Need to manage uncertainty? This requires recognition of the type uncertainty you are experiencing and creation of an associated action plan. Here are the four types of uncertainty identified by my Six State Logic framework and recommendations for how to manage each.
First is Knowledge Uncertainty which makes it impossible to justify any specific action. Proof of Knowledge Uncertainty is required to ensure process consistency. The only acceptable management plan for Knowledge Uncertainty is right-sized resource allocation to search for actionable knowledge.
Second is Action Uncertainty. This is when actions can’t be justified because of evident conflicting facts. The management plan is to first verify the facts are known and not time dependent or otherwise uncertain. Next, consensus teamwork and typically financial analysis is used to make difficult decisions.
Third is Pessimistic Uncertainty, which is a combination of Known Negative facts and Knowledge Uncertainty. Both characteristics must be proven and a threshold set for the extent of uncertainty that management is willing to accept to implement a negative action plan like terminating a project.
Pessimism is a human emotion that affects judgement. Teams must not overemphasize negative facts to avoid taking unjustified negative actions. Teams must also not overemphasize Knowledge Uncertainty to avoid unnecessary delay in taking justified negative actions.
Fourth is Optimistic Uncertainty, which is a combination of Known Positive facts and Knowledge Uncertainty. Like pessimism, both characteristics must be proven and thresholds set for the extent of uncertainty that management is willing to accept to justify implementing a positive action like investment.
Optimism is also a human emotion that can cause teams to mistakenly overemphasize the need for positive actions or to try to avoid taking justified positive actions. The making of overly optimistic or pessimistic decisions can also result in an equally unjustified and innovation capacity killing influence on future decisions.
Everything said above should be familiar to experienced managers. The new emphasis is the use of universal Six State Logic criteria to characterize uncertainty and identification of common uncertainty management challenges that an increasing number of stakeholders can actively help avoid.
The result is a more consistent, effective, efficient and universally applicable uncertainty management process. This engages more people in the effort of making better decisions and improves innovation capacity by reducing the uncertainty management anxiety associated with all truly new ideas like, for example, Six State Logic.
Michael Klasen, PhD
+1 (503) 442 6524