13/5/2014

Defining Uncertainity

Uncertainty is a key part of innovation, of being entrepreneurial in your work.

UncertaintyImage by Nicu in Flickr

Shane Parrish provides a good definition of this phenomenon:

There are decisions where:

  1. Outcomes are known. This is the easiest way to make decisions. If I hold out my hand and drop a ball, it will fall to the ground.
  2. Outcomes are unknown, but probabilities are known. This is risk. Think of this as going to Vegas and gambling. Before you set foot at the table, all of the outcomes are known as are the probabilities of each. No outcome surprises an objective third party.
  3. Outcomes are unknown and probabilities are unknown. This is uncertainty.

We often think we’re making decisions in #2 but we’re really in #3.

When you are in the third phase, the innovation process I describe on this blog is the best bet. That is where quantitative analysis does not work and we need to go deep with qualitative understanding for insight.


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