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A blog by Ryan Quinn, Robert Quinn, Shawn Quinn, and Amy Lemley

Reducing, Embracing, and Amplifying Uncertainty

By Ryan W. Quinn

When I am not playing the role of professor or the roles of husband and father (the two things that take up most of my time), one role I play is that of an adult leader in a local youth organization. Recently, we had some turnover in the adult leadership of this organization. I recommended some of the people that we brought into the positions, and I certainly would have recommended the other ones if I had known them better. They are phenomenal.

One of the reasons I thought so highly of these people is because of their willingness and drive to serve the youth and make the programs we offer the best they can possibly be. I knew that they would challenge the status quo and bring new ideas to the table. The funny thing is, at the first meeting with these new people, when they did exactly what I expected them to do, I felt defensive about how much they questioned everything we had been doing.

I was struck by the irony of this situation. I teach change management for a living. I know how hard change–even small changes–can sometimes be. And yet, even though I know this, knowing it is not the same as experiencing it. Each time I feel the worry or the defensiveness or the temptation to disdain in the face of something new,I have to recognize and then quell these feelings once again. I like to think that I am getting better at it over time. And I am also suspicious that it may be something that can never be overcome fully–we just learn to deal with it better.

I did manage to quell my feelings of defensiveness. And one of the results of me (and others in the leadership team) quelling their defensiveness was that, over the past two weekends, we just put on two major summer events for our youth in which the impact exceeded our expectations. We would not have succeeded at this without the full participation of our new members. And we would not have had their full participation if we had not quelled our defensiveness.

The Fear of Uncertainty

Why does change create such apprehension? There are many answers to this question. In an introduction to an edited book on emotions in organizations that Stephen Fineman [1] published in 1993, for example, he discussed the idea that organizations are entities that humans construct, at least in part, to deceive ourselves about how powerless and finite we are. Resistance to change is, in some sense, a microcosm of our fear of death. If the world as I understand it changes, who will I be? The prospect of a lost identity is frightening. Therefore, we cling to the devil we know. This, of course, is not the only reason why people struggle with change, but in my experience, it is a more common reason that we would often like to admit to ourselves.

Bullish on Uncertainty

Given the impact that uncertainty can have on human behavior and experience, it is interesting to consider the research of Alexandra Michel and her colleague, Stanton Wortham, have published on the topic [2]. Michel spent years doing ethnographic research on two of the most successful investment banks on Wall Street, shadowing people, observing what they do, participating in some of their activities, living with them, and analyzing their cultures. These two banks were particularly different in their approach to uncertainty: one of them tried to reduce it, while the other one tried to amplify it.

The bank that tried to reduce uncertainty did so by

  • Hiring experts, taking their advice as “truth,” and turning to them when truth is needed
  • Determining roles before every deal
  • Putting titles on business cards
  • Associating roles with specific tasks and behavioral norms
  • Focusing on quantitative feedback in performance reviews
  • Setting revenue goals for senior bankers to motivate performance

The bank that tried to amplify uncertainty did so by:

  • Staffing bankers on deals based on availability over expertise
  • Treating bankers as fungible
  • De-emphasizing roles, including taking titles off of business cards
  • Rotating fluidly between roles and tasks
  • Keeping norms ambiguous
  • Focusing on qualitative, ongoing feedback in performance reviews
  • Refraining from giving pre-determined goals to senior bankers

Both of these approaches to managing bankers had advantages and disadvantages for the bankers themselves. For example, bankers in the uncertainty-reducing bank felt less anxiety on a day-to-day basis with regards to how to manage the grind of daily life and were highly aware of the personal resources they had available, while the bankers in the uncertainty-amplifying bank felt more anxiety, but developed more  fluidity and were particularly attuned to the social resources available to them.

Each of the banks developed structures and policies to capitalize on the strengths and mitigate the effects of the weaknesses of their approach to managing uncertainty. As a result, both of the banks were high performers, at least until the financial collapse of 2008. In a personal email, Michel said to me that in a post-financial crisis world, the uncertainty-amplifying bank is doing fine, even though all of the stocks in the industry are down. The uncertainty-reducing bank, however, is struggling much more.

Implications

What, then, should we take away from Michel’s work? Here are a few thoughts:

  1. Both approaches to managing uncertainty can work, but the organizational systems, structures, policies, and procedures need to be consistent with the approach to managing uncertainty if an organization is to perform well over time.
  2. Given the consistency needed between the management approach and the systems, structures, policies, and procedures, executives should think very consciously and explicitly about what approach they want their organizations to take toward uncertainty and then make sure that their approach and their infrastructure are consistent with each other. Leaving the management of uncertainty to chance is not likely to be successful.
  3. Managers should be aware of the effects that the management approach and infrastructure have on their people, and be prepared to provide them the interpersonal support they need to thrive in that system.
  4. The uncertainty amplification approach is likely to be more conducive to long-term survival and success if the organization is likely to encounter significant shocks, like the global financial crisis. Being sensitive to the increasing number of social, economic, geopolitical, demographic, and other shocks that have happened in our world over the past decade may be an important consideration in guiding the decisions leaders make about how to manage uncertainty.

Conclusion

Managing the organization’s approach to uncertainty is a critical issue for leaders to address. The related issue, in turn, is the one I illustrated at the outset: managing one’s own uncertainty in a changing world. There is generally much more uncertainty and change the further you climb up in an organization. Embracing that uncertainty can be hard, just like it was for me when our new team members questioned the way we were doing things. The uncertainty also provided us with opportunities, though, and the results we achieved came because of what we chose to do with that uncertainty.

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References

[1] Fineman, S. (1993). Organizations as emotional arenas. Emotion in Organizations. S. Fineman. London, Sage: 9-35.

[2] Michel, A. A. (2007). A Distributed Cognition Perspective on Newcomers’ Change Processes: The Management of Cognitive Uncertainty in Two Investment Banks. Administrative Science Quarterly, 52: 507-557. Michel, A. A. & Wortham, S. (2009). Bullish on Uncertainty: How Organizational Cultures Transform Participants. New York: Cambridge University Press.

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