Step 3: deploy âbackward reasoningâ.
Identify a set of strategies that could lead to success under a range of possible futures, then backtrack from the end goal to work out the steps that would lead there. While designing these implementation plans, leaders should promote effectiveness and optionality â delaying committing to irreversible investments for as long as possible â to keep their options open. Put another way, when uncertainty is high, itâs important to privilege being flexible.
Jeff Bezos, the founder and former CEO of Amazon, underscored the importance of this approach in his 2018 letter to shareholders in which he wrote: âSome decisions are consequential and irreversible or nearly irreversible â one-way doors â and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation ⌠but most decisions arenât like that â they are changeable, reversible â theyâre two-way doors.â
By front-loading their implementation plans with two-way-door decisions, leaders create an opportunity to learn from the future: as new developments occur, they can update their thinking. For instance, an airline needs to decide whether to order new planes but is unable to accurately forecast passenger demand in 12 monthsâ time. Promoting optionality could mean letting go of owning the planes and leasing them instead. Yes, leasing might be more expensive than owning outright, but only if demand is strong. Under uncertainty, the better route might be to spend a little more on leases as this affords the flexibility to return the plane if thereâs no demand for it.
In summary, leaders should adopt an agile decision-making style, continuously modifying their allocation of resources as the environment evolves. Adapting their thinking in light of new evidence might call for maintaining redundant overlapping systems, which is at odds with the general corporate focus on efficiency gains. In normal circumstances, leaders rightfully challenge themselves to make their organizations as efficient as possible. However, when uncertainty skyrockets, they ought to focus on effectiveness, identifying first and foremost what needs to be achieved, then keeping their options open for as long as needed.
Maintaining optionality, along with scenario-planning for a wide range of possible futures, will help leaders to make more effective decisions as they attempt to navigate an increasingly volatile operating environment.