Chances are, the strategic approach developed in a stable environment won’t work in a time of uncertainty. Maybe we should look at the strategic, decision-making tools differently.

Before we go there, and not to split hairs, there’s a difference between risk and uncertainty. Risk can often be calculated. In a risky situation, the factors that determine success or failure are outside our control, but the odds are more or less known. When we roll the dice, we know there are more combinations to get to seven than there are to get to 12. The neuroscientists will tell you that when you estimate risk, the parietal lobes of your brain light up. You’re thinking and calculating.

If we consider resources broadly — money, time, personnel, raw material, means of production, inventory — we tend to see crisis as scarcity. So, the business question  becomes how to do more with less?  Do we cultivate  alternative sources of supply, stockpile cash, and/or inventory, and employ some variety of business/portfolio diversification? A hedge against risk. We know we’re gonna get hit, so we cover up to minimize damage.

When things step just outside the realm of routine, we commonly rely on simple rules of thumb. The behavioral scientists call them heuristics. It’s a fancy word for the mental shortcuts, the assumptions, that facilitate decision making. We hurry past shadowy figures in a darkened alley, assuming danger lurks. When we flick the switch and the kitchen light doesn’t go on, we don’t think circuit breaker, wiring, switch, socket; we change the bulb. We don’t know for a fact that the bulb is the problem, but most of the time it is. We rely on heuristics when we think there’s likelihood of a certain outcome and where speed is more important than thoroughness and precision.

When we pass into the realm of unknown unknowns, there’s no instruction manual. We’re improvising, spontaneously reacting to address the unforeseen.

You step into the ring. Your opponent approaches. You know generally what’s about to happen, but you’ve got to react to, and work with a highly volatile environment. That reaction is improvisation and successful improvisation relies on focus, awareness, and the agility to take advantage of the environment — all of which are refined by preparation. Joshua Funk, a past director of Chicago’s renowned improv group Second City, will tell us — with no small amount of irony — that getting good  at improvisation takes practice.

To use these decision-making, problem-solving methods effectively, we must understand their strengths and weaknesses, apply them appropriately, and move fluidly between them. These methods then become a set of tools that work together — a toolkit that an organization and its managers can use to create both resilience and agility. Both are necessary if we are to turn problems into possibilities.

So how do organizations gain that competitive edge? Perception, commitment and response. Can we see something that others don’t?  Are we sufficiently committed to revise our thinking and reallocate our resources? And lastly, can we pivot quickly and execute thoroughly?

Of course, we should examine our data and do our best to understand the environment, but are we also willing to modify our routines? Are we open to testing our assumptions? While C-suite executives may have a broad sense of the company and the marketplace, they may have little direct knowledge of what’s happening on the production line or what’s working with customers. In this regard, middle managers and frontline workers may be the best source of the information that originates at the edge of the enterprise. Executives should consider stepping outside hierarchical rigidity so information  can move up and down the organization quickly  and accurately.

Information may give a company an idea of what to do, but it must react decisively. Eventually, most executives make the right choices, but prompt, decisive action makes a leader. There are, of course, barriers to that decisive action. It’s natural that assets are sticky. Once allocations have been made, they tend to stay made. “The way we’ve always done it” is an obstacle to change. Before an enterprise can respond to the insight it has gathered, it must be committed to responding. It must be willing to reallocate and reassess before it can reinvent.

And lastly, the organization must be capable of speedy, precise, thorough execution. Here again, a flexible hierarchy may be advantageous. Executives create the environment and provide the resources, but it’s the managers and workers who do the job. From that perspective, the willingness of the executive team to shove responsibility and authority to the edges of the organization, to those who interact directly with the product and those who buy it, may create the best competitive edge.

So how do you best respond to uncertainty and end up on the side of the winners? Understand the basic approaches to problem solving and use them fluidly, as a whole toolkit. Realize that you must play offense and defense at the same time. Let go of preconceptions, test assumptions, listen to and collaborate with your employees and give them the authority to execute their responsibilities well.

Maybe we should be doing those things every day. And maybe if we did, we’d be prepared to slip whatever punches uncertainty may throw at us and take advantage of the opening to land a knockout.

— Bruce Kuerten