Ever since the pandemic hit last year, we've been dealing with massive uncertainty. Every day brings new questions on a range of topics that spans regulatory environment to customer demand. Many of us wonder what things will ever get back to the way they were--or whether we're dealing with a new reality altogether. Any way you slice it, the uncertainty can be overwhelming.
As a leader, what can you do about it? The good news is that there is an industry we can look to for a model of how to deal with a highly uncertain environment: technology companies. To survive and thrive, tech companies by their very nature have learned to deal with uncertain environments filled with high rates of change. If they aren't constantly churning out new products, they face the risk of becoming obsolete overnight.
So, let's look at three strategies tech companies rely on to deal with uncertain environments:
1. Hire boundary spanners
If you have the fortune to work in a market that has low rates of change, such as making ball bearings, you don't have to worry about any radical changes in the marketplace. Since change happens slowly, there is a low probability that you will be surprised.
But, on the flip side, if you operate in an uncertain market, you'll need to rely on what we can call "boundary spanners": people on your team who are actively looking at the market hunting for what's changing.
While this will include your sales team, it should also become the role for just about everyone inside the business--engineers, accountants, leadership--to keep their eyes and ears pointed out into the marketplace looking for signs of change that will impact the company. If you don't have people watching for change, then you'll drastically increase the odds that you will be caught unprepared for it when it comes.
2. Build in business buffers
In highly uncertain environments, it can be difficult to plan for change even if you're actively hunting for it. That means it behooves you to alter your planning process in ways that will allow you to absorb as many of those changes as possible that you didn't anticipate coming.
Take, for example, how you go about your budgeting process. In a flat unchanging environment, it can be fairly easy to make your projections and forecasts and tie your budget to them. But in a highly fluid market, build in some buffers to help you adapt to change. That might mean putting down a range of expected revenue in your budget rather than a single static figure. While you might have a stretch goal on the high end, it's wise to have a lower end figure as well in case market conditions tank unexpectedly.
The whole idea is to try to plan for a surprise by building error bands around your decisions, so that when things go a little bit wrong, it doesn't blow up the plan.
3. Create protected barriers
Build protected barriers inside your business that can be isolated from external market changes. That means that 99 percent of the time, even when something radical happens outside of the company, you've protected yourself internally.
One example to consider would be real estate. With the onset of the pandemic, many of us adapted by working less in the office and more from home. By doing that, we've also proved the effectiveness of this model. In fact, it's proved to be so effective, many companies can now shed real estate investments and simultaneously eliminate the risk of dealing with pricing changes in that market. In other words, no matter what happens in the real estate market going forward, you have mitigated its potential impact on your business.
When you think about how you and your business can deal with the kind of uncertain environment we all face today, look to the tech industry for inspiration on strategies you can use to cope. Actively look out at the market to see where changes are coming from, build in buffers to cope with the changes you didn't see coming, and find places inside the business you can isolate from market changes altogether. If you can leverage one or more of these strategies, you can greatly increase your odds of making it to the other side no matter what happens.