The ubiquity of uncertainty by David Allen

by Heather Dandridge  30-Jun-2016 at 17:11

The ubiquity of uncertainty by David Allen

Throughout the EU Referendum campaign and its aftermath, one of the most frequently heard concerns was that the market / the city / big companies "don't like uncertainty".

If that is a view you share, then I have news for you: the future is, and always will be, uncertain. The prices of goods, services, foreign currencies and even money itself (i.e. the interest rate) will vary over time, in ways that can never be precisely predicted. The important thing is that these variations are signals reflecting economic fundamentals, which you ignore at your peril. Governments often try to suppress these signals in order to protect the status quo (as in the UK in the nineteen seventies, and the Eurozone now) but, in the end, they have to be abandoned.

For the individual business enterprise, strategies (not to be confused with the late unlamented 'long range plans') must major on flexibility and responsiveness. For instance, the UK's massive balance of payments deficit is a signal that sterling has been overpriced, and therefore needs to fall. This should prompt managers to pay particular attention to seeking opportunities to increase exports, or to produce goods previously imported. But remember to hedge the risk of adverse fluctuations through the use of forward and futures markets.

Likewise, on the conversion cost front, variability is paramount so that, if you switch emphasis in terms of markets served, products offered or technology used, you won't be lumbered with what are usually referred to as 'legacy costs'. This will have an impact on policies in such areas as employment, and make or buy / own or rent decisions. Not to be overlooked is the impact on organisation structure. Enterprises that have adapted to the rapid rate of change have developed structures based on business units rather than functions, and have pushed authority out to those closest to action.
 
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