Council Post: How To Navigate Business Uncertainty

By Sri Vanamali, Executive Director and Interim CEO of GEX Management, Inc., a corporate advisory firm to high-growth and VC-backed companies

Business leaders and entrepreneurs often find themselves facing uncertainty while evaluating key business decisions. Will the new marketing strategy result in higher profit margins for the company? Should the company expand its product development efforts while risking cannibalization of current sales? Will the revenue synergies presented to investors translate to the promised returns after the deal closes?

While many of these outcomes can be reasonably estimated through in-depth strategic analysis, certain decisions require a leap of faith to execute. The two strategies below can help business owners and managers better navigate business uncertainty while maximizing their chances of success in the face of the unknown.

Use failure as a strategic tool.

One of the biggest challenges that leaders face related to business uncertainty is a fear of failure. Some questions leaders may ask themselves while facing uncertainty include: How can I confidently launch a new business venture without knowing whether I will succeed? If I fail this time, will investors support my business plan the next time around? If I am not successful, how will I win back the trust of my business partners and colleagues who advised me against embarking on this risky project?

It is often fear of failure, rather than failure itself, that prevents first-time entrepreneurs and business owners from achieving their goals. To overcome this obstacle, I propose leveraging failure as a strategic tool to navigate uncertainty and achieve desired business outcomes.

First, break down the business problem you are trying to solve into a series of smaller, manageable chunks. Second, establish acceptable failure parameters for each use case through a comprehensive risk evaluation exercise. For instance, a failure parameter could look something like this: “If the enterprise integration effort exceeds 25% of the product development costs, halt the development work and revise the program budget until costs lie within the acceptable boundaries.” Finally, adopt a system of processes to solve each use case and perform the necessary steps toward achieving these sequential goals.

If you fail to achieve the desired outcome for a specific task, review the corresponding failure parameter, and adopt a different solution strategy. Then attempt the task again until you succeed. As you work through these incremental steps, record the learnings from the failed attempts, and use these lessons to improve your subsequent processes until you reach your ultimate business objective.

By establishing acceptable failure parameters upfront and breaking down the problem into manageable units, you have developed a process to navigate uncertain outcomes in a systematic manner and convert failures into opportunities to learn while minimizing overall business risk.

Remember that most business leaders have faced failure in one form or another in their lives. The successful ones have learned valuable lessons from those failures and become experts in their fields. By taking calculated risks and adopting a systematic approach toward managing uncertain outcomes, entrepreneurs and business leaders can minimize the damage from failed initiatives while leveraging the knowledge gained from the exercise to not only correct course, but also improve overall results.

Be prepared to walk against the tide.

As a business leader, you will be surrounded by advisors and colleagues who may time and again study your business plan and concede that the plan makes sense in theory but ultimately recommend against executing it. They may argue that while they are not able to identify a material flaw in the business proposal, they haven’t seen anyone implement this approach before; hence, given all the uncertainty associated with lack of historic data, there must be something wrong with your solution.

Be open to listening to these arguments, and take their constructive feedback into consideration. But, at the end of this exercise, be prepared to evaluate your decision based on your own critical analysis using all available data at hand. Review every step of your plan, and identify the pros and cons of your approach. Systematically review all potential risk scenarios along with possible risk mitigation strategies. Toward the end of your analysis, if you still find that your arguments are backed by solid reasoning and you are able to reasonably respond to most concerns voiced by your advisors, proceed with executing your plan.

Every business problem is unique and comes with its own set of nuances; just because someone hasn’t seen a particular approach implemented before doesn’t mean that it cannot work. In a world of uncertainty, be prepared to walk against the tide and challenge the status quo — it is only through these less-trodden paths that new discoveries are made and successful entrepreneurs are born.

Uncertainty associated with decision-making is not uncommon in business. Be prepared to accept the notion that you will face challenges for which the answers are not immediately available. Sometimes you need to take a step or two into the unknown to better understand the problem and test the waters with your proposed strategy.

As you navigate uncertainty, you may come across decision points that force you to revisit your original assumptions. When that happens, be ready take a different route than originally planned and adapt to changing circumstances without losing sight of your destination.

Be prepared to embrace the unknown and you will find navigating uncertainty a less daunting and more rewarding experience.