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Tackling Uncertainty Featured Pattern: P1470 March 2020

Author: Martin Schwirn (Send us feedback.)

Decision makers are struggling with how to address uncertainties about future commercial environments, but various potential approaches exist.

Abstracts in this Pattern:

Wall Street Journal business columnist John D. Stoll claims that "businesspeople are haunted, and sometimes paralyzed, by uncertainty. This monster, however, can be a friend." His article summarizes some considerations about how to tackle uncertainty. For example, climate scientist Judith Curry highlights that instead of becoming paralyzed, decision makers should take small steps toward possible solutions to climate change. Stoll argues that a similar attitude works for decision makers in business environments. Berkshire Hathaway (Omaha, Nebraska) chairman and CEO Warren Buffett points out that many decision makers should not worry about uncertainty as much as they do and highlights that worthwhile projects will be worth investing in even under uncertainty.

In a recent article, PwC US (PricewaterhouseCoopers International; London, England) principals Sundar Subramanian and Anand Rao—who leads PricewaterhouseCoopers International's global artificial-intelligence efforts—suggest building "disruptive strategic flywheels" as a source of stabilization. They view AI, deep learning, and gaming solutions as tools for gaining a handle on disruptive developments. The authors discuss a case in which an auto manufacturer asked a consulting firm to gauge its competitive position in relation to a specific type of start-up. The consulting firm created a game that pitted the automaker against its competitors, and an AI system used data from the game to run numerous simulations that "suggested many strategic bets, option-value bets, and 'no-regret strategies,' or moves that made strategic and financial sense in a multitude of situations."

An approach to understanding the uncertainties of the future that Future Today Institute (New York, New York) founder and CEO Amy Webb suggests makes use of tools that are similar to Scan™. Her recommendation is that the president of the United States should create a "Strategic Foresight Office"—a government agency that analyzes probable futures by continually assessing sources of change, identifying emerging trends, and tracking the direction and speed of changes. Webb's concern is that although existing agencies "each marshal some aspect of a strategic foresight function, there is no entity charged to focus on strategic foresight across domains equipped with the resources to undertake a comprehensive approach."