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Uncertainty is an unavoidable factor in any organization, and although we cannot eliminate it completely, we can manage it effectively to reduce variation in results. Through techniques such as (1) Lean thinking, (2) scenario planning, (3) business intelligence, and (4) the development of a resilient organization; Companies can minimize the negative impacts of uncertainty and create a competitive advantage to successfully navigate times of change.
Contents
The Nature of Uncertainty and Variation
In a business environment where the only constant is change, uncertainty plays an important role in the mind of any organization that seeks to stay ahead of its competition and above market conditions. That is why managing uncertainty about the future effectively has become a key skill for leaders seeking to reduce the impact of variation on their businesses and better control the growth of organizations.
In each project, and in each action, the conditions vary from small fluctuations to major disruptions which can be categorized into two types of uncertainty:
Internal Uncertainty, related to decision making, process efficiency, worker productivity and organizational culture.
External Uncertainty, coming from changes in the economy, new regulations, disruptive technological innovations or global events, such as the COVID-19 pandemic.
Both forms of uncertainty have something in common: they generate variation, that is, fluctuations in performance and results that make it difficult to plan activities and predict results. Thus, primary industries such as agribusiness and construction are the most likely to suffer from this phenomenon. However, with the implementation of digital strategies and tools appropriate, it is possible to reduce uncertainty and minimize its adverse effects.
The success of any project depends on the ability to anticipate and manage uncertainties. This requires careful planning, taking early action, and using helpful tools to prevent problems before they become difficult to fix. The key is to see uncertainty not only as a problem, but also as an opportunity to improve things and make projects work better.
Techniques to Manage Uncertainty
To manage uncertainty it is essential to have a proactive approach to identifying and planning for risks to reduce variation in processes and results.
1. Apply Lean Thinking: A Solid Foundation
The Lean approach, which originated in the Japanese manufacturing industry, focuses on eliminating waste and creating a continuous flow of value. By standardizing processes and continually improving them, companies can create reliable results that adapt to the needs of the moment. However, this is sometimes insufficient to mitigate the immediate effects of uncertainty.
This approach is essential for ensuring that the organization resolves current problems and minimizes the likelihood that they will arise again in the future. By applying the PDCA (Plan, Do, Check and Act) model, gradual improvements can be made and process efficiency increased to ensure project success.
2. Diversify and Plan Scenarios: Prepare for the Unexpected
When we face an uncertain environment, it is necessary to be prepared for different situations that may arise; From the most optimistic to the most pessimistic scenarios, we must plan an appropriate strategy for each one and apply a buffer mechanism (slack) to prevent unexpected events from affecting the final result we seek. These mechanisms can be classified as:
Inventory Slack to cushion delays in supply.
Example: Maintain additional stock of essential materials.
Time Gaps to compensate for delays.
Example: Add “overtime” to key tasks on the schedule
Capacity Clearances to speed up production.
Example: Have additional resources to respond to any situation.
These clearances help us maintain the necessary flexibility to manage unforeseen events without compromising the project as a whole. Also, by dividing projects into short phases (sprints), we can quickly adjust course as circumstances dictate, thereby reducing the risk that an unforeseen change will significantly impact the entire project.
3. Measure and Control Processes: Identify a Problem the Moment It Happens
Monitoring and controlling processes is essential to Identify variations in real time and correct them before they become larger problems. By having Business Intelligence (BI) systems that allow us to collect, process and analyze data from multiple sources to generate reports and interactive dashboards, we can not only improve the stability of processes, but also reduce variability and facilitate decision-making in uncertain scenarios.
It is also important to keep a constant feedback loop with customers and other stakeholders to spot early warning signs, so you can continually make strategy adjustments before problems become insurmountable.
4. Develop a Resilient Organization: Take Advantage of Uncertainty
Although the previous techniques are effective in managing uncertainty, it is essential to develop a resilient organizational culture, capable of adapting to changes efficiently and with a growth mindset that allows not only respond well to crises, but emerge from them stronger. Some strategies to achieve this include:
Solve Problems When They Happen, thus avoiding the creation of unresolved conflicts, the generation of mistrust between people and the power games in the organization.
Promote a Culture of Innovation, encouraging experimentation and the search for new opportunities in order to avoid being surprised by changes.
Strengthen Transparency and Internal Communication, informing, aligning and engaging teams to reduce anxiety and variations in performance.
Consider the Well-being of Employees; investing in reducing stress and errors due to it.
Conclusion: The Domain of Uncertainty
In all projects unexpected things will always happen; that is why we must always be open to the possibility that the plan is going to change. This mindset allows work teams to anticipate potential risks, plan solutions, and maintain the flexibility necessary to adapt to unexpected changes in conditions and circumstances around projects.
Mastering uncertainty is not a question of having all the answers, but of being prepared to adapt and thrive in any scenario. By carefully planning projects, constantly measuring them, and adjusting strategies in a timely manner, we can turn great challenges into majestic growth opportunities.
The times of uncertainty are also times of opportunityWhile others are paralyzed by fear of “what will happen”, we invite you to keep moving, learn new skills, enroll in courses, take certifications, watch tutorials on platforms such as YouTube, LinkedIn Learning, Coursera, etc., read value-added books... This will open more doors and opportunities than you can imagine.
With these approaches, teams can minimize risks, improve efficiency, and ensure projects are completed on time, within budget, with established quality standards and necessary safety measures.
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About Yesenia Pellegrini (Author):
Consultant at TACs Consultores, specialist in the implementation of strategic solutions and digital improvements; seeks to optimize processes and ensure the success of our clients.
About Pablo Tellaeche (Editor):
Owner and main consultant of TACs Consultores, Lecturer and University Professor; seeks to bring a true and positive Culture Lean and Digital Transformation to any company with which you have the pleasure of collaborating.
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