Quick Take: Rethinking risk and reward

Can supply chain professionals reframe uncertainty as opportunity to make way for system-changing business innovation?

Embracing uncertainty

Supply chain practitioners are natural pessimists, perceiving risk in uncertainty and implementing strategies to mitigate losses. Listening to a recent HBR IdeaCast episode, The Case for Embracing Uncertainty, I learned that uncertainty and possibility are two sides of the same coin. INSEAD professor Nathan Furr and entrepreneur Susannah Harmon Furr have explored how successful innovators find hidden opportunities in planned and unplanned uncertainty, meaning situations that are forced on companies and those that business leaders voluntarily pursue. Together, the husband and wife team explore research and offer tools in their new book, The Upside of Uncertainty: A Guide to Finding Possibility in the Unknown.

For supply chain professionals, embracing uncertainty as a window to opportunities is an absolute game changer. It is often written that today’s supply chain crisis resulted from a hyperfocus on efficiency, resulting in a decidedly non-resilient global infrastructure. But listening to the podcast, I wonder if the supply chain failed because it was not designed to embrace uncertainty and enable customers to pursue opportunities. A supply chain that promotes innovation could be optimistic and vibrant, not fragile and self-defeating.

In this edition, I share 10 takeaways from Nathan and Susannah Harmon Furr’s insights. I borrow their words and explain what they might mean for the future of distribution and supply chains. I will dig into their book, make adjustments, and push further. My list is a start, a push in a new direction:

1. Good things happen after uncertainty. This fact is evidenced in our personal lives as we push through uncertainty and find happiness after accepting jobs, selecting colleges, and committing to relationships. In business, good things follow new partnerships, launching new products, finding new suppliers, and changing organizations. This is obvious, but sometimes forgotten. 

2. Achieve “transilience.” Transilience is the shift from a fear of uncertainty and avoiding risk to embracing uncertainty and seeking opportunities. For B2B innovators seeking to help their customers innovate in the customer’s own business, achieving mutual transilience may mark the beginning of game-changing collaborations.

3. Reverse uncertainty. Customer experiences may be designed to highlight and explore uncertainties, not eliminate them. With this approach, supply chain companies promise not to manage risk but to create opportunities. By doing so, the supply chain will exist not only to create efficiencies that drive out costs, but also provide solutions that may help customers develop new products, strengthen brands, and innovate business models.

4.  Reframe threats as opportunities. When a planned or unplanned uncertainty arises, customers value help and grant suppliers the grace to innovate. In such times, B2B innovators can lean in to help customers, learn from innovations born of challenge, and foster resilient customer relationships.

5. Look for adjacent possibilities. As an example, adding renewable energy to power grids requires batteries to store energy for periods when sunlight or wind is unavailable. As grid batteries become common, intermediaries may see an opportunity to keep energy for customers and offer power as a complementary (adjacent) product with equipment sales. Read here for more.

6. Seek mindsets that pursue infinite gains. As intermediaries adding value to products manufactured by suppliers, distributors operate fragile business models because prices set by others constrain their margins. By embracing a mindset of human flourishing—helping customers and their workers grow, thrive, and accumulate wealth—distributors may create unconstrained profit opportunities. Read here for more.

7. Manage values, not goals. Goals are about achieving rigid and defined end states which may be “out of hand” for managers and workers. Values guide choices and reflect human interests. When well-defined and consistently followed, values reveal opportunities for change. Goals constrain innovation; values open possibilities.

8. Add “uncertainty projects.” Most leaders direct effort toward what is certain and known to be true—standards for serving customers, line extensions for incremental improvements, accepted financial metrics, and so on. By adding projects with uncertain outcomes to an organization’s effort, leaders give teams the thrill of pursuing game-changing opportunities without penalty. Over time, big ideas emerge from failures and near-failures, helping companies achieve unimagined progress.

9. Don’t minimize risk; balance it. Faced with uncertainty at the start of the pandemic, some leaders were hyper-focused on financial risk. In contrast, others worried more about employee health, managing through remote work, the shortage of truckers and skilled workers, abandonment of critical initiatives, and so on. Success flowed from achieving a balanced approach to managing uncertainty. The same holds for pursuing planned uncertainties such as inventing a new product or entering a new market. By understanding individual affinities and aversions to risk—where people will naturally take risks and where they won’t—risks are balanced, not eliminated, making success more likely.

10. Embrace life (and business) as a series of onramps. In the digital age, there are more uncertainties than ever, and if leaders believe there are opportunities hidden in uncertainty, opportunities are nearly boundless. For those with courage, now is not the time to look for off-ramps—don’t abandon plans for innovations and improvements. Instead, invest in change and push harder, ever forward.

Your take?

Can you share stories of pursuing opportunities in uncertainty? As successes or failures? Do you know how to achieve such a mind shift? What works and what doesn’t? Please share your comments below or reach me at mark.dancer@n4bi.com.