Dealing with uncertainty

As a manager in a technical field, I always have to deal with a great amount of uncertainty. Most questions cannot be answered with certainty: Will a technology still be relevant in 5 years? Which software architecture will fulfil future requirements? Which developer should we hire? Which project should get priority?

I’ve identified several patterns and algorithms to deal with this uncertainty and would like to present them here.

the visionary goal

It becomes easier to make decisions under uncertainty, if you have a visionary goal to measure your decisions against. You can always ask: “Which of the alternatives will bring me the furthest with regards to my visionary goal?”

the compass direction

It can be confusing, when you don’t know which way to go in order to reach a goal. What helps is developing a compass direction. Identify a direction that will “most likely” bring you forward and try out going in this direction. Then stop, reflect, learn and adapt. You don’t need to stick to your plan, just start moving.

the metaphor

You’ve probably heard people say things like: “this is like…”. Using a metaphor can help you find new solutions and new perspectives. When dealing with an uncertain situation, try to find a metaphor and ask yourself: “What would one do in the metaphoric situation?”

the rule of thumb

This is actually one of the most important techniques for dealing with uncertainties. Having good rules of thumb (or “heuristics”). For most uncertain situations there are some heuristics that can be applied easily. The difficult thing here is to find them. So how do you go about that: You look for patterns and abstractions, make experiments and generalise. Question your own viewpoints: Observe, think and test.

the range of uncertainty

When somebody asks you for your opinion, you don’t always need to nail it down to a single number or a single statement. You can use ranges like: “I think this costs between 20.000 € and 100.000 €”. Don’t be shy to use large ranges.

the probability estimation

Similar to the previous section, you can also use probabilities. I often say things like: “I think it’s 20% probable that he will accept the offer.” Of course I cannot know (not even afterwards), if the probability was correct, but it gives orientation and allows a discussion about the uncertainty.

the cowboy business case

Using business cases is not a new thing. But they easily create a fake rationality. Making a statements like “I think we can reduce our cost about 20% if we make this investment of about 100.000 €” without backing it up with data can be just as valuable. It’s like a cowboy shooting from the hip. It’s just a rough estimation, it’s like saying “hey this will definitely be profitable, let’s do it”. Of course you need to make sure that your audience understands this uncertainty.

Building large spreadsheets will not always reduce the uncertainty. They just might give you a better feeling (and less time).

the order of magnitude

This is especially valuable when estimating costs. Immediately Saying “this costs 5 digits” or “6 digits” is often more valuable to a manager than using two days for preparing an estimation that is precise to the hundreds position.

the risk premium

Every decision contains risk. What should be taken into account is that you need to be rewarded for risk. When you take an alternative with higher uncertainty or risk, the benefits should also be higher. This is called the risk premium. The higher the risk, the higher the extra reward. Sometimes the risk premium is something you can define on your own (eg. by adding a risk premium to your calculation).

the explicit risk strategy

A lot of risks can be identified and mitigated. Having a small plan for your identified risks usually pays off. This is actually something you can read in the project risk management literature, so I recommend looking into it.

the ace in the hole

Try to create an option that is always available if things go really wrong. It can be something like: “If it doesn’t work out, I can still do it on my own.” or “If it fails, I simply give it to developer XY, he’s going to solve it.”

The ace in the hole will give you peace of mind when dealing with uncertainty. But don’t mix it up with an explicit strategy. The ace in the hole has to be something that covers multiple risks at once or even fatal failures.

the chaos management capacity

Whatever you do to prevent it: Chaos will eventually happen. Instead of trying to avoid it at all costs, learn to manage it and to survive in chaos. This can actually be learned (also by applying the here described principles).

the worst-case analysis

Bringing the worst things that can happen to your mind can also help you making the right decisions. You can simply rule out alternatives with an unacceptable worst-case. And you can use the next section for dealing with the remaining worst-case scenarios.

the acceptance of failure

Regardless of what you do to mitigate risk and reduce uncertainty: you will face failure sometimes. I have learned to accept that in advance (this is actually a stoic technique of “negative visualisation”). I’ve also noticed that this acceptance is a necessary emotional skill when dealing with uncertainty. People that don’t have that skill usually avoid uncertain situations which leads to a certain paralysis.

the “whatever happens” mindset

Building upon the previous section I want to offer a mindset: “Whatever happens, I can deal with it.” This is an extremely helpful advice I got from Susan Jeffers’ “Feel the fear and do it anyway”. She writes that every single fear is actually based on the more basic fear of “not being able to deal with it”. When you recognize that that you always will somehow deal with it, the fear cannot hold you back anymore.