Join Mike Figliuolo for an in-depth discussion in this video Dealing with completely unpredictable outcomes, part of Decision-Making Strategies.
- The fourth state of ambiguity you might find yourself in is one with completely unpredictable outcomes. Let's look at a situation where I give you a card and it's the seven of clubs, and then I give you another card and it's the queen of diamonds, the next card is an UNO card, and then I give you a joker from a deck of cards, the next card I give you is a credit card, then a greeting card, then a baseball card, then a SIM card, it's not clear what the next outcome is going to be. You have no way to predict what the next card is that I'm going to give you, it's impossible.
Even with a lot more information you would be hard pressed to even construct a scenario where you would be able to figure out what that card is going to be. Let's imagine I said, "Hey, would you bet "a hundred dollars on betting what that next card is?" Would you take that bet? What if I told you, you could win a thousand dollars on that bet, or a hundred thousand, or a million, at what point do you take that bet? The uncertainty is too high in this situation, and the value of incremental information is going to be extremely high, so when you're facing situations with complete ambiguity the value of spending the time to gather additional data, construct possible scenarios, is going to help you make a much better decision.
Sometimes the way you can eliminate some of that ambiguity is to actually move to a phased decision making approach, where you make a decision, you gather some additional data, and you make another decision, so breaking those big decisions down into smaller ones will reduce that risk. Let me offer an example of what this might look like. Let's say your company is based in California, and you're looking at expanding your service offerings, so you decide you're going to expand into India, now there's a lot of ambiguity in this situation.
First, you don't know how customers are going to receive your new service. Your service has never been offered in that geography before. You have no idea how your competitors are going to react. There may be regulators who are going to govern how your service is offered, and you have no idea how those regulators are going to decide whether your service is offered or not. You don't know what the employee capabilities are in that market. Is there a talent pool that can actually deliver your service? You may be unsure about the economic environment long term in the Indian market.
As you look at this very large decision there are so many sources of ambiguity that you are really facing a situation with completely unpredictable outcomes. Given all that uncertainty you face it's critical that you reduce that ambiguity, so what are some ways that you could do that? Well you could run a small pilot of your service in the Indian market to gage true consumer receptivity to your service. You may have conversations with regulators, and ask them what decisions might they make about your service, what regulations do they plan on putting in place.
You could look at your competitors, and see how their offerings fair in the Indian market. Maybe pick up your competitors annual report, and look at their strategic plan. See what reactions have been in the past when they've had somebody go head to head with one of their service offerings. You could look at the Indian economic forecast, and understand what are some of the trends that could affect your service positively or negatively. The value of gathering all this additional information as you go to make a major decision of entering a new geography is critical.
If you find yourself in a situation of complete ambiguity, complete uncertainty, remember the most important thing you can do is gather additional information in order to reduce that ambiguity, which is going to reduce the ultimate risk that you face when you make your decision.
- Choosing a decision-making style
- Involving stakeholders
- Managing ambiguity and outcomes
- Reducing risk
- Communicating and executing decisions
- Measuring the results of decisions