like scenario planning and collective sense-making processes to parse weak signals. These help us grapple with uncertainty and wrestle breakthroughs from the jaws of chaos.
Strategists that are trained in how cognitive biases lead to failures and mistakes and then selected for higher than average foresight capabilities are twice as likely to predict events in the future than untrained leaders. As the leading authority on superforecasting, Philip Tetlock, says: “Belief updating is to good forecasting as brushing and flossing is to good dental hygiene. It can be boring, occasionally uncomfortable, but it pays off in the long term.”
Here are key forecasting and futuring techniques to help avoid innovation failures that come from uncertainty vs. risk:
5) Refine Your Intuition to Balance Out The (Imperfect) Data
In a major study, leaders who blend intuition with data out-perform those that use just data alone. The research amongst City of London investment backs demonstrated that “the most successful traders (whose annual income averaged £500,000) were neither the ones who relied entirely on analytics nor the ones who just went with their guts. They focused on a full range of emotions, which they used to judge the value of their intuition.”
Developing wisdom around the “somatic markers” within us, encouraging increased interoceptive awareness of sensations in our viscera, helps us refine our intuition over time so that it becomes ever more useful. But as I explain in more recent book, don’t confused instinct (the fear driven threat response) with genuine intuition. That way leads to disaster.
6) Stick To Routines To Store Precious Cognitive Energy for Adaptation
Dealing with the challenges of uncertainty requires cerebral energy. We need to keep as much energy available to power our brain so it can constantly update its views of the world as new information and intuition comes flows in. If we fritter away our energy on relatively value-less decisions we don’t have the cognitive resources we need to update our beliefs and challenge our own assumptions. We are too tired and overwhelmed to cope and so turn away from the headwinds rather than use them.
So do like Obama did as President when he wore the same tie and suit combo each day of the week: radically reduce the number of less important choices you have to make each day?—?by following stable routines and rhythms?—?so storing up the energy needed to engage with our crazy world and deal with unknowability positively. Routines provide a kind of psychological safety that helps adults and kids alike remain creativity and inspired even when things are challenging.
7) Use Your Vision To Take Charge of Change
Research indicates that having a strong vision the single most important trait for successful entrepreneurship and innovation leadership. As a study co-author says: “Vision is the gift of being able to look forward into the future, of being able to develop a clear path forward in the quest to accomplish lofty goals and ambitions. It’s with vision that we’re inspired to push through our own insecurities, fears, and uncertainties—and ultimately to succeed.” You can use very powerful tools to ensure that you can imagine, craft, and share your vision powerfully in stories (in all types of media).
The research shows that increased sensitivity to uncertainty provides an adaptive edge. “We practice our response to ever-present (though erratic) levels of risk by recognizing when we’re not in control and recruiting every available neuron to regain control.” This is what visionary action does. We generate a positive “reality distortion bubble”?—?what Nobel Prize winning behavioral economist Daniel Kahneman calls “delusional optimism”—that dances with unknowability and unlocks uncertainty.
So sense changes in the environment, reflect on what this means, intuit the next step in context of the best data… and then step forward powerfully. Whilst others freeze you can advance your most ambitious innovations and transformations, leveraging the space that others who are not progressing give us. While everyone else is fearful, it’s an ideal opportunity to invest in the next game-changing idea and breakthrough innovation. As Woody Allen is supposed to have said, 80% of success is showing up (without fear or freezing).
Fortune favors the bold—and never more so than in uncertain times.
This article originally appeared in Switch On Now and has been republished by kind permission of the author.