Dealing with Downturns: Strategies in Uncertain Times
Dealing with Downturns:
Strategies in Uncertain Times
It is inherent in the nature of action in an uncertain world that we must deal with both success and failure. Therefore strategies are essential in today’s competitive world. They can make the difference and turn a disadvantageous situation into success.
The importance of strategy and what it means, as well as the historic view of strategy are addressed in this latest Convoco! Editions publication dealing with themes of freedom, intuition and law.
Failure is present as a possibility in any action or venture. In order to fail “well” it is essential to have a strategy, for then one recognizes alternatives and can admit mistakes. Strategies are essential—they can turn a defeat into a victory and create success in the face of adversity and an unfavorable starting point.
Corinne M. Flick
The revelation of the law as a way of controlling the uncertainty of the future.
Christoph G. Paulus
We expect the law to create regulations applicable even to situations that are characterized by risk and “non-knowing.” This can be successful if uncertainty is not seen as a problem or a degenerative phenomenon associated with postmodernism, but as an inevitable and productive part of knowledge. The law contains strategies, from rules regarding the burden of proof to rules governing liability, that can reduce complexity and distribute the social risks of “non-knowing” in an appropriate way.
Failure means falling short of goals of a particular action. How- ever, the problem of uncertainty questions this model of action. If the conditions of the action are not fully known, as there is no complete information available, and the future also cannot be derived probabilistically from the past, how do actors make decisions? One solution would be to act as if it were possible to determine means-end relations unequivocally. An alternative is to understand decisions in quite a different way, that is as a process of trial and error, in which the goals and means of the action adapt again and again to the new experiences that are encountered over the course of the situation. In this way action is understood neither teleologically, as if controlled by a goal that exists outside the process of action, nor traditionally, as if based on unquestioned habits. Rather, it is understood as a continuous- ly situational process of adaptation based on the information to hand. If we are to take uncertainty seriously as a starting point, such a pragmatic model of action is a possible alternative. Failure then becomes a normal part of action, but it can also be seen more clearly as an obvious starting point for processes of learn- ing that form the basis of further decisions.
Freedom overcomes uncertainty and contains uncertainty with- in itself. But freedom creates hope out of the unknown, the invisible, and the uncertain. This hope refers to the individual human being, his right to self-determination, his joy in creativity, and his sense of responsibility. Freedom is the principle of the individual who hopes.
Even the extinction of the dinosaurs after a meteor strike and the decline of all empires that have ever existed are not capable of reducing in the least our optimism that we can survive the worst if we learn how to deal with it. These are the words of the prophet of doom who is nevertheless smart enough to survive, as he knows that by changing the descriptions of this awful prospect he can avoid being harnessed to the yoke of doubt and euphoria.
For Carl von Clausewitz, the great 19th-century Prussian military theorist, the role of “strategy” in war was vital. But his definition of strategy was not that used by Sun Tzu nor as military theorists understand it today—in effect, the commander’s method of planning and conducting a campaign—but, rather, the use of engagement or battle for the purposes of war: in other words it is the interface between policy (the political aims of war) and tactics (the means of fighting a battle). Clausewitz was convinced that without a firm grasp of strategy—understanding how military operations could achieve policy—no general could hope to be successful.
The possibility of failure must be real, as this creates the strongest incentives for individuals to make decisions assuming full responsibility.
“Gambling for resurrection” is among the favorite strategies used in the face of failure by decision-makers, but it is also one of the most dangerous. Someone with their back against the wall can either give up, or enter into a bet. This promises rescue with a certain degree of probability. But there is also a residual probability of a huge amount of damage. One would not take on this bet if one did not need to, as the gain in the event of success is considerably smaller than the loss in the event of failure. The bet is actually a bet on financial loss. But for someone backed against the wall, this bet is attractive. He will profit if he succeeds; and he
does not bear the loss himself if the bet is lost. Others will bear the loss, or at least the best part of it.
Kai A. Konrad
In an uncertain world statistical thinking and the communication of risk is not enough. Good rules of thumb are vitally important for good decisions. A rule of thumb or heuristic allows us to make a decision quickly without much searching for information but nevertheless with a high degree of accuracy.
It is not change as such that leads to failure, but the inability to recognize change in good time and respond resolutely and courageously.