- March 30, 2020
Expectations are a fundamental factor in spending and investment decisions and, as we have seen, absence of expectations can be even more damaging to economic activity than negative ones. Events that are totally unprecedented, as we are seeing today, have massive effects on a global scale. Although rare, it is on this occasion that businesses worldwide are facing one universal challenge – uncertainty.
Uncertainty refers to situations with unknown variables, information and outcomes. They are difficult to predict and even more difficult to prepare for. However, Nassim Nicholas Taleb describes events such as these as ‘black swans’ – while unpredictable and unlikely, they have a severe impact, and there is always one around the corner, which stresses the importance of preparing for the improbable.
In business today, management prepares for many risks or situations of uncertainty. These can occur during contract negotiations, supply chain partnerships, recruitment or changes in products or distribution channels. Risk preparation tends to be around those we can easily foresee – internal risks can be calculated and controlled, and effects can be mitigated through taking preventive action. However, external factors, like the pandemic we are facing now, are far less easily foreseen and almost impossible to control.
So now we are here, the black swan has arrived. What do we do now?
As businesses, there is a need for transparency – both with employees and clients. We have not been here before, and as the definition of uncertainty suggests – no one has all the information or knowledge of what the outcome will be. The external is out of our control, however there is extreme importance on focusing control where we can: on the internal factors.
This pandemic has caused a major shift in the way companies operate. We are seeing huge movement towards remote working as a key outcome of this. Long before this pandemic arrived, there has been debate around the effectiveness of remote working, but now it is no longer a question of whether to do it, but how to do it well.
Behaviours will need to evolve in line with this shift in working pattern, the importance of active management is stressed even further in the case of dealing with a remote workforce. Regular check-ins with staff are required, not only to confirm they are still on track for key deliverables, but also to ensure staff wellbeing. Managers are responsible for making sure employees remain engaged and motivated, and that productivity is being maintained. Flexibility within the workforce, and businesses ability to adapt and keep up with changing trends will be tested, and ultimately will be the deciding factor on how the business fares in these times.
As Taleb concludes, the fundamental takeaway from this is that although we may not be able to predict these events, what we can do to prepare for them is build robustness. Businesses must learn from this and, whilst the current situation is unprecedented, it is important to incorporate flexibility and adaptability into their planning if they’re to withstand, not just the current situation, but the inevitable turbulent times that are ahead.