We have probably all heard this a one time or another.
“Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know that we know. There are known unknowns; that is to say, there are things that we now know we don’t know. But there are also unknown unknowns – there are things we do not know we don’t know.”
United States Secretary of Defense, Donald Rumsfeld
For anyone who hasn’t, take a look here.
I not a big fan of Donald Rumsfeld, but in this case he is 100% correct. Known knowns, known unknowns, unknowns unknowns.
The first two represent risk and the third uncertainty. And if you are managing a change effort the absolute last thing you want to encounter is an unknown unknown.
Most people use the terms risk and uncertainty interchangeably but they represent two fundamentally different things.
Risk is a lot more tangible as it refers to situations of which that you are aware. It’s manageable because you can look at the risk objectively, look at the likelihood of it occurring, look at the consequences if the risk actually occurs and then decide what mitigations or controls need to be put into place to manage the risk. This works pretty well, even though most people really don’t have a good way to predict either the likelihood or the consequences. Calculating probability is not necessarily as simple as it looks (but that’s a subject for a future post).
Uncertainty is a different matter altogether. Because it’s an unknown unknown it can’t be predicted; in essence it’s a surprise. It’s a ‘black swan’ event. The term black swan has been around since Roman times but has been redefined by Nassim Nicholas Taleb (in the book of the same name) as an event that:
- Is unpredictable
- Has major consequences
- In hindsight, appears as if it should have been predicted.
Think 9/11. Or the 2008 subprime crisis or the ensuing financial meltdown. Or the 2011 Tōhoku earthquake and tsunami in Japan. Black swans occur in your personal life as well. You get called into your manager’s office and are told your position is eliminated. Your spouse packs up and leaves. Your doctor looks at your test results and you hear the word ‘cancer’. Or, on a much more positive note, you look at your lotto ticket and you realize that you are a millionaire.
The very nature of a black swan event makes it impervious to traditional risk management approaches. So how do you protect your change effort from the consequences of a black swan?
You have to make your change effort robust so it is both flexible and responsive to unexpected change. I can suggest two strategies and one technique.
Get the right people on your team
Having the right people on your team can take you a long way towards reducing the longevity and the severity of an unexpected crisis. If I am managing a change initiative I want people on the team with ‘guts’ – or as Hemingway described it – ‘grace under pressure’. You need people who will remain objective and clear-headed when they are under pressure; people who can be both patient and decisive, waiting until the time is right to act and then acting with authority. One of the challenges with this approach is that you really don’t know how an individual will react to pressure until you actually see them under pressure. But when you find them keep them for they are more precious than gold.
There is a prerequisite that need to be in place for this to work. People need to be able to speak their minds. In a lot of organizations the opposite is true. Positive feedback is encouraged but anything else is strongly discouraged; any feedback that isn’t positive is perceived as a challenge to the authority of the leadership. It’s a shame, because organizations and leaders are missing out if they are deaf to the informed opinions of their people. (Notice that I’m only referring to ‘informed opinion’. Everybody has opinions but that doesn’t mean they are all worth listening to.) Being willing to listen requires strong leadership; most people don’t like hearing that their baby is ugly (even just a tiny bit) and leaders are no exception. Hearing positive feedback is easy; negative feedback not so much. It requires a degree of objectivity and detachment that many leaders find difficult to achieve.
Leaders should make the effort. The establishment of a work environment that encourages individuals to speak their minds (maybe ‘encourages’ isn’t a strong enough word – ‘rewards’ would be better) is a huge asset for an organization. Subjecting proposals for change to scrutiny by in-house (and external, if necessary) subject matter experts raises issues and concerns sooner, which leads to them being resolved earlier. It could also result in the change initiative being postponed or terminated. The earlier work stops on a bad idea the better it is for an organization.
Build contingency into your timeline and budget
When you are constructing your timeline for the change effort do not take a blue sky view. Too many change initiatives are scuttled because the leadership assumes nothing will go wrong and when it does they have neither the time nor the money to deal with the issue in the appropriate manner. Make the opposite assumption instead; assume that there will be issues and plan build additional time and money into your plan. The amount of the contingency needs to be based on the degree of familiarity with the space where your change management is operating. For example, suppose you are developing a simple life insurance product for a company, but it’s something that is done regularly and there is a clear methodology to follow. The amount of contingency will be less (probably much less) than if the development is for a complex product being developed for the first time.
Hold a pre-mortem
The idea of a pre-mortem is simple but it is a powerful technique.
- Get your team and stakeholders together, give them all a pen and some paper.
- Set this scenario – it’s a year after the end of the change initiative. It failed, and it failed badly. Think of the Hindenburg – this was worse. Because of the failure friends are no longer friends, people have lost their jobs and careers have been ruined.
- Ask them to answer this question: What happened? What were the reasons that it failed?
- Have each of them list the reasons for the failure.
- When everyone is finished, have them share their lists, one reason at a time until all the reasons are captured.
- Following the meeting, consider each of the reasons. Some of the reasons will be risk management concerns and can be managed by that process. The remainder are items of concern that you need to consider and that should be taken into account when determining how much contingency is required.
Essentially you are trying to make the future a little bit less unknown by leveraging the knowledge and expertise of your team to envision problem scenarios and to consider the best way to respond to these scenarios in advance of them occurring.
(The concept of a pre-mortem was developed by Gary Klein and is described in his book The Power of Intuition.)
Uncertainty is daunting, but it’s a fact of life; we need to learn how to manage it better. I’ve given some suggestions on how to do just that – please feel free to share your approaches and techniques. If nothing else, it’s good to think like a Boy Scout – ‘Be Prepared’.