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Wednesday, July 15, 2020

C-Suite Advisory

Exercising Wisdom in an Era of Ambiguity

“Wisdom is the power to put our time and our knowledge to the proper use”, said Tom Watson, Sr. the legendary CEO of IBM. However, he was never confronted with a situation quite like business leaders are facing today. Our experience and prior knowledge is rendered useless because today’s challenges are spreading even faster than COVID-19 itself. Wisdom is demonstrated though two primary executive behaviors: decision-making and deep insight. Both are challenging when data and experience can be relied upon, but information is changing daily making it impossible to forecast accurately what will happen tomorrow putting leaders in a reactionary state. It’s difficult to get ahead of a problem when leaders are playing catch up. For most leaders, this is new territory for people who have consistently been ahead of the curve. Because of this, leaders are frustrated, annoyed and visibly angry — not the best state of mind to make decisions and render judgments.

Throughout the lockdown due to COVID-19 pandemic, leaders have been advised to rely on their company’s purpose, mission and culture but even in the best of times this can be abstract and confusing, and won’t eradicate the ambiguity they’re experiencing. Researchers have known for a long time that Loss Aversion has a significant impact on decision-making, but recently they have been studying the role of a particular type of Loss Aversion — an antipathy for uncertainty or ambiguity1. The Ambiguity Effect is a cognitive bias where decision-making is affected by a lack of information impairing our Executive Functions (please see The Leadership Tax). This effect shows how leaders avoid ambiguity by ignoring unknown probabilities because they prefer to pursue a conventional outcome. However our current business environment doesn’t offer likely outcomes — we don’t know what the future holds post COVID-19. Leader’s are left to gamble without knowing the odds because the risk level is unknown. Managing The Ambiguity Effect is accomplished by defining frustration tolerance, applying frustration management strategies and realizing its effects.

The Frustration Predicament

Frustration is a state of being upset or annoyed primarily due to an inability to change something or achieve a goal. This impairs our Executive Functions because frustration is one of the primary emotions that causes irrational thoughts that lead to poor decisions. Frustration occurs whenever highly motivated individuals encounter a barrier that prevents them from achieving a highly desired goal The barrier may be physical, psychological or symbolic. COVID-19 represents an unseen and intangible barrier unless one has experienced the virus first hand and those who have been exposed are well aware of the power of this barrier. Frustration forms when people are unable to get around the barrier and is demonstrated initially by becoming less logical resulting in compromised decision-making abilities and a failure to recognize the reality of a situation. When frustration fails to be managed, a person becomes irrational and emotional leading to aggressive behavior and may eventually lead to violence. The only reason frustration doesn’t escalate to violence consistently is social norms condition us to regulate our unreasonable behavior. This proves that we, as human organisms, are able to manage frustration. However, social norms do allow for emotionally based decisions. We’re capable of learning how to manage frustration caused by surrounding ambiguity enabling us to make better decisions even with incomplete and imperfect information. The question is “When?” Before we become violent? Before we become aggressive? Or before we make a poor decision? When do we tap the brakes?

Strategies

The first and most important tactic of managing frustration is recognizing when you are frustrated. However, some are incapable because they live in a perpetual state of frustration. Their anger is evident on a daily basis and are the last people to become aware how frustration affects the quality of their decisions. It’s virtually impossible for them to recognize when they are frustrated because annoyance, irritability and lack of enjoyment are part of their personality. These people are known as “carriers” where they contaminate everyone with their low frustration tolerance.

Second, when we become aware of the effects of our frustration we then are held accountable for our mindset. Just as there are “social brakes” for aggression and violence, we have the responsibility to check our frustration before it escalates to poor judgement. The sooner we accept the responsibility that we have control over how we think, the sooner frustration dissipates enabling us to make rational based decisions.

The third and fourth tactics are patience and persistence. Psychologists haven’t been able to figure out which comes first. Some people need to be patient to continue to persist while others need to persist to be patient. One thing is for sure — the ability to be comfortable with ambiguity is vital for today’s leaders. Persisting to accumulate valid information while waiting to make crucial decisions is an indication of enhanced Executive Functions. Getting comfortable being uncomfortable has never been more valued.

Finally, recognize goals are inherently temporary. Once a goal is achieved it’s replaced with another goal. Some highly motivated people may challenge this fact because of the far-reaching goals they establish for themselves and their organization, however COVID-19 has presented a barrier that may make those goals superannuated. Leaders who successfully manage frustration recognize it’s the goal that might be out of line — not them. In the era of ambiguity, positive thinking doesn’t go very far because most people resort to cynicism when probabilities diminish. However, Negative Logic is an important cognitive tool by recognizing the limits of the environment of which a goal can be achieved. Knowing what cannot be achieved leads to the realization of what can be achieved.

Effects

The most visible effect of Frustration Tolerance is resiliency. COVID-19 has forced all of us to recognize and accept our humanity. Not only is everyone vulnerable to the virus, but the extreme challenges we’re facing presents us with a failure rate that most leaders are not accustomed. Higher failure rates leads to only one outcome — resiliency. Whether we like it or not, over the past several months and the foreseeable future we will get use to getting up off the mat, literally and figuratively. The ability to bounce back is an unintended consequence of this global crisis.

Second, the natural order of things has been disrupted on a global scale. Adaptability (Please see The World Has Changed. Have You?) manifests by distinguishing between what you have control over and what you don’t have control over. How you think leads to how you act leading to how your organization executes. When leaders adapt, organizations adapt. When leaders fail to adapt, organizations simply fail.

Consistency is the third effect of successful frustration tolerance, and the most important. People need to know who they can rely upon. Inconsistent people are not leaders because they lose their followers — they’re figureheads. Leaders who absorb ambiguity and manage frustration demonstrate a consistency of purpose, a consistency of temperament and consistency of execution. As a result, people integrate ambiguity into their daily lives because their leader has. People manage their frustration more effectively because their leader has. The effects of Social Learning in the time of Social Distancing cannot be understated. Successfully managing your business is only possible when you successfully manage yourself.

References: David L. Dicks, Paolo Fulghieri – Uncertainty Aversion and Systemic Risk, Journal of Political Economy, Volume 127, Number 3, June 2019. pp.1118-1155.

Written by Stephen Long. Have you read?

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Stephen Long
Stephen Long, PhD is the founder and president of Motere Consulting, a performance enhancement firm providing management assessment and management development services through his statistically based predictive model of Human Performance & Leadership he built while serving as the Head of Performance Psychology in the Human Performance Lab at the US Air Force Academy. His clients average 115% improvement in financial performance with a zero failure rate through the application of his model. Stephen Long is an opinion columnist for the CEOWORLD magazine. Follow him on Twitter or connect on LinkedIn.