Does Expected Value Help You Prepare for Uncertainty?
As a business leader, you often face unexpected challenges and uncertainty somewhere along the way. At such challenging times, employees look up to you for guidance. It is undoubtedly tough to stay confident when you do not know what is next. So, how do you remain calm and steady and lead through uncertain times? In this article at Harvard Business Review, Don A. Moore and Max H. Bazerman explain how accurate expected value calculations help make better decisions during uncertain times.
Make Informed Decisions With the Expected Value
How to Calculate an Expected Value
The expected outcome value is calculated by multiplying the value associated with each potential outcome by its probability. Additionally, it can be calculated based on measurable parameters, such as cost, price, duration, or units. The authors believe that the logic underlying expected values must acknowledge that the future is uncertain, and the business decisions must reflect that. This process will significantly improve the quality of decisions.
Other Ways to Lead During Uncertain Times
Focus on the Long Term
Stay focused on your business’s long-term goals, mission, vision, values, and strategy. During uncertainty, guide your team to continue to work toward the long-term plan. Achieving short-term milestones may be challenging. However, the long-term goals remain relevant to your business no matter what.
Plan for Multiple Scenarios
Planning for multiple scenarios will help you feel more confident and prepared. Spend time thinking of various strategies to achieve your business goals. Ask the following questions:
Can supply chain bottlenecks complicate the way you operate?How can you potentially deal with these situations?Will sales increase or decrease?
Detailed planning will allow you to be more agile and respond effectively.
Communicate with Confidence
“You do not need to pretend you can perfectly predict an uncertain future to come across as decisive,” say the authors. Give people a behind-the-scenes view of the strategies you are considering implementing to achieve the goals. Furthermore, involve stakeholders when making operational decisions.
To read the original article, click on https://hbr.org/2022/08/leading-with-confidence-in-uncertain-times.
The post Does Expected Value Help You Prepare for Uncertainty? appeared first on AITS CAI’s Accelerating IT Success.