Uncertainty: “It’s the consequences not the events, that ‘stiff’ us!”

One of the issues that has intrigued me about being prepared for uncertainty, in either a fragile or anti-fragile (as per N. Taleb) manner is the second order blindness factor.

An event is uncertain when we are not ready to sense it. The event is one of a surprise. This is the first order factor. Yet I would suggest that many events are observed but the consequences of them are what surprise us. An example could be we are in a seemingly minor vehicle accident, and later we discover (unexpectedly) that we have developed a medical condition as a consequence. This is the second order factor.

So uncertainty can happen:

  • because we fail to expect an event along with its consequences, and/or
  • because we fail to recognize in advance the impacts of witnessed or foreseen events.

In either situation above it is the consequences that matter. and consequences are the personal impacts on our and/or other lives.

  • Why are consequences sometimes so hard to discern in witnessed events? Some reasons would include:
  • Time delays: a volcano eruption on the other side of the world will not impact our lives for several days or even weeks; legislation may not impact us until we later find ourselves involved in some activities that are regulated by this law.
  • Events take place within complex systems: this is where the event sets off a chain of domino falling like subsequent events. It is one of these latter events that impacts us directly.

In both the above scenarios we are initially remote from the precipitating event and our lack of understanding, knowledge or even alertness to the event’s significance is what catches us unprepared.

We usually take out fire insurance on our homes and where we work. In some situations where our business process is critically dependent on a supplier we take out some form of business disruption insurance. But how many pay attention to that supplier’s critical supplier, or in the case of our home the fact that nearby road construction impacts the fire department’s ability to quickly respond to a fire in our home?

We could I suppose engage in some form of “if then, then, then” type of analysis, but for most of us this problematic for two very obvious reasons:

  1. Would we be able to do this in any meaningful way at a cost we can bear?
  2. Where/when would we stop and on what basis?

The thought I am considering is to begin to appreciate what impacts would be most traumatic to us? Then look to what events would precipitate these types of consequences? And where lead time is so very valuable, look at what would trigger these events and decide how we could observe them. The value of this approach is we are hoping to take advantage of two things:

  1. Time is at play: it takes time for A to lead to B to lead to C (which is what we really care about). This may mean we can do something more useful than just take out loss insurance. Lead time can give us the opportunity to be anti-fragile.
  2. We are more alert to the “kinds” of early events that precipitate a chain reaction. Once we have “envisaged” a possibility and why it might be significant, we are more likely to notice it early on.

One thing I have noticed over the years in OD work is the lack of consideration of the value of being early for anything. The value of being on time is usually recognized. The problems of being late are usually recognized. Yet the value of being early is ignored. Think of the myriad of performance management and incentive like schemes we have all been witness to. How many times has being early been positively reinforced. Yes there are notable examples. Many project management efforts do bonus being early (as well as under budget and no performance failings).

Our schooling, office even factory type settings reinforce timeliness (i.e., on time). There are times where being early can be problematic and these are understood in highly optimized production type processes. Yet I suspect there are many circumstances where this is not the case.

There is in my mind an asymmetrical bias to being on being on time/just in time, a negative view on being late and a propensity to be silent on being early.

This time sensitivity habit, where unwittingly and indiscriminately held on everything is a “self inflicted” blindness to uncertainty: It further aggravates our likelihood to be blindsided and caught unprepared. At best when we are impacted in such a manner, the best we can hope for is we “survive” so the “resiliency” capacity is at a premium. What can not do (because we are unprepared) is to take any advantage, i.e., be anti-fragile.


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 Creativity, Decison Making, Performance Management, Risk & Uncertainty, Strategy, Values and tagged , , , . Bookmark the permalink.

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