The Uncertainty Model: Understanding What Business You Are In

labyrinth of uncertainty
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Over the last few weeks, I have been working on a presentation of the leadership model I use during my coaching sessions, but I have to admit that preparing presentations is not my forte. So I’m posting a rough outline here to stimulate thoughts and discussion. Please bear with me as I do my best to put into words what is now in slides.

 

Since everyone comes into with world in the same way, I think it is fair to start from the human condition. We are all born into a precarious state of life and death. Up until recent history, infant mortality was a challenge. Even today, infant mortality rates are monitored and published by governments and non-governmental agencies around the world. The same can be said for a significant number of other life-affirming statistics, such as education rates, graduation rate, access to healthcare, (un) employment rates, birth rates, life expectancy, to name just a few. Therefore, we can see that our whole life is a struggle to survive.

 

One of the most touted models for understanding our struggles is Maslow’s hierarchy of needs. In it, Maslow argues that at the bottom of the pyramid there are our basic or – as I call the – alimentary needs and as we move up the five levels we attain self-realization. However excellent Maslow’s model may be, I find it flat and hyperbolic. It doesn’t really allow us to fully understand the nuances and complexities that make us who we are. Also, in most countries today we can’t really talk about needs as much as wants and desires. For this reason I have developed another model based on “uncertainties” of outcome. After all, what is Maslow describing but our struggle to overcome uncertainty; moving from a state of “need” to one of “freedom” from that need. I unimaginatively refer to this framework as the “Uncertainty Model”.

 

The model is quite simple in its constitution, making it easy for anyone to understand yet challenging in its application because of all the questions it raises. The basic premise consists in recognizing that the human condition is a struggle on three principal axes: physical existence, emotional existence and intellectual existence. In fact, you can take any element in Maslow’s model and re-categorize it according to these three axes. For example, food is a need – there is no denying that – making it a physical uncertainty. However, once we move away from the physical it can be a source of emotional or intellectual uncertainty as well. Emotionally, we have “comfort food”, or a way of building community, or a source of distress (such as what occurs with eating disorders). Intellectually, food can be a challenge if unknown, a joy to discover, a tool to create with, or a science to measure. Depending on the individual their uncertainty may be very high – a need – in one or all of these three axes and medium or low in the others. Not in the absolute but on the basis of a perceived reality. Although a portion of the world still struggles to acquire food on a daily basis, even for them food has an emotional and intellectual component albeit not as significant as for the rest of the world.

 

By way of another example I offer another of Maslow’s needs: clothing. Here too we can analyze this uncertainty based on these three axes. A person’s emotional uncertainties may be satisfied through clothing either by giving expression to who they are by donning certain clothes, or by taking on a certain persona by wearing the same. In the former case, in Maslow’s interpretation the individual is satisfying self-realization needs. In the uncertainty model, the people who are from the basic need to cover their body from the elements can now express themselves through clothing. In the latter case, the person might be seen as addressing self-esteem issues or more emotionally or psychologically undesirable challenges. Many more examples may be required to illustrate the usefulness of this model but in the interest of brevity I will wrap things up quickly, but hope I have inspired you to test this model on your own time.

 

Two more examples to clarify and then we can move on. Picture a three dimensional graph that starts at 0% and goes to 100% – from freedom to struggle – and, where each axis corresponds to physical, emotional and intellectual uncertainty. Now imagine what a person who is near 100% on all three axes looks like? This person would fall into the “neediest” part the community. Next, imagine a person who is close 0% on all three axes. This person doesn’t need to struggle almost at all to satisfy the uncertainty of their physical, emotional and intellectual outcomes. They would be at peace with themselves and the world, or very “Zen”.

 

However, most of us are somewhere in the middle and struggle to one degree or another with one, two or three of these axes on a daily basis. To overcome these uncertainties we look to those members of our community who can help us struggle less.

 

It stands to reason that if someone is experiencing a high level of uncertainty with regard to a given outcome they will value the assistance of the person who can help them struggle less to overcome it. In the case of food, a person may value a hunter, a gatherer, a farmer, a butcher, a cook, a restaurant, a supermarket, or a brand. Whoever provides them access to food will be valuable to them. Similarly, a person uncertain about their ability to understand a certain subject may look to a teach, a tutor, a family member, a learning center, a school, or a writer. Someone who can reduce their uncertainty about understanding a subject. The same thing can be said for just about everything one experiences multiple times a day through different encounters. In some small way these people we look toward to reduce the uncertainty of outcomes for us free us from our daily struggles.

 

In the ROKC Method we define a leader as an individual who has developed a view of the world – however you want to define it – that allows them to perceive a less uncertain reality, who communicates this vision to their community, inspiring them to cooperate and collaborate to bring this reality/vision into fruition. From this point of view, anyone who helps another person reduce an uncertainty for them is a leader for those they have helped. On an individual basis, we allow many people to lead us on a daily basis without even thinking about it. The person driving the train or bus this morning was your leader in getting you to and from work today. The agent at the airline kiosk who led you through the user un-friendly computerized check-in process was the leader there. The person who made your lunch at the local restaurant or company cafeteria was also a leader for you today. All these people, in one way or another, reduced the uncertainty of an outcome for you and you willing collaborated and cooperated with them to make it happen.

 

When one of these individual leaders takes their specific uncertainty-reducing magic and makes it available to an ever-increasing number of people, we call that a business. As demand grows, that individual will have to hire and train others to help satisfy all the demand. As demand grows even further, those people will explain the processes to the engineers who will mechanize all or part of the processes necessary to reduce that specific uncertainty of outcome. And so on and so forth, scaling the business to reduce uncertainty for an ever-greater number of clients.

 

However, if that individual can come up with some way to reduce uncertainty then someone else can too; the competition. There are two types of competitors: more effective and more efficient. Once again, our struggle graph helps us to understand. A competitor who struggles less but achieves the same level of outcome is considered more efficient. While a competitor who struggles just as much but reduces uncertainty to a lower level is known as more effective. As you can imagine, through the process of competition economic actors – big and small – drive the level of uncertainty of outcomes toward zero thus freeing us from the struggle to survive.

 

Unfortunately, no matter how free we are, some of us will always be uncertain about something else. Once again, a good example to illustrate this point is food. In hunter gathers communities the level of uncertainty is high so when they start domesticating plants and animals people are freed up to engage in other activities. In other words, domestication brings down uncertainty. Through mechanization agriculture becomes more efficient allowing businesses to take over from small farmers. With chemistry, agriculture becomes more effective. But each step toward freedom comes with its challenges. With fewer people required to farm a migration takes place to towns and cities, which makes getting the food to market more uncertain than it was when everyone consumed what they produced. Transportation companies developed in response. At first, food was transported to small shops run by shopkeepers and these became supermarkets because it was more efficient. However, as the uncertainty of accessing food moved to zero, consumers started to become uncertain about the way the food was produced, spurring the organic movement. A new segment of the market was thus introduced. For some people this uncertainty went ever further, they wanted locally produced food, creating a further segmentation in the market. You get the idea. The closer you get to freedom from uncertainty of outcomes the more fragmented the market becomes because new uncertainties take primacy over the old ones and/or are created as a result of the solutions that are found.

 

As I hope you can see from the above, businesses exist because someone was able to come up with way of reducing a specific uncertainty of outcome for a specific part of a community on a large scale and the members of that community value the freedom the product(s) give them.

 

Once this is well understood, it is then only a question of political, economic, cultural and societal specifications and biases that determine which stakeholder gets what portion of the value created by reducing this uncertainty.

 

The work I do with business leaders focuses heavily on helping them to clearly identify and communicate the uncertainty they are reducing and for whom. The uncertainty model gives them a framework to better understand their business’s market position as well as that of their competitors thereby significantly influencing decision-making. Lastly, by understanding the specific parameters in which the business exists they can maximize stakeholder satisfaction.

 

Give it try. You’ll like it. The Uncertainty Model.

 


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