Situational Notion of Uncertainty and Risk


In an earlier BLOG post I explored my growth towards an OD centric view of uncertainty & risk (U&R). In this post I want to expand on the notion of the “situational” concept in U&R.

In that post I described macabrely humorous story of two hunters running away from a mad hungry bear and one noted that they couldn’t possibly outrun the bear. The second hunter suggested that he only needed to be able to outrun him.

This store captures the situation notion of U&R. An article in 31 January, 2011 National Post page FP4 titled  “Double Reality Check: Do you have what it takes to be a franchisee?” suggest another aspect of the situational nature of U&R. The article’s author (Derek Sankey) suggest that we can usefully categorize franchisees into 3 archetypes: Big Timers, Independent Franchisees, and Small Shop Franchisees. Briefly the attributes of each type is:

Big Timers:

  • able to handle larger franchises
  • typically experienced running franchises or owning/managing a business
  • superior management and leadership skills
  • assertive, confident, making decisions and conflict management
  • willing to share success and adhere to rules, have been “around the block” a few times
  • willing to take calculated risks
  • hold community values

Independent Franchisees:

  • wants operational flexibility
  • needs to be able to work on their own, okay with “guidelines” but needs a “say” on some things
  • well suited for newly developed franchises where they are able to contribute innovative ideas
  • need to be able to express their innovative nature
  • positive mindset
  • can manage others, more inclined to work with fewer well-selected employees
  • willing to take risks, adapts easily to changes

Small Shop Franchisees:

  • likes being in business
  • wants to reduce risk as much as possible
  • enjoys structure and format from parent organization
  • willing to adhere to rules
  • less willing to share success
  • not as self-reliant and above types
  • best suited for safe well established franchises

The situational nature is the mindset towards business risk, according to the above archetypes they would each view a potential investment opportunity with very distinct approaches and interest.

I suspect the three risk adverse/openness attributes described above can be found throughout the population at large. And to the degree each of us is better described by one type of U&R orientation or other will predispose us to certain choices over others and certain concerns over others.

The key here is the same U&R event (an investment opportunity) presents 3 different sense of U&R concern. Hence my earlier observation in the aforementioned post is that U&R has meaning only if someone cares. Added to this is the additional notion that what specifically we care about determines where and whether we see U&R. Our values, preferences, biases, etc. are critical to ascertaining U&R in our personal and organizational lives. Note: I am not in any way commenting on the metaphysical nature of the event itself (I agree at the outset – it is what it is regardless of how we choose to view it) only the meaning that it has for any one of us.

Implications for TM include:

  • What U&R attentiveness is required within a role design (what does the role have to worry about)?
  • What personal U&R attributes are necessary in any role position if role performance is to attained?
  • what personal U&R attributes would be dysfunctional (role performance)?
  • Considering role and position U&R issues and attributes can be critical to performance success.

Comments and observations?

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About 123stilllearning456

As a management consultant I am passionately interested in talent management and risk/uncertainty issues. In the area of talent management I propose that we seek strategies that look beyond the staffing/employee centric frames of reference. I have been frustrated at the "closing down on possibilities" by these more conventional staffing/employee centric approaches. I have been impressed where people have found systematic solutions to their talent management issues by going beyond the conventional approaches. In the area of risk and uncertainty, I am interested in making this topic relevant to more normal decision making situations. My conceptual foundation is to use the micro-economist's fixed/variable cost theme. I also think it is important to look at these issues for people through their emotional and psychological lens. As a premise I think risk and uncertainty only exist where there is a person who cares about possible events and its consequences. Hence, risk and uncertainty are social based concepts (no sentience, no risk and uncertainty). A major influence on my thinking in this area is Nassim Taleb of "Black Swan" fame. This BLOG provides me with an opportunity to express my thoughts on topics that interest me. As this is an online diary, content is more important to me than polish. I apologize if this distracts from readers' enjoyment and learning. Still I find this a useful way to live up to my namesake, learn more from others and hopefully provoke creative thoughts and ideas in others.
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