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/ Autumn 2020/Issue 100

Why managing uncertainty is a key leadership skill

The ability to cope with ambiguity is at a particular premium.

A version of this article appeared in the Autumn 2020 issue of strategy+business.

In early 2020, Wafels & Dinges, a popular Belgian waffle truck fleet, was in major expansion mode. It was planning to add brick-and-mortar restaurants in some markets, including in the Mall of America in Bloomington, Minn., and American Dream in the Meadowlands of New Jersey, where it would peddle espressos and cranberry-rosemary waffles. But when the COVID-19 national emergency was declared on March 13, owners Thomas de Geest and Rossanna Figuera realized they had exactly enough cash on hand to give their workers two weeks’ severance pay. Tearfully, they said goodbye and emptied their bank account.

Once they made the painful decision to let their employees go, the couple made arrangements with creditors and landlords. Then they focused on what they could do to help others. They found the answer in their mission: to give people the happiest moment of their day.

“In crises, we’re always solving problems, but suddenly it hit me that there was nothing we could solve. There was nothing we could do. That’s when the acceptance began,” said Figuera, the Venezuela-born cofounder of the company she and her Belgium-born husband left corporate careers to build in 2007. “That’s not something you learn: It’s something you are supposed to fight. But on the other side of surrendering, there was peace, very contrary to what you would expect. In that peace, we found clarity.”

They pivoted to online ordering, which until then had been a very small side business, and moved operations from New York City to Denver, Colo., where they already had one store. Their option to donate waffles to frontline healthcare workers was enthusiastically embraced by customers, enabling the company to bring back some employees. Wafels & Dinges is now shipping nationwide, not only to its customers but also to hospitals.

As it brutally disrupts life and business as we know it, COVID-19 has brought into sharp relief a crucial business skill: the ability to navigate uncertainty. That means knowing what you can control and what you cannot, aligning your company and employees with a shared purpose, holding to a clear vision of where you want the company to be, and trusting your team to help your company get there.

Today’s economy is a real-life laboratory, an environment that supports the conclusion of a 2019 study of dozens of global leaders that identified the top leadership skill needed today as comfort with risk and with ambiguity — that is, the absence of certainty or clarity.

“The best CEOs are able to live with ambiguity in a way that others can’t,” said Christa Lynne Gyori, CEO and cofounder of the research organization Leaders on Purpose, which carried out the study. They do so by staying centered around a strong sense of shared purpose — the ambition to create value by contributing to the welfare of society — just as Wafels & Dinges did.

The business leaders who are best at managing in uncertain worlds also rely on systems thinking that allows them to sort out complex problems, the report concluded. They prioritize diverse inputs, teamwork, and partnerships. These leaders assemble the best team they can, and trust that team to find the information the organization needs to get through a crisis.

“These CEOs understand they don’t need to know it all themselves,” said Tatjana Kazakova, chief strategy officer and cofounder of Leaders on Purpose. “But they do need to be ready to see an opportunity in uncertainty and to have a logical understanding of how to get to where they need to be. They have the ability to go into a dark room and know how to bring light — but [aren’t] afraid to go into the dark room.”

We are all in the “dark room.” The pandemic has created an enormous uncertainty shock, which a team of economists recently described asPDF “larger than the one associated with the financial crisis of 2008–09 and more similar in magnitude to the rise in uncertainty during the Great Depression of 1929–1933.” The measurement tool they created, which was based on stock market volatility, media, and business expectation surveys, the U.S. Economic Policy Uncertainty Index, hit an all-time high of 861.16 on May 17, more than four times where it stood on New Year’s Day, before the novel coronavirus hit global headlines.

The pandemic has created an enormous uncertainty shock, which a team of economists recently described as ‘larger than the one associated with the financial crisis of 2008–09.’

The group expects the U.S. economy to contract by 11 percent by the end of the year. Significantly, it estimated that 60 percent of that contraction will be the direct consequence of uncertainty: that is, a condition in which important information is unknowable.

Because nobody knows what is next, no CEO can reasonably be taken to task for not knowing everything. That provides an opening for leaders who have deployed a top-down, command-and-control leadership style to switch to a mind-set that helps them and their teams better navigate uncertain conditions.

Leaders don’t have to like dealing with uncertainty in order to master it. “You can be uncomfortable with uncertainty. We don’t grow if we don’t feel uncomfortable,” said Lori Michele Leavitt, a business coach, consultant, and author of The Pivot: Orchestrating Extraordinary Business Momentum. That’s why the same skills that CEOs need to navigate crises are useful in normal times, when the sense that everything is “fine” can lead to stagnation. “You have to continuously be in that spot where you are progressing and learning and changing,” Leavitt said.

The biggest challenge for many business leaders, in Leavitt’s view, is to see their role as orchestrating, not commanding. That means making sure your employees are in touch with their own desires and potential just as much as your business is aligned with its sense of purpose.

The point isn’t for CEOs to be the hero, Leavitt said, but for them be able to say, once they are past the crisis: “Look at how the team was built up during this time! Look at what they did! Look how they stepped up!”

That behavior makes all the difference between whether employees respond to uncertainty by becoming more creative and proactive, or overstressed and paralyzed. The ability to cope with uncertainty and keep pursuing your mission will be the difference between success and failure.

Michele Wucker

Michele Wucker is a speaker and strategic advisor based in Chicago. She is the author of four books, including You Are What You Risk: The New Art and Science of Navigating an Uncertain World (April 2021) and of the international bestseller The Gray Rhino. Follow her at http://www.thegrayrhino.com/ or on Twitter @wucker.

 
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