BRS-005: In times of Uncertainty

Uncertainty is inherent to everything we do. How do you eliminate it? How does it impact us? How should leaders react to it? How do you define it?

Hello Readers -

I have been meaning to write this particular essay for quite a while. It is even more poignant in our present times with a pandemic on our hands, anti-trust investigations, record losses, record stock market highs, unemployment hitting high numbers, GDP shrinking, bail outs across industries, collapse of brick and mortar retail, e-commerce acceleration. As leaders of organizations, how does one build strategies or react to such unprecedented times to ensure the survival of your organization? I would love to hear your thoughts on the the matter so please share thoughts in the comments.

Happy Reading.

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The Known Unknowns & The Case for a Misguided Costly War

On February 12, 2002, whilst answering questions during a press conference about lack of evidence linking Iraq with Weapons of Mass Destruction, then Secretary of Defence, Donald Rumsfeld uttered arguably his most famous statement.

'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 we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns - the ones we don't know we don't know '

Sec. of Def Rumsfeld.

Though ridiculed for his statement and much embarrassment followed Rumsfeld’s statement for the Bush Administration, the concept of the known unknowns wasn’t new. It was commonplace in Project Management and Strategy planning.

Aadil’s note: I was in highschool at that time, freshman year (or Grade 9 for my fellow Canadians). The impact of this statement wouldn’t actualize for me until mid-way through my career at Apple when I stumbled upon the famous documentary The Unknown Known.

As a technology leader, without direct authority nor direct reports, we project managers occupy an odd space on the leadership team. Our job is to predict the future, accurately. However, predicting an accurate future requires immense control. If the scope of the universe was fixed, and we had mastery over time and space, I can whip up a fantastic project plan down to the single day. Yet, that is not how the universe works.

Thomas Lechler and Barbara Edington call out Risk and Uncertainty as two key management planning challenges from their paper presented at the PMI® Global Congress in 2013. In an in-depth survey they conducted, they noted a confusion between how project managers and leaders defined risk and uncertainty.

“In a qualitative study using open-ended questions, it is not unusual to be surprised at the information gathered from the interviewees. What was thought to be straight-forward questions, such as “Did you encounter any uncertainty during the project?” were often answered with responses which indicated that the question itself was being interpreted in different ways or that the terminology was confusing. In particular, the terms risk and uncertainty were often used interchangeably and the concept of project-related opportunities was not well understood.” -

Lechler, T. & Edington, B. (2013). The silver lining of project uncertainties: discovering opportunities to enhance project value. Paper presented at PMI® Global Congress 2013—North America, New Orleans, LA. Newtown Square, PA: Project Management Institute.

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How do you define Risk versus Uncertainty?

Let’s look at it from the perspective of the known unknowns.

Risk is the known unknowns. Risk . . .

  • . . . can be predicted.

  • . . . can be understood to a certain degree.

  • . . . can be factored into planning.

  • . . . can be mitigated before actualization.

Let’s take a look at a hardware program as an example. A Risk is lower than expected yields in a particular manufacturing run (Proto, EVT, DVT, PVT). It can most certainly be predicted. We can understand the consequences of this - not enough devices to share with engineers thus impact to program delivery dates. We can mitigate it by asking for more devices than needed or identifying which teams on the critical path need fresh units first. Schedules can have buffers or be aligned as to prioritize key validation milestones up front.

Aadil’s note: This risk was real for me when working on Android Things team at Google. With long lead times and even minor resistor changes requiring an immense amount of planning and cost, we had to be sure about our unit numbers because at the end of the day, it still costs money to build these so we can’t be asking for 1000 units when we need 500. What milestone was critical and how much of difference was between two hardware revisions were key in allocation of units to engineers.

Uncertainty is the unknown unknown. Uncertainty . . .

  • . . . cannot be predicted.

  • . . . cannot be understand to even a minor degree or percentage.

  • . . . is difficult to factor into planning.

  • . . . cannot be mitigated before actualization.

  • . . . is a question you didn’t know you had to ask.

Uncertainty is a pandemic decimating our just-in-time supply chains. Uncertainty is an anti-trust investigation into big tech. Uncertainty is a startup creating something brand new from scratch. Uncertainty is a technology organization developing a new product on a never before tried technology. Uncertainty is making a bold claim there is no reason for a person to own a computer at home. You do not anticipate these events to occur or truly understand the impact it can have on your business operations until it becomes reality.

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Kenneth H. Olsen, then president of Digital Equipment Corporation, announced in 1977 that “there is no reason for any individual to have a computer in their home.”

HBR - Strategy under uncertainty - 1997

How do you deal with Uncertainty?

The traditional approach in strategic planning and classical project management is to treat uncertainty similar to how we address risk - process. In agile, the process is leveraging the cone of uncertainty.

In a nutshell - cone of uncertainty - probability of predicting or estimating when a project will be complete improves over time as work happens.

The conventional wisdom is that estimates improve as the project progresses. Barry Boehm was the first to graph uncertainty levels at different stages in the life cycle of a high-tech project in 1981. The result later was nicknamed “the cone of uncertainty” by McConnell (2006). The idea behind the cone is that at the start of the project there is significant uncertainty about “what” needs to be built. This makes it very hard to answer the “when will it be completed?” and “how much will it cost?” questions. While the project progresses, the project team gains a better understanding of what it needs to build and how they are going to build it. As a consequence it becomes easier to estimate the completion date and project cost, therefore lowering the uncertainty of the estimates. Of course, at the end of the project there is no uncertainty anymore, just reality.

Koppensteiner, S. & Udo, N. (2009). An agile guide to the planning processes. Paper presented at PMI® Global Congress 2009—EMEA, Amsterdam, North Holland, The Netherlands. Newtown Square, PA: Project Management Institute.

Practically, you can use the cone of uncertainty by:

  • Padding the Estimates.

  • Breaking down work tasks into the smallest chunks.

  • Leverage high/low confidence estimates.

Aadil’s Notes: Much of the work I did at Apple was working on a lot of 1.0 features. This meant that accurately predicting when certain tasks would be complete was near impossible especially when we do not have a frame of reference to leverage. I have experienced the cone of uncertainty in action many times in my career and each time it can be a frustrating endeavor to deal with. I have yet to find my silver bullet. I dealt with on a project by project basis.

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This works fine at the 1000 feet view when you are working on an small chunk of an app or software, or upgrading a backend system. You cannot pad estimates when developing long-term roadmaps. Work tasks at the 10,000 ft view are nebulous pipe dreams of our best understanding of where technology is heading and how we want to place our bets. You cannot defeat uncertainty through traditional risk management strategies and processes. So, how do you deal with uncertainty at the strategic level? Embrace uncertainty not as a challenge or catastrophic event but as an opportunity.

This begins by building flexibility into roadmaps and strategies instead of looking at strategy planning through the lens of profit-loss-cost sheets. There are many ways to build in this flexibility.

  • Invest only as far as you can conceive reality - Although this place your organization in a constant reactionary state, it does allow you to swim with waves instead of crashing into them. Plan quarter by quarter and ship often. Almost all software startups or technology companies focused on continuous delivery release mechanisms do this.

  • Invest in predicting where the future is heading - The most famous example of this thinking is the Lockheed Martin Skunkworks team or the Google X team. This is a cash intensive strategy and often not possible for smaller or early stage organizations with many projects never yielding results - sunk costs.

  • Invest in where you think the future is heading - This is a gut check. This is the Apple way. The most classic example of this strategy is the origin of iPod. It was made possible by a routine encounter between Toshiba executives and Jon Rubinstein, Steve Jobs top hardware guy. Instead of spending time doing a cost benefit analysis and further investigations, Jon pulled in Tony Fadell to oversee the project and within a year, the iPod was ready. All of Apple’s products were and are bets not on the future of technology but what future can technology build today.

Jobs asked his top hardware guy, Jon Rubinstein, to see if Apple could do better. Rubinstein spent a few weeks on the project but concluded the technology wasn’t yet there. Either it would be big and bulky, or the battery would suck, or it would have limited memory. He was just about to give up when he made a routine visit to Toshiba, one of Apple’s hard drive suppliers. At the end of a meeting, the Toshiba executives off handly showed him a new, 1.8-inch hard drive they had just prototyped. They didn’t know what to do with it. Rubinstein immediately recognized it as the key technology for the first iPod.

Cult of Mac - An illustrated history of the iPod and its massive impact

Final Thoughts

Building flexibility at the organization level requires retraining of leaders to develop the mindset of embracing uncertainty. Not all uncertainty can be predicted or mitigated against but if flexibility and retrospective mentality exists within a leadership team, during uncertain times, you can find opportunities.

Uncertainty can be molded to develop new moats, revenue streams, markets, a whole host of possibilities that can avert disaster. However, it requires patience and calm character as floating within the sea of uncertainty, not knowing what is around the corner, is inherently unhuman and not sustainable if unprepared. Knowing where we are heading, how much fuel we have, where the next fuel stops are, how a technology works, how long it will take me to write X amount of lines, human nature craves predictability. It is comforting. However, the really strong organizations, the true winners, have built the capacity to not only handle unpredictability but thrive in it. As leaders, we should focus on building mindsets instead of processes, systems instead of controls. Abandon the classical risk management theories and embrace development of systems to respond to an uncertain environment - that is the only certainty for dealing with uncertainty.

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Further Reading:

  1. https://hbr.org/1997/11/strategy-under-uncertainty

  2. https://www.pmi.org/learning/library/project-management-uncertainties-discovering-opportunities-5939

  3. https://www.pmi.org/learning/library/agile-guide-planning-agile-approach-6837

  4. http://www.agilenutshell.com/cone_of_uncertainty


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