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Our center is dedicated to developing theories, frameworks, and tools that can help us better understand and manage uncertainty in all sectors. We host conversations with experts in the field as well as develop research and articles to help guide decision-making in uncertain times.
What If: A Science of Uncertainty?
Uncertainty is not new. Although it may feel like uncertainty is overwhelming now, recall that this isn’t the first-time people have faced significant uncertainty. Recently, I attended a special exhibit on the American painter, Winslow Homer, held in the National Gallery in London. Because the curators brought an outsider’s perspective to the American painter, they were able to see what I had not: an artist wrestling with the deep uncertainty unleashed when a newly formed United States took up arms to fight, neighbor against neighbor. Homer’s painting, “The Veteran in a New Field,” composed just after Lincoln’s assassination depicts an individual standing before head-high wheat beneath a blue sky, Union Army uniform cast to the side, cutting a great swath of new grain with the oldest symbol of death, the scythe. For a painting of such a mundane subject, it is beautiful, reflective, and moving. The explanatory card beside it explained that it captures both the hope and loss of that period of deep uncertainty.
Standing before that painting it struck me: if human beings have faced such great uncertainty before, why haven’t we developed clear, teachable tools and frameworks for how to face it well? Why aren’t we taught from the day we enter school, or before that, how to navigate planned and unplanned uncertainty? My thesis, however imperfect, suggests two reasons. First, in fact, human beings had collectively developed a workable solution for uncertainty. Religion, community, routine, and the liberal arts, among other factors, provided the mental, emotional, and physical tools to cope with uncertainty.
I’m not trying to extol traditional values, nor to overlook their abuses, but simply state that when human beings were embedded in deep local communities with highly repetitive routines (e.g., farming cycles driven by seasons) with an overarching philosophy that life is largely outside our control, people had workable, in imperfect, tools to manage uncertainty. The challenge is that those tools are largely no longer workable solutions for most people leading to a gap in the needed tools to face uncertainty. One could argue that the angst of the modern era, from the world wars to existentialism through post modernism is a story of recognizing (and suffering) in the face of the fundamental fact of uncertainty, but with only limited efforts to address how to actually face that uncertainty well.
This does not mean we have not made efforts. Work in the fields of psychology, philosophy, and even management, among others, have provided useful approaches to facing uncertainty well. For example, in the fields of psychology, work in domains like positive psychology, cognitive behavioral therapy, and resilience provide tools for uncertainty. In engineering, frameworks like the application of the Johari window (commonly known as “unknown unknowns” framework) acknowledge and try to address uncertainty. Likewise in strategy, work in strategy in dynamic environments which describes tools like simple rules, also provides frameworks for uncertainty. Similarly, in the practical sphere, no doubt that that rise of perspectives such as mindfulness, stoicism, and resilience all provide the nub-ends of useful approaches to facing the unknown.
But without facing the fact that we have not taken a full, comprehensive look at uncertainty, we will not recognize the need to develop, and more importantly teach, the broad set of skills to face uncertainty well. We will go on teaching people how to add sums, how to interpret history, and how to formulate a hypothesis without teaching them how to face the anxiety that can turn into anger when the sums in their accounts aren’t enough, to have the compassion to engage with the many voices of society rather than cling to our own history, the courage to choose a challenging hypothesis that matters rather than a safe one that gets you tenure.
This issue becomes all the more pressing if one believes that uncertainty is increasing. According to the World Uncertainty Index, created by economists at Stanford and the IMF, measures of political and economic uncertainty have increased 50% since the 1990s. There are several driving forces that may lead to an increase in uncertainty. Technology has lowered the barriers to entry, increasing the pace of entry into new markets (Agarwal and Gort, 2001) and decreasing the length of competitive advantage five-fold (Wiggins and Ruefli, 2005). Increased access to education has increased our ability to associate to create new ideas (Epstein, 2019) thereby increasing the rate at which new ideas become accessible and change the world. Likewise increased participation due to inclusive policies has allowed for more ideas to come to light further accelerating the rate of possible change. Of course, there are counter-vailing forces that decrease uncertainty, such as industry concentration around technology giants, increasing reliance on technology standards, and strong institutions, etc. Ultimately, whether you believe that uncertainty is increasing or decreasing, many people and organizations struggle to navigate the uncertainty feeling they do not have adequate tools. This gap between the reality and the tools we have been taught is a human issue, a societal issue, but it is also a management issue.
Uncertainty matters to the field of management, and particularly strategy, because we have only partly addressed uncertainty in our existing research. The roots of industrial organization and management, one could argue, were developed to solve a very specific problem. We sometimes forget that management, and strategy particularly, are relatively new disciplines. Before the industrial revolution, virtually every business, with the exception of church and state, were small businesses of less than thirty people. There was no need for management.
But technology transformed the economic landscape creating massive organizations that needed new approaches. In 1850, the President of Harvard remarked in surprise that half their graduates were going into this new profession called “management.” This new discipline, with the first business school founded in the 1880s and the first MBA program established in 1908, tried to solve the problem created by the industrial revolution: how do we organize, coordinate, optimize these large organizations. In other words, how do we manage them to capture value. The problem to be solved was how not how do we step into the unknown to create value. In these early schools, entrepreneurship and innovation was not a topic of serious study because, in part, that was not the problem they were created to solve, and in part because companies hired managers to manage companies, not managers to create a new company.
The outcome of this focus on coordinating industrial organizations, including the strategy for such organizations, is that we are only recently turning our attention to the theories, frameworks, and tools for facing uncertainty. This turning of attention is manifest at the level of emerging topics. For example, entrepreneurship has only comparatively recently become a major topic of research and teaching in universities or a major career path. Likewise, innovation capability, or the process to test ideas effectively in the market, has only recently emerged as a repeatable capability as described in frameworks like design thinking, lean startup, or agile. Similarly, fluid organizations based on open systems (Thompson 1967) or strategy in dynamic environments has only more recently become a major discussion and one that only followed the establishment of more familiar, more-certainty based perspectives such as the industry-structure or resource-based views (Furr and Eisenhardt, 2021).
The presence of uncertainty does not diminish the relevance or importance of prior work in management because, just as we must be prepared for conditions of uncertainty, so we must also be prepared for conditions of certainty. But the major gap in our social and organization evolution is developing and teaching the tools for an uncertain world.
The good news is that there is a growing body of research-based theories, frameworks, and tools for the topic of uncertainty. Broadly in fields related to management this includes research in areas such as ambiguity tolerance, uncertainty avoidance, resilience, and positive psychology and more narrowly in the field of strategy includes work on strategy in dynamic environments, innovation, and entrepreneurship. But it is a challenging topic: uncertainty remains hard to define because it is the study of something that is an absence and sometimes irresolvable. But the effects of the absence of these tools are equally sharp: the well documented effects of threat-rigidity, escalation of commitment, rumination, anxiety, and others highlight the dangers when we do not have tools to face uncertainty well.
Most importantly, in my work on technology strategy and innovation it became clear to me that few possibilities are achieved without first facing uncertainty. Uncertainty is the moat that protects new opportunities. But in addition to the uncertainty we choose when we do something new, there are uncertainties that happen to us. Yet even in these situations, there may be some possibility that can be pulled out of it. My recent and future work, aimed at the research community (e.g., “Strategy and Uncertainty,” Journal of Management, 2021) and at the practice community, (e.g., “The Upside of Uncertainty,” Harvard Business Review Press, 2022) are dedicated to exploring, understanding, and ultimately teaching the frameworks to navigate uncertainty.
Before tenure, my research touched indirectly on uncertainty by examining situations where firms face uncertainty, such as entering a new industry or navigating technology discontinuity (e.g., papers 2, 3, 9-16). Since tenure my work has focused explicitly on uncertainty (e.g., papers 1, 4, 5, 6, 7, 8, etc.) My hope is to focus ever more explicitly on developing an “uncertainty science,” or the study of uncertainty because I believe it is critical to the success of individuals and organizations in dynamic environments, to the ability to create new things and possibilities, and at the heart of resilience in the face of the unknown. Only by developing the ability to face uncertainty well can we have the calm, courage, and vision to solve our biggest challenges.
Like Dr. Ayana Johnson, a marine biologist facing up to the existential threat of the climate crisis, rather than focus on the dangers of getting it wrong, I would like to ask: “what if we get it right?” What does a world look like where we all have the tools to face uncertainty with courage, where organizations train their people to develop “uncertainty ability,” and where leaders engage using strategies and frameworks designed for a world of change. It could be empowering, robust, and humane. It could be both important and beautiful.
Motivation
Nathan R. Furr
Nathan Furr is an Associate Professor of Strategy at INSEAD, where he teaches innovation and technology strategy. Nathan earned his PhD from the Stanford Technology Ventures Program at Stanford University. Nathan’s research focuses on innovation and technology strategy, particularly how individuals and firms navigate uncertainty. Published papers include explorations of how to capture new opportunities, how to balance the need for execution and flexibility, how firms develop innovative business models, the determinants of success for firms changing industries, and the impact of learning on new market success. His research has been published in leading journals, such as Strategic Management Journal, Organization Science, Strategic Entrepreneurship Journal. He has received various awards, including the Best Dissertation Award from both the Technology & Innovation Management Division and the Entrepreneurship Division of the Academy of Management, as well as Best Paper Awards or finalist distinctions from the Business and Public Policy Division of the Academy of Management, the Kauffman Foundation, the Sloan Foundation, and other recognized academic institutions.
Nathan is also a recognized expert in innovation, entrepreneurship, and uncertainty, co-authoring The Upside of Uncertainty (Harvard Business Review Press, 2022), Innovation Capital (Harvard Business Review Press, 2019), Leading Transformation, (Harvard Business School Press, 2018), The Innovator's Method (Harvard Business School Press, 2014) and Nail It then Scale It (NISI Institute, 2011). He is an Innosight Fellow, has been nominated for the Thinkers 50 Innovation Award, and works with leading companies such as Google, Microsoft, Citi, ING, Philips, Solvay and others. His work also appears regularly in Harvard Business Review, MIT Sloan Management Review, Forbes, and other outlets.