EntrepreneursVenture Capital

New arrivals and uncertainty

By January 12, 2007 14 Comments

We had some good news in our family yesterday with the arrival of our second child – Stan.  All went as well as can be expected, which was great, and the family have rallied round and been really helpful.

Last night was a little disturbed, as you can imagine, and this morning when we were discussing what might have been upsetting Stan I was struck by how much we wanted to know the answer and how not knowing felt uncomfortable, so we all had a theory and settled on how it was probably stomach ache.

I see similar situations at companies all the time – where boards have to take important decisions in the absence of complete information.  That is unavoidable – we are talking about small businesses in fast changing environments.  Even if you had sufficient resources to devote a team of analysts to a problem you still wouldn’t have a full understanding of the issues – in fast changing markets a lot of things are matters of opinion, not fact.

Good boards recognise that sometimes it will be difficult, or impossible, to find more data and take quick decisions based on the balance of the information available and what their intuition is telling them.  This is all about trust and confidence – in particular giving the executive team the confidence to be open about the limits of their information and understanding.

After all admitting what you don’t know, and what you can’t find out, can be hard.  Not surprising given that not having a full understanding can be (seen as) a weakness.

When companies don’t deal with uncertainty well it slows down decision making, sometimes terminally.  You see it most often during strategy sessions where the conclusion ends up being that the (usually already over-worked) executive should go and find some more information.  Then at the next strategy session there isn’t much more information, and so a decision is avoided once again.  Meanwhile the competition is making hay.

The bad news is that the bigger the issue the more difficult this is – particularly if it is something controversial.

Don’t get me wrong, I am all for analysis.  I started life as a strategy consultant.  But you need to know when to stop thinking and start deciding.

I try to write something every working day, and 7.41pm on a Friday night doesn’t really cut it as a Friday post.  But bear with me, normal service will be resumed in a week or two.