This is yet another of Vaughn Tan’s weekly attempts to make sense of the state of not-knowing and adjacent or sometimes entirely unrelated considerations. The first issue explains the project; you can see all the issues here. My book, The Uncertainty Mindset, is about uncertainty, innovation, organizational design … and cutting-edge cuisine. It was officially published yesterday in the US and will soon be available worldwide. You can get it here.
This issue is a bunch of fragments because I’m flat out on other work, swarmed with bitty ideas that have to be placeholdered to stop them rattling about, and variety is the s. of l.
An incomplete list of actions consistent with the uncertainty mindset
Really just a placeholder. I’ve been collecting these and will put them somewhere. Eventually. Meanwhile:
Only using “risk” as a label for situations where the actual future outcome is unknown but all possible outcomes and their respective probabilities are known (instead of using “risk” to indiscriminately label all situations where future outcomes are unknown).
Taking actions designed to understand more about the situation and/or explore evolving preferences (instead of delaying acting “until we know more”).
Choosing to take many intentional small actions that are reviewed periodically (instead of taking big actions, haphazard small actions, or actions that are never reviewed).
Planning for realistic worst-case scenarios and continually updating those plans and scenarios as more information becomes available (instead of planning for unrealistic best-case scenarios and failing to update those plans and scenarios as more information becomes available).
Intentionally overinvesting in flexibility at the expense of efficiency (instead of unintentionally overinvesting in optimization to pursue efficiency).
Luck and uncertainty
Last week, I had an Interesting Conversation with an investment manager while recording what might become a podcast episode. We were talking about how to know whether building and maintaining a high-performing investment portfolio was due to luck or skill. I don’t have a good answer for this yet. The follow-up question was if and how luck is influenced by uncertainty. Where we parked the idea is that it might be useful to think of at least two kinds of luck in this context:
Choice-set luck: Having access to good opportunities.
Action luck: Having the right resources at the right time to be able to take advantage of good opportunities that are available.
Choice-set luck seems to depend on how much an organization chooses to explore different new spaces in which opportunities are latent (vs to exploit particular spaces by investing in learning, over time, how to take better advantage of their respective patterns of opportunities). All else equal, the more an organization explores, the more likely it is that new spaces are discovered with more and/or better opportunities (e.g., Google discovering the space of search advertising) or less competition for opportunities (e.g., Coca Cola expanding into Africa from the US). There is always a tension between exploring and exploiting. Uncertainty tilts the balance in favor of exploration because it makes the pattern of opportunities in any space more likely to change in unpredictable ways and at unpredictable intervals. Uncertainty erodes the learning advantages of exploitation and amplifies the choice set luck enjoyed by organizations which choose to overinvest in exploration vs exploitation.
Action luck seems to depend on organizations having resources which can be deployed usefully in many different ways—I think of this as pluripotent slack (vs slack that can only be deployed in one particular way, like an unused piece of machinery that can only make one kind of widget). The more flexible something is at doing many things, the more inefficient it probably is at doing any one of those things—and the more expensive it is likely to be. Having pluripotent slack is not super-efficient but makes it more likely that the right resources are available when an opportunity shows up that needs them. Under uncertainty, the pluripotent slack that promotes action luck becomes relatively more useful because it also enhances the organization’s ability to respond appropriately to the unpredictably changing conditions uncertainty creates. Uncertainty increases the value (relative to the cost) of pluripotent slack—organizations that acknowledge uncertainty are more likely to invest in pluripotent slack and thus more likely to enjoy action luck.
High-quality, interesting humans who can learn and create meaning (vs needing meaning to be created for them) will probably remain the most pluripotent type of resource for some time. But not, if our machine overlords have their way, forever.
The summer solstice was more than a month ago but only now have the days become undeniably shorter. The urge to do nothing at all becomes overwhelming as it becomes clear that summer draws once more to a close.
Aimless nothingness should have palled after months of pandemic-enforced inactivity, but it turns out that intentionality and choice are essential for attaining a state of complete indolence. It is totally unsurprising that many innovators and creators have highlighted the importance of being rigorous while slacking off.
I have come back to the couch—
hands behind my head,
legs crossed at the ankles—
To resume my lifelong study
of the ceiling and its river-like crack,
its memory of a water stain,
The touch of civilization
in the rounded steps of the molding,
and the lick of time in the flaking plaster.
To move would only ruffle
the calm surface of the morning,
and disturb shadows of leaves in the windows.
And to throw open a door
would startle the fish in the pond,
maybe frighten a few birds from a hedge.
Better to stay here,
to occupy the still room of thought,
to listen to the dog breathing on the floor,
better to count my lucky coins,
or redesign my family coat of arms—
remove the plow and hive, shoo away the bee.
In order from the top, the photos in this issue were taken in Atlanta (2017), San Francisco (2015), London (2018), and Venice (2018).