Issue 37: Risk and Uncertainty

SHOT

Any solid plan needs to account for risk and uncertainty.

CHASER

Yes, absolutely. But more often the way people deal with risk and uncertainty is by defaulting to overly conservative planning. Behind every stretched timeline and padded estimate lies a team that either doesn’t know how to cope with risk and uncertainty.

INSIGHT

Risk and uncertainty are two different things.

Risk refers to potential problems you can put your finger on and therefore anticipate what you might do. Example: you’re signing a big new client and preparing for the onboarding. But because an essential feature of your product may be delayed one month, you may need to delay the onboarding, which may create a staffing problem for other projects.

Uncertainty is when you don’t have enough information to predict what might happen. Example: you are launching a new product that has a non-trivial service element to it for which you will need to hire people. Your hiring plans will depend on how quickly the product is adopted, which is unknown.

The key is to assess each stage of the plan by asking: Do we know exactly what we are going to do, or is there risk or uncertainty here?

  • If the path is clear, move forward as planned. No delays, get things done!
  • If there’s risk, define those risks and figure out how you will react to each one so when you get there, you already know your options and how the plan might change.
  • If there’s uncertainty, you need to structure the plan to reduce it over time. The best way to do this is to engage in scenario planning. Start by identifying the possible outcomes then asking yourselves how you would handle them. What would we do if X happened? What would we do if Y happened? Identify the information you need to reduce uncertainty, and how and when you can get it. Then start!

The most important thing to overcome when your facing risk and uncertainty is to act! Staying in the planning stage locks you in a mentality where all the options are still on the table. Action inherently eliminates extraneous choices and simplifies the path forward.

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