Dealing with an Uncertain Future
L. Douglas Mault
August 2007In "Competing For The Future,” a detailed study of how companies compete for the future, the authors, G. Hamel and C. Prahalad, asked a wide variety and large number of owners/senior executives the following three questions.
1. What percentage of your time is spent (looking outward) on external rather than internal issues—on understanding, for example, the implications of a particular new technology instead of debating corporate overhead allocations?
2. Of this time spent looking outward, how much do you spend (looking forward) considering how the world may change in five or 10 years rather than worrying about winning the next big contract or responding to a competitor’s pricing move?
3. Of the time devoted to looking outward and forward, how much do you spend working with colleagues to build a deeply shared, well-tested perspective on the future as opposed to a personal and idiosyncratic view?
The answers fall into what Hamel and Prahalad call their "40/30/20 rule.” What this says, and their research supports, is that owners/senior managers spend about 40 percent of their time looking outward. Of that time, about 30 percent is spent looking three or more years into the future. Of that time, about 20 percent is spent building a collective, or in the case of a single proprietor, a reasonable and valid view of the future.
The math then is (40% x 30% x 20% = 2.4%). Although in some companies this figure is less than 1 percent, for most companies let’s call it 3 percent. Let’s also assume the average owner/senior manager works a 50 hour week, 50 weeks per year or 2500 hours. Three percent of 2,500 is 75 hours, or only one and a half weeks per year dealing with the uncertain future.
Owners/senior managers must look to the unknown future and, therefore, by definition, must deal with ambiguity. There seldom seems to be enough time or enough information to make a decision, yet a decision must often be made even in the face of uncertainty. Nevertheless, they often make one or more of the following mistakes.
1. Despite the lack of time and adequate information, decisions must be made. However, and unfortunately, owners/managers too often proceed as though the assumptions on which their earlier decisions were premised were hard facts and not uncertain data.
2. Sometimes the hard facts are there to be used to check on the assumptions, but owners/managers either fail to see the implications and ramifications or ignore the facts. They proceed to make decisions and implement them based on untested assumptions.
3. Companies have all the data to determine that a real opportunity exists but make erroneous or inaccurate assumptions about their ability to plan and execute the plan.
4. Companies have, at one point, all the correct data but fail to keep current with the marketplace or its key components. They assume stasis instead of change; they rely on yesterday’s knowledge in today’s world.
In next month’s article, we’ll take a look at six action items to gain insight into dealing with uncertainty, and in the following month we’ll outline six steps that can be taken to help cope with uncertainty.
About the Author
L. Douglas Mault is president of the Executive Advisory Institute in Portland, Ore. You can reach him by calling (888) 428.3331 or (503) 595.8374, or by sending e-mail to email@example.com.