Make a New Year’s resolution – to manage uncertainty

Here we stand once again at the beginning of a new year.  What will it have in store?

12 months ago no-one could foresee all that 2011 would bring.  Some events were expected: the royal wedding; the rugby world cup.  Others, if not expected, might reasonably have been foreseeable to some extent: bailouts of the weaker Eurozone economies;  the spread of Tunisian unrest across the Arab world.  And of course many were neither expected nor foreseen: the Japanese tsunami; the death of Osama bin Laden; riots in Britain; Manchester United being trounced 6-1 at home by Manchester City… 

Businesses face similar uncertainties in 2012.  Much of what will happen to them this year will be unexpected, and some will be unforeseeable.  But there are two key steps you can take to manage the impact of uncertainty on your business and even turn it to your advantage:

1. Minimise the unexpected by taking time to understand your commercial environment in detail.  The better you understand the developing trends amongst your customers and competitors and their impacts on market size and profitability, the more likely you are to recognise the important events – whether evolutionary or revolutionary – early, and (crucially) before your competitors.

2. Protect yourself against the unforeseen by making sure you identify and occupy strategic high ground, focusing your resources on those activities which are the most profitable, the most desired by customers and which you’re best at.  That way your returns are more likely to survive unexpected floodwaters that will erode weaker businesses.

New Year’s resolutions are not very fashionable these days, but with a whole year of uncertainty ahead, what better time than now to resolve to manage that uncertainty, rather than let it manage your business?