When the rate of cultural change is maximum, individual thinking is not prized. As a consequence, we go with the flow. The problem is we spin as individual thinking ideas that looked more closely we would see for what they are — a way to manage risk by aligning with the crowd.
Risk management is not just the domain of organizations. Uncertainty affects how we think about the future and thus our appetite for making decisions proactively. But understanding the nature of risk and learning to make better decisions can help us become a better driving force of what we do. Nate Silver's excellent book, The Signal and the Noise: Why so Many Predictions Fail – but Some Don't provides a summary of the difference between risk and uncertainty:
Risk, as first articulated by the economist Frank H. Knight in 1921, is something that you can put a price on. Say that you'll win a poker hand unless your opponent draws to an inside straight: the changes of that happening are exactly 1 in 11. This is risk. It is not pleasant when you take a “bad beat” in poker, but at least you know the odds of it and can account for it ahead of time. In the long run, you'll make a profit from your opponents making desperate draws with insufficient odds.
Uncertainty, on the other hand, is risk that is hard to measure. You might have some vague awareness of the demons lurking out there. You might even be acutely concerned about them. But you have no real idea how many of them there are or when they might strike. Your back-of-the-envelope estimate might be off by a factor of 100 or by a factor of 1,000; there is no good way to know. This is uncertainty.
Risk greases the wheels of a free-market economy; uncertainty grinds them to a halt.
The context for Silver's lucid comparison is that of the alchemy that the rating agencies performed by spinning uncertainty into what looked and felt like risk. When we learn to identify risk, we can deal with it by understanding the odds and accounting for them in our decisions.
To deal with uncertainty we need to first understand what it does to us. In Uncertainty: Turning Fear and Doubt into Fuel for Brilliance Jonathan Fields says the reason we are terrified of the unknown is hardwired into us. Magnetic resonance studies show that:
When exposed to [an unknown fact] a part of the brain known as the amygdala, a core instigator of fear and anxiety, lights up, triggering a cascade of psychological and physiological events, sending impulses and chemicals rushing through our bodies that induce a state of hyper alertness and, for many, anywhere from mild to severe fear and anxiety.
Most people experience uncertainty as a form of suffering to be banished by any means necessary.
Most of us react to uncertainty strongly enough for it to be a limiting factor in our lives and in our willingness to act in the face of it.
But that is not the only limiting aspect of uncertainty, for it triggers something else — fear of judgement. Fields focuses specifically on artists and creators in many of his examples, but in some respect we are all creators, whether we work independently or in a large corporation.
Physical exercise and meditation, building better habits, a strong support network all help temper our automatic response to the unknown and keep us from getting stuck in uncertainty and fear mode. Fields also says we should own the story line. That means learning to run scenarios. To overcome fear and uncertainty about our path, we should ask three questions:
1. What if I go to zero? What would happen if I failed completely?
2. What if I Do Nothing? Fields says, “There is no way to move sideways in life. Not in relationships, not in business, not in spiritual growth, not in the quest to build something brilliant from nothing. There's only up or down.” He points out that if any of the following are left unaddressed over time: nagging pain becomes chronic; unrewarding work becomes soulless; our currently “passable” life becomes increasingly painful as we enter the long, slow slide toward death.
3. What if I Succeed? What would be the story line of success?
The rate of change has accelerated, and while individual thinking is not prized, it is more important than ever to learn to manage risk and deal with uncertainty. To become more resilient, we can and need to adapt. In The Harvest of Victory, Esme Wingfeld Stratford says:
“Life is the adaptation of creature to environment. In the pre-human past the tempo of that adaption has been limited, so that a revolutionary change in the environment has always meant the death to the species. Man, in the Machine Age, has contrived to revolutionize his own environment – an unprecedented feat. The crucial question is whether with discourse of reason will enable him to perform the equally unprecedented task of revolutionizing himself.
Failing that, his civilization, and possibly his species, are doomed, if only for the reason that the energies he has succeeded in exploiting are incomparably swift and potent to destroy than to benefit, and if not controlled by adequate intelligence, will inevitably do so.”