Opinion: Understanding uncertainty and managing the fear, how boards can embrace the unknown

In today’s constantly evolving business landscape, responding to disruption requires new strategic thinking. It is no longer enough for directors and leaders to rely solely on what they know.

We must learn to work with what we don’t know and embrace the uncertainty that comes with it. The challenge lies in breaking free from outdated conformity and unconscious bias. We must embrace positive uncertainty and be ready for the unknown unknowns.

Part one of this article looks at the critical areas where boards are frequently immersing themselves in the unknown. From risk and compliance to HR and financial complexity, our increasingly dynamic business environment is thrusting boards into previously uncharted situations.

As chairs and non-executive directors are placed for their experience and expertise, charting the unknown can be a little scary or uncomfortable but it is something we need to get comfortable with. And fast.

Shifting board thinking in the unknown

It’s a known fact that companies are increasingly navigating unforeseen events. From quiet data breaches that go unreported to the Optus crisis, every chair and non-executive director needs to be prepared for how they will help their company navigate the unknown.

How can boards shift their thinking to operate more effectively in unknown environments and respond to crises while maintaining oversight of an organisation’s function?

The key lies in developing what John Keats called ‘negative capability’, this is the ability to deal positively with uncertainty, complexity, paradox, ambiguity, and the anxiety that comes with not knowing what to do next.

The gap here is that chairs, directors and executive teams have all been appointed for what they know, not what they don’t know. But in our increasingly dynamic business environment, boards and executives are managing through what they don’t know more than what they do. This understandably feels uncomfortable.

Board directors may experience fear in various areas when it comes to navigating changing business environments. Some areas of fear for board directors include ten key factors.

Uncertainty about the future

Board directors have an expected role of grappling with uncertainty about the future direction of the business and its landscape. This can incorporate concern for things such as rapid technological advancements, shifting consumer behaviour, the economy, climate impact and geopolitical challenges, all of which can create caution, anxiety and uncertainty about the long-term sustainability and relevance of the organisation’s strategies.

Risk management and compliance

Directors are responsible for overseeing risk management and ensuring compliance with regulations and industry standards. Fear of unforeseen risks, regulatory changes, or legal issues can lead to concerns about the organisation’s ability to adapt and remain resilient in the face of evolving external pressures.

Talent and leadership

The ability to attract, develop and retain top talent is critical for the success of any organisation. Board directors may fear talent shortages and leadership gaps and the onboarding of new employees with different expectations. These all then need to be developed into a cohesive group who can cultivate a culture of innovation and agility to meet changing workforce demands.

Financial performance and market volatility

While not new, economic downturns, market fluctuations and fiscal challenges can evoke fear related to the organisation’s financial performance, liquidity and ability to sustain growth amidst unpredictable macroeconomic conditions. These are more difficult to predict than perhaps in the past, and the impacts far reaching.

Reputation and brand protection

Safeguarding the organisation’s reputation and brand integrity is a paramount concern for board directors. Fear of reputational damage, public scrutiny or brand erosion due to external events or missteps can create apprehension about maintaining stakeholder trust and confidence.

In a world of “fake news” and unknown ‘influencers’ predicting the messaging coming at you is hard and concerning. We have only to observe recent examples of Qantas, Optus and Rugby Australia to see the impact of brand deterioration and consumer trust.

Digital transformation and cybersecurity

The acceleration of digital transformation brings about fear related to cybersecurity threats, data privacy breaches and digital disruptions that could jeopardise the organisation’s operations, customer trust and overall resilience in the digital realm.

Stakeholder expectations and sustainability factors

Heightened awareness of environmental, social and governance (ESG) factors has placed additional pressure on directors to meet evolving stakeholder expectations. Fear of falling short in ESG performance or failing to align with societal values and with their own personal ethics, and interests, can weigh on board directors' minds.

Geopolitical and geoeconomic change

Global geopolitical shifts, trade tensions and geopolitical risks may instil fear about the impact of such changes on any international operations, supply chains, manufacturing processes as well as market access and traversing.

Business disruption and innovation

The fear of disruption from nimble competitors, technological innovators, or unforeseen market entrants can prompt concerns about the organisation’s ability to innovate to remain competitive in an ever-changing operational environment.

Crisis preparedness and resilience

Board directors carry the responsibility of crisis preparedness and resilience planning. Fear of unanticipated crises or inability to manage emergency situations effectively can create concern about the organisation’s ability to safeguard its people, assets, and reputation.

Zoom Out

Leaders often get stuck in the challenges they face because they are too immersed in them. Based on the list above, it’s hard not to get stuck when there are multiple unknown variables imposing themselves on business at any given time.

“Zooming out” or moving from “the dance floor to the balcony” as described by Ron Heifetz, Marty Linksy, and Alexander Grashow provides a broader perspective and a systemic view of the issues and can shine a light on unexamined assumptions that would otherwise not be visible.

From this “balcony” or elevated vantage point, interdependencies and larger patterns become observable, potentially revealing unforeseen obstacles and new solutions.

This more holistic perspective allows for greater adaptability and course correction when needed, and today, boards, their executive and their companies need it more than ever.

Next month, we will build on the critical areas where boards are managing the unknown and move on to the skills they can call on to handle new challenges and change.

Cheryl Hayman is an independent non-executive director on listed boards Ai Media, Beston Global Foods and Silk Logistics Holdings.