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Are you sure? A leader’s guide to strategizing during uncertainty

Almost perfect ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 
Leading Off

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The ancient Stoic philosophers believed that it was essential to be prepared for downturns—whether contemplating war, shipwrecks, torture, or exile, the “premeditation of the evils and troubles that might lie ahead” was a way to manage life’s inevitable disasters. Modern leaders may be unlikely to endure shipwrecks, but they are beset with uncertainty of all kinds, from geopolitical upheavals to global supply chain shocks. Operating in a near-permanent state of uncertainty may require its acceptance in ways that traditional strategists may not be prepared for. This week, we explore this concept in more detail.
An image linking to the web page “Why strategists should embrace imperfection” on McKinsey.com.

“Imperfectionism sounds like a bad thing, but what we mean is accepting the ambiguity of not having perfect knowledge before making strategic moves,” says investor and McKinsey alumnus Charles Conn in an episode of our Inside the Strategy Room podcast. In a world marked by disruptions, conventional approaches to strategy can “yield either incomplete or misleading results,” he says; instead, dynamic, real-time, and nonlinear actions have a better chance of success. Adopting a few different mindsets can help leaders go with the flow rather than wait for certainty. For example, an “Ever Curious” mindset “starts with an audacious question or a long-term vision” that leaders should encourage their teams to cultivate, Conn suggests. “Your people have fantastic ideas, but there’s nothing more boring than being told to stay in your lane. You need to change incentive structures so that people aren’t penalized for working on the side.”

37%

That’s New Jersey commissioner of health Judith Persichilli, who took the job just as COVID-19 hit the state. In an interview with McKinsey partner Ellen Feehan, Persichilli describes one of the main lessons in leadership that the crisis taught her: that public service can be both “transactional and transformational.” While the pandemic sometimes required her to be transactional—as when setting vaccination targets—she needed to keep the broader mission of ensuring health and longevity for New Jersey residents firmly in mind. “The leader sets the tone,” Persichilli says. “I had to be confident yet inquisitive, at times stern but open to jest, and calm even when on edge. But through it all, to keep the team intact I had to lead with our values. We never lost sight of our mission and every day held the vision of a future much better than the present we were living in.”
An image linking to the web page “In conversation: Managing in extreme uncertainty” on McKinsey.com.

The COVID-19 pandemic led to widespread operational disruptions and a heightened sense of uncertainty about the future. “Our normal style of operating tends to lock in assumptions,” says McKinsey senior partner Patrick Finn in an episode of our Inside the Strategy Room podcast. “It is challenging for executives to admit that their direction of travel is wrong because the underlying information has changed.” When faced with information instability, leaders need to recognize that “the solutions to the crisis may have to be invented, not only implemented,” adds partner Mihir Mysore. “You have to go all the way to the basic tenets of the problem you are trying to solve. Many companies are not set up to do that.” Strategies may need to be flexible and include constant testing of assumptions. “In extreme uncertainty, there is no such thing as a forecast; there are only scenarios,” says Finn.
An image linking to the web page “What is resilience?” on McKinsey.com.

Lead by managing uncertainty.

– Edited by Rama Ramaswami, senior editor, New York

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by "McKinsey Leading Off" <publishing@email.mckinsey.com> - 04:42 - 29 Apr 2024