Connect with us


How To Make Decisions In Conditions Of Uncertainty

Decision-making is complicated by uncertainty, which is an inherent part of every business. More often than not, business owners find themselves in a situation under which they must take a call without knowing fully well the consequences of the decision they are about to make. For example, a shopkeeper has to think about how much inventory would be needed to meet the demand when he has very little idea about the demand from the market. Similarly, a manager has to hire new hands in anticipation of more work without knowing whether new work will come his way or not. Uncertainty, therefore, rules every aspect of business. And if you want to run a business successfully, you must learn the art of making decisions in uncertain conditions.

Having run a successful startup myself for a few years, I can say that it becomes easier with time and experience, but only if you learn the right lessons. Let me tell you, from my experience, what the potential pitfalls are when making decisions in an uncertain environment. We’ll then talk briefly about how Elon Musk, the co-founder of Tesla and SpaceX and perhaps the most iconic business leader of our time, deals with such situations.

The Four Pitfalls You Must Avoid

1) Overconfidence

When making decisions, we think that we know everything that could go wrong if things don’t work out the way we have planned them to. But it would help if you remembered that your decisions don’t work in a vacuum. Anything you do is influenced by multiple parties, including those who may have competing interests. As Maurice Schweitzer, Cecilia Yen Koo Professor at the Wharton School of the University of Pennsylvania says, “When multiple players, components, and steps are involved, uncertainty rises.” No one knows how a decision may pan out once things are out of their control. This brings me to the necessity of historical experience.

2) Historical experience

Experience is your only friend in an uncertain situation. Both good and bad experiences shape our decision-making, and any attempt to discount historical experience while taking a call on tricky issues may handicap you right from the start and set you up for failure. Going back to historical experiences while making a decision can remind you of the lessons you had learned at the time. With our attention spans becoming shorter with every passing day, it is always helpful to stop, go back to the basics, and be guided by our own experience.

3) Risk aversion

If you think of it, risk aversion sounds like good business advice. But trust me, it isn’t. Consider this, for example: your company is on the cusp of making a groundbreaking innovation, but it involves a substantial investment, and you’re not sure about the outcomes. Would you drop the idea? Don’t, I’d say, because managing risk is a better strategy than avoiding risk altogether.

It was not for nothing that the highly revered Austrian-American management consultant and the author of the book ‘The Effective Executive’ Peter Drucker once said, “Whenever you see a successful business, someone once made a courageous decision.”

4) Delay

While rushing through a decision is a bad strategy, delaying it is worse. The only thing delaying a decision does is add more uncertainty, which has bad consequences for your business. You don’t want to be in limbo for long, do you? In one of his recent letters to shareholders, Amazon founder Jeff Bezos outlined the importance of making “high-velocity decisions.” He said Amazon was “determined to keep our decision-making velocity high. Speed matters in business – plus a high-velocity decision making environment is more fun too.”

The One Advice You Must Imbibe

Who better than Elon Musk to learn decision-making from? Managing uncertainty has been his forte. He has aced it with SpaceX, which was like shooting an arrow in the dark, both figuratively and metaphorically. Over the years, he has evolved a system of decision making, which he says is a “scientific method” and “really helpful for figuring out the tricky things”.

Step 1: Ask the question that is troubling you about the decision.

Step 2: Collect the evidence which can potentially answer it.

Spet 3: Derive hypotheses based on the evidence you have collected. Then, as Musk says, “try to assign a probability of truth to each one.”

Step 4: Analyze the axioms and ask yourself, “Are these axioms correct, are they relevant, do they necessarily lead to this conclusion, and with what probability?”.

Step 5: Try to disprove the conclusion you have reached in response to the question above. You can also ask others to refute your conclusion to help break it down further.

Step 6: If no one is able to invalidate your conclusion, you have your answer.

As you see, asking the first question is important. It is for this reason that the process of decision-making looks so much like a series of questions and answers.

Once you believe that you can cut through the clutter of uncertainty and reach a conclusion, you’re set to go. Of course, you may not be able to implement the Elom Musk method of decision-making in one go. He has advice for you: try again.

Read more incredible stories on disrupt magazine here

Artem Kazakov is a sales and marketing professional with over 12 years of experience. He is a leading industry expert with an extraordinary record of delivering actionable marketing strategies and generating revenue streams for clients. As an advisor, he has helped global teams in competitive sectors like EdTech & Enterprise SaaS to scale their business exponentially.

Advertisement defi

Join Disrupt Magazine

Become A Disrupt Contributor

Most Disruptive

tezos and NFT tezos and NFT
NFT3 weeks ago

Beginners guide to NFTs: What are non-fungible tokens?

You have probably heard the word NFT hundreds of times so far. At first glance, you thought it only had...

Sports + Gaming2 months ago

What Motorcycles Are Good For Long Trips?

Motorcycles are all about freedom. But the question is: how often do we really go out there and enjoy the...

Executive Voice2 months ago

3 Ways Maternal Instincts Give Women In Leadership An Advantage

As the landscape of gender roles continues to be redefined, these 3 experts agree that their maternal instincts provide an...

Executive Voice3 months ago

The Queen of Title: How Powerplayer Rachel Luna is Disrupting the Title Industry Through a Modern Approach

Rachel Luna has made quite the name for herself within Texas’s title real estate business as the Title Queen and...

Executive Voice3 months ago

Nancy Almodovar: The Latina CEO Who is Disrupting the Status Quo of the Luxury Real Estate Market

It comes as no surprise that Nancy Almodovar, the CEO and founder of Nan and Company Properties, is one of...

Business3 months ago

How To Nurture Talent Within Your Business

Your business can only succeed with talented workers on the payroll. Luck and even strong economic conditions will only get...

NFT4 months ago

Solana’s value plummets below $98 due to a Wormhole Exploit

Many people thought blockchain technology was robust, secure, and virtually “unhackable.” However, the crypto world has faced several hacking incidents...

NFT4 months ago

Polly Kole, The Beauty With Gifted Hands Tycoon Of NFT Sculptures

In a society full of stereotypes, people clinging to appearance and disregarding one’s achievements is the magnificent Polly Kole stunning...

gold and black round emblem gold and black round emblem
Cryptocurrency5 months ago

Bitcoin’s Volatility Explained

Since cryptocurrency was introduced in 2009, it has become a very controversial subject for both critics and supporters. One of...

News5 months ago

Spider Man; No Way Home’, Crushes Box Office Estimates Generating A Mammoth $253 Million In North America.

After only 3 days in the cinemas, the latest and last Spidey outing disrupted the international market as the highest-grossing...


Copyright © 2020 Disrupt ™ Magazine - Disrupt is a Minority Owned Privately Held Company

Disrupt ™ is the voice of Latino entrepreneurs around the world. We are part of a global movement to increase diversity in the technology industry and we are focused on using entrepreneurship to grow new economies in underserved communities around the world. We enable millennials to become what they want to become in life by learning new skills and leveraging the power of the digital economy. We are living proof that all you need to succeed in this new economy is a landing page and a dream. Disrupt tells the stories of the world top entrepreneurs, developers, creators, and digital marketers and help empower them to teach others the skills they used to grow their careers, chase their passions and create financial freedom for themselves, their families, and their lives, all while living out their true purpose. We recognize the fact that most young people are opting to skip college in exchange for entrepreneurship and real-life experience. This Podcast was designed to give them a taste of that.