Inflation. War. Geopolitical instability. Lingering post-pandemic supply chain issues. A volatile stock market. Recession fears.
Add up all these problems and the world faces more massive uncertainty as 2023 unfolds.
The U-word now permeates nearly every business and economic discussion, and it’s a scary term indeed. Fear of uncertainty is actually hard-wired into our brains.
“Uncertainty can cause you tremendous anxiety,” wrote author and psychotherapist Bryan E. Robinson. “Why? Your survival brain is constantly updating your world, making judgments about what's safe and what isn't. Due to its disdain for uncertainty, it makes up all sorts of untested stories hundreds of times a day because, to the mind, uncertainty equals danger.”
In business, uncertainty comes with the territory even in the best of times. When starting a company, founders don’t really know if it will succeed (and the harsh truth is that most do not). When launching a new product, even the sharpest hunches and most thorough market analysis can’t guarantee it will sell. Too many factors are beyond the company’s control.
Business leaders learn quickly to deal with those kinds of question marks or they can’t survive, but where things tend to get wobbly is when trouble brews in the macro environment. That’s when uncertainty starts to create its own reality beyond the forces contributing to it.
“It is well-known that uncertainty reduces the willingness of firms to hire and invest and of consumers to spend,” a report by the International Monetary Fund said. “Yet it is a nebulous concept, because it reflects uncertainty in the minds of consumers, managers, and policymakers about future events (that may or may not happen).”
No wonder conditions feel a bit dark right now. But as a tech CEO since 2014 and a venture capitalist at two Bay Area firms before that, I have an up-close-and-personal relationship with uncertainty. I’ve learned a few lessons.
The good news: By not allowing uncertainty to become a distraction unto itself, by accepting it, and even by embracing it as an opportunity to get stronger, businesses have more power than they may realize to decide their own fate.
The bad news: Even then, of course, there’s no guarantee of success. But by aggressively making the right moves – now – companies can put themselves in the best possible position to power through anxious times and emerge stronger in the long run.
I have four pieces of advice:
1. Maximize the here and now
Every entrepreneur I’ve ever met shares two characteristics: They’re naturally optimistic, and they think a lot about the future. Those are wonderful qualities but, believe it or not, they can be an impediment during highly uncertain times.
The dreamer’s mentality is to constantly charge forward toward a better future, but global economic turmoil calls on business leaders to focus squarely on the present, to take vigorous and immediate action to keep their companies on the right path.
For example, no company introducing a new product in 2023 should just launch it and hope for the best. It should work to reduce uncertainty by meeting with as many customers as it can to get feedback, make improvements, and better understand the offering’s prospects.
The nice side effect of such a move is that action helps quell anxiety. Doing something constructive, rather than just worrying or guessing, has a calming effect.
2. Don’t be too linear in a superlinear environment
Think of linear as the operational steps a business takes all the time -- attracting investors, selling and marketing products, hiring, etc. Superlinear is the scientific term for when a curve sharply deviates from the linear.
The world events currently dictating business conditions are superlinear, and they’re moving quickly. Business leaders must respond accordingly.
For example, many startups -- again because of that confidence and enthusiasm described in the first point-- tend to postpone hard decisions such as cutting costs. That’s why one of Silicon Valley’s best-known venture capital firms, Sequoia Capital, was so vocal in spring 2022 when it warned in a 52-page presentation that young companies face a “Crucible Moment” and must act immediately to “avoid the death spiral.”
The point here is that the mind tends to work in a deliberate linear fashion and struggles with critical decisions that should be made quickly. However, business leaders must recognize that the ability to somehow adapt to a superlinear climate is now essential.
3. Resist psychological safety
In sports, the most successful players have an innate belief that they can overcome the unpredictability inherent in any game, control the situation, and meet every challenge on the way to victory. In fact, they relish the pressure. In a way, they’re psychological daredevils.
Company leaders need to think the same way. It’s a natural human tendency to seek psychological safety when times turn turbulent, to figuratively curl up in a ball and hope things get better. But that can be a serious trap in business.
No one knows how the new year will turn out, but the wisest business minds accept that they’re in an unexpectedly tight game and are willing to take decisive steps, without hesitation, to guide their companies through.
4. Over communicate
Most companies pride themselves on transparency -- everyone says they have a candid culture -- but exhibiting that quality during rough times is where the rubber really meets the road.
CEOs and other senior executives must understand that their employees are worried too. A lack of regular information about company performance and other important matters creates a news vacuum they’ll fill with negative assumptions. That’s just human nature.
The lesson: No amount of communication is too much. Don’t lose transparency just when it’s needed most.
Eliminating the deep uncertainty we’re experiencing now is a superpower no one possesses, but by following these four tips, company leaders can put their best foot forward in attacking it. Denying uncertainty or failing to properly address it is a certain recipe for disaster.