06. Uncertainty Dynamic Modeling

“The art of managing uncertainty depends hugely on how much we can understand the realities of the situation.”
- Winston Churchill

Based on the analysis of the action research and the case studies presented above, I developed a methodology for modeling uncertainty in early stage startup, focusing the internal factors — product/service development and team development. Note that the external factors such as fund raising, goverment policy and regulations stated by the case study are excluded.

The uncertainty dynamic model is a process diagram which has different types of nodes, edges and symbols representing the element of uncertainty management that were examined in Section 5 — Action Research. The intent of the model is to make the evolving state of an early startup explicit concerning internal uncertainty field & variables, uncertainty point, uncertainty management tasks and uncertainty resolved outcome(decision point). This section demonstrates the diagram representation and then shows how the model can be used in uncertainty management for early startup.

6.1. Uncertainty Dynamic Representation

The diagram has a few nodes, edged and symbols. The diagram shows how the internal uncertainty condition in early startup varies over time. Note the conducted nodes and edges always move from left to right in the process that always move forward in time. Followings are the description of the meaning of the various symbols for the edges, nodes, and field.

Figure 1. Uncertainty Dynamic Modeling for early stage startup (Yoona Cho, 2016, Uncertainty Management for Entrepreneurs)

• Uncertainty Field: The gray and ivory boxes are uncertainty fields; business development field and team development field. They can be used to represent areas during the early startup where an uncertainty issue arose and lead the need to select from among decision alternatives.
• Information level: The vertical line left indicates the amount of information the team has which is one of the key variables of uncertainty. When the information level is too high, the team often feel uncertain with overloaded alternatives whereas they feel insecure as well when the amount of information is insufficient.
• Timeline: The horizontal line in the middle implies the timeline that has several phase in two fields of uncertainty.
• Information flow: The curved edges indicate information flow with three principal elements; orientation(left to rigt), speed(varies by the team) and the fluctuation(varies by the team).
• Uncertainty node: The red stars are uncertainty nodes. They can be used to represent uncertainty point that needs to be resolved to move forward.
• Decision node (uncertainty resolved outcome): The yellow dot points are decision node that can be referred as the uncertainty resolved outcome in each phase. These can represent the requirements in early startup development. If a decision node goes from one decision node to another decision node, the later node can be interpreted as a subsequential decision to be defined under the former decision.
• Uncertainty management task: The arrow lines beside to the edges from an uncertainty node to decision node indicates the uncertainty management task. The blue solid line arrow lines are tools to diverge the information/alternatives. The green dot line arrows are tools to converge the information/alternatives. The uncertainty management task lines that are going beyond the point of the optimal amount of information represent the reality that it is hard to figure out the optimal level of information when the team diverges or converges the alternatives, and they often make a decision after taking over the divergent/convergent process.

6.2. Uncertainty Dynamic Analysis — How to manage the uncertainty

Know when to diverge and converge
If the team feel uncertain, it is closely related to the level of information. So ask a self-question if it’s because of the insufficient knowledge or too many options. If the available information among the team is too small to make the decision, it is time to diverge; gain information and explore alternatives. If the team feels uncertain to make a decision with too many choices, it is time to converge; synthesise and integrate the knowledge/information by categorizing, filtering, selecting based on their decision point. Focus on the decision point is the key in synthesizing the information.

Focus on the decision point with the respect of the former decision made
The maximum and minimum threshold of data level depend on the team (time frame, issues to decide, the number of team members, etc.) but the key is to decrease the fluctuation degree of the information and stabilize the team regarding the uncertainty.
Then how to reduce the knowledge variation over time? When exploring (diverging) or synthesise(converging) the choices to manage the uncertainty, make sure you focus on the decision point. Try to build the decision upon the former decision. Otherwise, the information variation and the uncertainty will increase.

Make sure information keeps flowing, ideally quickly.
Uncertainty only remains uncertain if there is no movement, and it might even grow when it freezes. Leaders need to create a culture that allows people to keep moving forward with the action of exploring or integrating information. The various digital tools are facilitating the speedy flow of information in this time.

Business is the half, and the another half is the team.
Don’t overlook the importance of team development in uncertainty management. I found the team suffered from the uncertainty aroused in team development field far more than they expected. The startup team usually foresees the uncertainty in business development (even though they can’t forecast the probability) but hardly expect the uncertainty from the team issue can affect the whole startup up to the risky degree. But the truth is startup fails when people give up, and what makes people leave is due to the failure of teamwork in large part. So take care of the information level and information flow regarding the team as well as the business. Be acknowledge of the tools for managing the uncertainties in team development field not only the tools for managing business developement.

Embrace the ambiguity.
Even though managing the information level and the information flow can mitigate the uncertainty, it is almost impossible to be free from the uncertainty because the reality is the team feel rarely certain; when one member feels uncertain then the team is unstable; uncertainty is cognitive, and the appraisal to uncertainty varies by individuals. Even in managing information level to resolve the uncertainty, the team often unable to calculate the optimal level of information and cannot help collecting too much information or selecting too little alternatives, turns out only as hindsight. Therefore, the team must aware that the uncertainty management should be an iterative process. Team only can stabilize the themselves by sharing the each team members’ perception and appraisal toward the uncertainty each time, and making decisions upon that team perspective with available sources over time.

Read 07. Conclusion