February 2016 | Nano Tools | Leadership
Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.
Contributor: B. Cade Massey, PhD, Practice Professor, Operations and Information Management, The Wharton School
Improve your success rate on risky decisions by accepting uncertainty and adapting your decisions to the “logic of chance.”
“Uncertainty is an uncomfortable position. But certainty is an absurd one.”
Most leaders believe their environment is more like a math problem than a lottery. Gather enough data, understand the formula, study how it’s been done before, and you get the right answer. The reality is, though, that leadership requires constant judgment under uncertainty. Whenever we estimate the timing and cost of a project, decide to merge with or acquire another company, or choose an investment vehicle, we need to factor in the role of chance: there are some variables we just can’t account for.
Why, then, do we neglect chance, or pretend it’s not there? Most people simply don’t believe they can do anything about it. But they’re wrong. There is, in fact, a lot we can — and should — do.
Start by acknowledging that there will almost always be some degree of uncertainty, however psychologically difficult that is to accept. Those who don’t acknowledge this reality believe every decision requires lots of data, including information about how the issue at hand was handled in the past. That approach can lead to overconfidence and can often miss important risk-management opportunities. Many situations instead call for another kind of logic: the logic of chance. This logic recognizes that there is no one “knowable” answer. When you adapt your decisions to the logic of chance, they will improve. Below are five active strategies to help you make that adaptation.
Nano Tools for Leaders® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director is Professor John Paul MacDuffie, Professor of Management at the Wharton School and Director of the Program on Vehicle and Mobility Innovation (PVMI) at Wharton’s Mack Institute for Innovation Management.
Subscribe to the Wharton@Work RSS Feed