The Strategic Value Creation Mindset
Dealing with Uncertainty
In a world where uncertainty is the new normal, we must learn how to deal with uncertainty and make decisions in a world where we can't be certain of the outcome anymore.
In the past ‘risk management’ was sufficient for dealing with the near and mid-future.
The current world is characterized by uncertainty and a vast amount of data; hence, we have to develop new methods for the business arena.
Yes, Businesses need to prepare for the uncertain era big time.
In the following, you will find a glimpse into some of the insights we have about business solutions for the uncertainty era.
Basically, there are two strategies we encounter in every organization.
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Operation Strategies that deal with how we can make more and better outcomes from the current resources: knowledge and relationship (Human and Social Capital), and physical assets.
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Growth Strategies that deal with the profitable expansion of the business.
Human knowledge limits the success of these two strategies.
Why?
The human brain is not capable of processing all the data and knowledge that is created. The human brain needs to be augmented with technology to be able to process data and knowledge.
Furthermore, Prof. Kahneman taught us that human being has their own “bias” and “noise” that prevent them from creating appropriate insights from unlimited data.
What is needed is a machine that will distill the info so that knowledgeable experts can make sense of it. It should be about internal data and external data of the organization. The machine’s capabilities should be fused into the capabilities of the human being that should make out of it appropriate decisions.
Here we can connect the dots between the two Global Forum meetings:
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The Human Imperative, Navigating Uncertainty in the Digital Age. November 2021.
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Performance That Matters, Sparking the Entrepreneurial Spirit. November 2022.
At the Global Forum Meeting in November 2021, we dealt with ‘Navigating Uncertainty in the Digital Age. Clearly, there must be ways to fuse Machine capabilities (Artificial Intelligence) with Human Intelligence. The notion was that Artificial Intelligence is characterized by ‘competencies without understanding.’ And Human Intelligence is characterized by ‘understanding with limits of competencies.’
Hence, making both sources of intelligence work in coordination will bring the solution to cope with uncertainty and the explosive of data.
At the Global Forum in November 2022, we will deal with ‘Performance That Matter’.
Again, linking the dots is essential:
About 20 years ago, I read the book: "Management Challenges for the 21st Century" written by Peter F. Drucker.
One sunny afternoon I revisited the book. I was shocked by the relevance of the book these days.
For the sake of example, I will concentrate only on aspects from two chapters:
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Chapter 4: the information challenges
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Chapter 5: knowledge-worker productivity
Chapter 4 deals with the way managers gather information to make better decisions. Chapter 5 discusses the importance of knowledgeable workers for the organization's performance.
Drucker claimed that the productivity of knowledge workers is the most challenging for management in the 21 century.
The challenge of our time is to make the revolution in decision-making as it happened with designing a machine: a long time ago, engineers used pencil and paper to design devices. In the last three decades, engineers have started to use large-scale CAD software to design devices and send the design directly to manufacturing.
This is a real revolution—a massive improvement in the performance of knowledgeable workers.
The revolution we face in decision-making is how to make it based on insights that emerge from data analysis. Again, if we will design it properly, the performance of any organization will be affected by factors (10x, 100x, or even more than 1,000x)
We face the information challenge while knowledgeable workers are at the front of it: gathering, analyzing, and extracting insights.
We are currently in the premature phase: AI experts try to expose patterns and anomalies and then ask the expert matter domain to reason for it. If you can reason, you can predict.
My argument is as follows:
The world is changing rapidly, and we are only at the dawn of the AI era. We didn’t see anything yet. Sure, AI is all over: searching the web, translating, completing sentences, and many other applications.
However, it is all on a low scale. The real revolution is ahead: how to use the power of the machine to gather, screen, filter, and make automatic new insights the experts didn’t see before. Or: how to create the ‘aha’ moments among the knowledgeable workers and let them reason, predict and create better decisions.
For that, we need better platforms that can deal automatically with the entire data (numeric and textual, as well) and bring it in a way that it will be easy to consume by knowledgeable workers.
By doing so, we will start to deal with Mr. Drucker's argument: the productivity of knowledge workers is the most challenging for management in the 21 century.