Uncertainty & Risk Management: Implications of not having an exit strategy in an all or nothing decision?


I read a recent comment that suggested that the officials who set up the European Common Market did not anticipate nor contingently plan for any need to deal with a member exit. So the highly possible exit of Greece is viewed in a calamitous manner as no one understands the implications of the event. Wow! Talk about the uncertainty & risk (U&R) management implications arising of having no plan to deal with foreseeable (even if unlikely) consequential events. In this post I wish to explore the implications of knowingly pursuing a strategy with no Plan B or exit strategy.

History is rich in examples where leaders have committed their people to “do this or die” like choices. Apparently one of the Spanish commanders burned their ships after landing in Central America so there was no possible way to stop exploring the new world. Also, I believe there is a story where a general lead his forces across a river and destroyed  the bridge once they were across. They were committed to go forth and try and successfully conquer those who lay ahead.

The motivation to do everything in ones power to succeed is a consequence of such strategies. Yet, for most of us we are encouraged to not overcommit to the degree that failure means literal or symbolic death. When we make large scale investments in new ventures, at what point and circumstances are we prepared to “walk away” (and be able to do so)?

In business, we sometimes use the “burning platform” agreement to convince and compel people to take on change. This is analogous to the no going back decisions described above.

So U&R management can mean that we totally commit to the new decision, regardless of its possible consequences. Does this mean we necessarily abandon U&R management in these momentous decision situations? No.

A series of questions come to mind some of which are:

  • How do we decide a specific situation warrants such an extreme commitment?
  • What will we do if we find that the choice we have made leads us to another burning platform (or worse)?
  • What are the implications on ongoing U&R management when one of the fundamental “hedging” like options is abandonment is removed from further consideration?
  • What are the moral and ethical implications on the leadership who make such choices and it becomes subsequently clear were poor ones? What does the notion and practice of leadership accountability mean here?
  • etc.

I am actually less troubled by the “burning of bridges” like choices than I am by choices that commit whole  (present and future) populations to potential misery because of the consequences of such choices. So for me it is the fourth question above that is most interesting.

I am troubled by the seeming lack of willingness of leaders who make wide spread impacting “weak”, “deficient”, “clearly inappropriate” decisions to take meaningful responsibility and accountability for them. Unfortunately we seem to all commonly observe leadership behaviours that “would make Mohammed Ali proud” dodging, floating and dancing to avoid acknowledging that they “blew it” and they should atone for it.

Am I suggesting that anything less than always right decisions are acceptable? No. I do suggest that because we live in an U&R like universe we always know that our decisions will subsequently be shown to be deficient. It is how we factor this awareness into our choices (especially the ones that really matter) that is important. Do we have a Plan B that helps us navigate going forward?

If we make decisions that will can dramatically impact others who have little to say in the matter then there is, I would argue a moral principle that is akin to the medical profession “do no harm” is present. At the very least, a principle that we will act to minimize and mediate for any subsequent harm we enabled. We compensate leaders enough that this should be the core principle for their rewards: take the fall if you don’t manage your decisions’ subsequent U&R consequences. How they navigate through the subsequent minefield of consequences to their significant decisions is the critical measure of their wit and skill as leaders.

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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.
This entry was posted in Decison Making, Performance Management, Risk & Uncertainty, Strategy, Values and tagged , , . Bookmark the permalink.

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