A lot of businesspeople seem to be frozen in the headlights, paralyzed by uncertainty, fear of failure, and lack of trust. In this economy, inaction is understandable but shortsighted. Those who face their fear and get unstuck can outrun hesitant competitors and seize advantage. In studying how leaders prevail in uncertain times, we’ve observed four practices you can use to get yourself, your people, and your firm moving again.
Decrease uncertainty.
Doubts about the near term can cause managers to avoid pursuing long-term goals because uncertainty obscures the path. But rather than wait until you can clearly see the entire route to a distant goal, focus on getting to the next bend. Identify a series of near-term goals that can serve as checkpoints along the way, indicating your progress and illuminating the best way forward. As you proceed down the path, you can stop, change direction, or continue on the same trajectory, depending on what you learn en route to each checkpoint. This approach is cost-effective and reduces risk because only relatively small investments are required to move from one milestone to the next and because it reveals false starts early.
Air Products and Chemicals proceeded this way when it decided to enter a new market in China. Although the long-term goal was clear, the route to it was murky. So the company set a near-term market-testing goal and subcontracted the job of reaching it to another supplier. What the firm learned in arriving at that bend led it to change course and adopt a new, and ultimately successful, business model.
Reduce the fear of failure.
People fear failing, particularly in a downturn, when they think any misstep might cost a job. As a result, they tend to freeze because it appears that the easiest way to avoid failing is to do nothing. To spur action, shift your emphasis from cutting the rate of failure to minimizing the cost of failure. The checkpoint method is one good way to allow for failure while containing costs. If each disappointment (a term we prefer to “failure”) is cheap and you learn from it, you can afford more of them. To reduce people’s anxiety, give them permission to be wrong but not to make expensive mistakes. Silicon Valley’s famous discipline—fail fast, fail cheap, and move on—applies here.
Hedge your bets.
Decreasing uncertainty and reducing the fear of failure both involve linear experimentation: Try A; if that fails try B and so on. In some cases, the shortest route to the goal involves investing in simultaneous experiments whose outcomes are mutually exclusive: Try A, B, and C in tandem; whichever succeeds first necessarily negates the others. That’s what some U.S. mobile-phone operators did in the face of uncertainty about which fourth-generation network standard would prevail. Verizon, for instance, hedged its bets by experimenting with several network technologies at once. But as evidence mounted that the LTE technology favored by Nokia and others would dominate, Verizon shut down its other experiments and committed to this technology.
Create momentum.
Once you’ve settled on a course, two further steps can give the final push needed to get moving: First, remember that the more uncertain things are, the more people prefer to stick with comfortable and predictable routines. Leaders need to insist on substantial, coordinated changes that depart from obsolete practices and make business-as-usual impossible. Second, they need to defang or otherwise neutralize the people who persist in resisting change.
DuPont did this in 2002, after two years of experimentation with a concept it called “knowledge-intensive growth.” It learned that the current organizational structure was hampering its ambitions and reorganized into five growth platforms while exiting profitable but slow-moving areas such as textiles. The shift to a new structure was accompanied by significant management changes, with the old guard giving way to growth-oriented leaders. Today, DuPont is thriving in emerging markets, as well as through exciting new technologies, such as those used in optical light-emitting diodes.
