How To Lead In Uncertain Times

Uncertainty is a permanent part of the leadership landscape.  It never goes away.  Andy Stanley

We all want control of our lives especially in business where our decisions can impact thousands of people from team members to employees, from shareholders to customers.

Control gives us certainty, and certainty gives us confidence the life-blood of successful business.

But uncertainty can dent our confidence.  And uncertainty is constantly with us perhaps in the form of a new entrant disrupting our market, an unexpected cash-flow challenge, a key supplier going bust, poorly executed strategy, a business turnaround, an unwelcome takeover bid or a new CEO joining.  In the UK today, Brexit has created a tidal wave of uncertainty.

In this article I share thoughts on how to lead in uncertain times, including the psychological consequences of uncertainty and ways to manage them, and six guidelines to help you better lead in these times.

___________

Feeling uncertain is an uncomfortable feeling because it threatens our sense of control. When we feel out of control, the fight-flight mechanism is in full and constant throttle, which is not only uncomfortable in itself, but can manifest as constant anxiety and worry.  Some make the distinction between fear as a reasonable response to a real threat, and anxiety, a concern about a potential threat. As such anxiety is more future oriented -- what's going to happen. While some aspects of fear, e.g. an identifiable challenge, can motivate and even elevate performance, lack of control and uncertainty can paralyse it.

In many ways our feeling of control is often illusory.  We may think that we have it all under control while at the same the time realizing there are a host of unpredictable and unexpected events, anything from unusually severe weather to a seismic political event, that can change the equation in a heartbeat.

In my recent article, “How you deal with anxiety in the boardroom” I outlined the concept of defense mechanisms, our characteristic ways of dealing with high levels of emotion and stress.  Each ‘defense’ if not tackled can impact the business. Reading this earlier article will allow you to understand how you and your colleagues are likely to react to anxiety, and importantly how you can adopt a healthier response.

In a 2009 article on uncertainty, Bar-Anan, Wilson and Gilbert provide evidence that uncertainty exaggerates emotional reactions to negative events and propose it can increase emotions around a positive situation (for example, watching a movie where the suspense builds). In short, uncertainty is an emotional amplifier. When there is uncertainty, know that emotions are going to be ramped-up, so use the tools mentioned earlier to manage yours and others' heightened emotions.

Taking a positive and adaptive approach to uncertainty requires courage because you have to rise above the natural caution inherent in human thinking. Research in cognitive neuroscience has shown that we have numerous biases, which inherently make us overvalue certain aspects of a situation. We know that fear and fear of loss makes us unnecessarily cautious compared to the pure logic of the situation. In the classic experiments on loss aversion, people are more than twice as likely to act conservatively to protect losing $100 as they are to act riskily to win $100. Fear of loss makes us ultra cautious, often more cautious than the logic of the situation demands. For example, a recent article on Yahoo financial news on managing uncertainty in the face of the Brexit, noted:

"The Orange Book of CEO economic comments, published by Bloomberg, shows that peaking mentions of “uncertainty”—including during the 2012 (US) fiscal cliff debate—aligned with a capital expenditure slowdown."

With this quote in mind, I just reviewed the Financial Times UK digital edition.  The word “uncertainty” appears 342 times in the week after the Brexit referendum result was announced, but in the same period in 2015 only 50 times.  In effect the mindset is being molded to expect the worse and avoid spending, and as Mark Carney, Governor of the Bank of England in his speech on 30th June 2016 stated "uncertainty... risked causing businesses and households to delay spending and investment, hitting demand and employment levels.”

So, in facing uncertainty a leader needs the courage not to be overwhelmed by defensiveness while at the same time being realistic. That's one of the problems of uncertainty; the criteria for what is realistic are themselves changing and subject to uncertainty.

As an individual, the leader needs to embrace the challenge and not allow fear-mongering and doubt make an uncertain situation worse. Uncertainty isn't disaster although it can often feel like that. A disaster is a known situation in which our knowledge can at least give us a direction and comfort in our decision-making. If disaster is a lightning strike, uncertainty is thick fog.  However, the human mind can take its need for control and turn the unknown into a disaster if we're not careful. In the current Brexit crisis it's not difficult to see how anxiety might permeate all levels of an organisation if uncertainty introduces the spectre of lost jobs, reduced profits and pay and, maybe worst of all, massive organizational change.

Reining in anxiety at both an individual, team and organisational level is a prime goal for any leader.  The more stressed and anxious we become the worse our decision-making and mindset is likely to be.

The 6 Cs of leading through uncertainty:

Professor Martha Maznevski of IMD provides useful guidelines for managing uncertainty. She talks about the 3 Cs.

1.  Clarity: In the fog of uncertainty it is easy to lose sight of what you do know and its important to reaffirm these:  your mission, values, and goals. They are the foundation on which an adaptive response is based.

2.  Curiosity: Uncertainty is a time to encourage the team to challenge existing ideas and ways of operating. 

3.  Courage: It is important for a leader to demonstrate courage and exude confidence that the team will emerge stronger as a result of rising to the challenge.

In addition I would add 3 more Cs.

4.  Composure: Managing the anxiety levels and finding a healthy way to counterbalance these feelings.

5.  Commitment: To ensure your senior leadership team can regulate their anxiety and operate at optimal levels through effective development initiatives.  If you don’t do this then dysfunctions can creep in as my HBR featured research has shown.

6.  Confidence: Provide reassurance that you and the top team have what it takes to deal with the uncertainty.  To quote Mark Carney again, “To emerge from an uncertain world with confidence, people and businesses need a fixed point by which to navigate.”  In your business that fixed point needs to be you and your senior leadership team.

Managing individual and collective anxiety and pursuing a realistic, positive and adaptive approach will not only reassure team members, stakeholders and customers, it's likely to result in innovative responses to the uncertainty. And today's uncertainty can morph into tomorrow's status quo. In fact uncertainty is an opportunity to evolve to a higher level.

"The quest for certainty blocks the search for meaning. Uncertainty is the very condition to impel man to unfold his powers." -- Erich Fromm


______________

Top Team Effectiveness

Culture Change

Transformational Executive Coaching

Conference Keynotes and Seminars