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The Management of Uncertainty Published: Sunday, November 11, 2001 By: Dr. Manuel Ángel Morales

Consistent with a profound base of research, our fundamental claim about conventional organizations, managers and administrators is that they will avoid high risk decisions. The traditional logic is that by acting in such a way they are reducing uncertainty. The essential idea is that seldom does a power elite wants to expose itself to high risk or failure potentials unless they are forced to do so. Thus the high risk decisions are broken down into smaller risk decisions, whenever possible. This is what my great teacher Aaron Wilddavsky labeled the policy of incrementalism for mitigating against breakthrough, framebreaking, radical innovation ventures.

Again, the traditional organizational understanding has been that themore the decision can be incrementalized, the more the power elite can reduce risk, cost and discontinuity. This explains why examples of high risk, high cost and discontinuity decisions are rare and why the strategy of two steps forward and one step backward is so common. Some organizations will make large commitments for the purchase of technological infrastructure, but only after having considerable experience with prototype. Others produce products, services or change their operational mode on a small scale before moving to a large scale undertaking. Market research is used conservatively and extensively to predict levels of acceptability of critical decisions.

The problem or challenge arises when market, environmental and/or social conditions have drastically changed as to require the same proportional changes by respective decision makings systems within organizations…

Mayor exceptions are organizations or institutions operating within mass contexts or markets or large communities, or business junctures requiring high initial investment. One can not start small in the manufacture of a car or a technical product, as it is also the case with large scale products. In the governmental sector the best examples are in health, education, public security, crisis or emergency management.

There are multi-organizational systems that specialize in taking high risk decisions more often than others. In these organizations the diversity of products and services, plus the robust financial base allows them to reduce somewhat the cost of any potential failure.

But one thing is for sure, organizational learning will result from the success (and sometimes failure) of having taken a high risk decision that works or not. The prudent point is that social systems, organizations and institutions in general have to create and experiment with strategies for continuously identifying breakthrough opportunities in an age of great uncertainty and ambiguity. Here information and knowledge acquisition is fundamental. The uncertainty generally comes from the outside world of the organizations. The creative, innovative and frame breaking response has to come from within or from a combination of these two dimensions.

Leadership is about intelligent, fast, creative and innovative actions based on ideas that for some reason have been overlook. The challenge is for thinking and acting in environments that are fast-paced, turbulent in nature and highly uncertain. The new game is how to proceed in an unpredictable world.

 


Copyright 2001 QBS, Inc.
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