Living with Uncertainty

3. A view from, but not of, Argentina by Esteban Chinetti

What do I mean by uncertainty

There is an aspect of any environment that subtly steers planning, expectations, risk appetites, costs and even stress levels in the same direction. This aspect is uncertainty. I used to think that the key drivers framing potential failures when embarking in projects or plans were structural shortcomings such as inflation, political turmoil or a generalised lack of trust in the system. But I now believe these are just different ways of looking at uncertainty.

When there is no way of knowing what will happen next, one is forced to focus on the present. Either by maximising short-term advantages/edges/returns, or by becoming as adaptable as possible (which might be in itself a hidden cost). And because there is no way of predicting what can go wrong. or rather, because so many things can go wrong, there’s just no way of planning for all possibilities. And it’s even less possible to try and mitigate all of these unknowns.

Systemic Uncertainty

What I call “regular” uncertainty is just part of life. There’s always something out of our control, some aspect that is undefined, variable, unpredictable. Systemic uncertainty, on the other hand cascades into everything else.

Why go the “extra mile” to future-proof something, for example, if the day after tomorrow (well, not literally the day after tomorrow) a radical game-changer might render it all useless? And if the rules can be altered with relative ease (rules such as country laws, company policies or even the degree in which the State intervenes in a given market) what is the point in learning them, abiding by them and/or creating a lasting project based on them?

As a business, why ensure the quality of a product or service if context pushes towards getting a quick profit today instead of caring for repeat customers or brand-building? As an investor, if you have to put your money into a project without knowing how any of the above will eat into your returns? And finally, as an individual, where should your hard-earned savings go to ensure they are secure?

With uncertainty, risks multiply, planning becomes limited, timescales shorten and, due to all of the above, costs skyrocket. The long-term becomes either a fantasy or a heavy burden.

The impact of uncertainty on quality

On a different note, quality might be compromised: there’s just no time to carry out analysis and scoping exercises as deeply as would be desirable (or required). Stress increases: the need to “beat the odds”, to deliver on an unstable, ever-changing and unfair context is a strain on even the most experienced person.

It is a fact that many people can’t take high levels of uncertainty for long periods of time. Everyone’s quality of life and mental health suffers from rampant unpredictability and arbitrariness (I’m uncertain if this is an actual English word, but if it isn’t, it should be!).

To summarise, at a societal level, uncertainty leaves deep marks. Inevitably, some people will adopt an “everyone-for-themselves” approach, which only adds to this pervasive, systemic uncertainty, increasing risk, costs, volatility, mistrust… the building blocks for disaster.

Coronavirus: Uncertainty at the worldwide scale

The corona outbreak gave us all a strong taste of what real uncertainty looks like. Suddenly, everyone found themselves in a position where they didn’t know what might happen next. And “not knowing” on a global scale gave way to radical, questionable and/or isolationist measures (take your pick), among other phenomena.

An “economic and social nosedive” might be a good description of what happened, as in a matter of weeks whole industries and countries had their paradigms forcibly shifted, their plans disintegrated, and their risk multiplied. As a society, we had to think of adapting without knowing really how we should adapt. This is clear by looking at how different governments and organisations reacted differently. And as is the nature of uncertainty, it is yet to be determined which were the best strategies or decisions…

Despite this however, I think that when dealing with uncertainty, certain kinds of decision tend to be the “sensible one” or the “right one”. They may take the form of “everyone is doing it” or “if we don’t do this, and the rest do, we will [insert consequence]”. This is really a Prisoner’s Dilemma, where few might be willing (or capable) of risking doing something different that might yield different (and better!) results. Perhaps, the risk of disaster is simply too high. So it might be easier to assume the worst and go with the generally-accepted view or position. But, by individually choosing what seems best, everyone ends up in a worse situation.

What now?

Uncertainty is a very hard-to-remove weed. It requires fixing a lot of other issues first. From my experience, and talking mainly about the macroeconomic aspects of uncertainty, a country first needs to offer a credible, stable image to the rest of the world (including its inhabitants, of course!). To do that, at a glance it requires having a clear, fair set of rules, a strong commitment from all political actors to work towards a (somewhat) similar and aligned goal, and a will to invest in the long-term variables: infrastructure (both economic and social), education, quality of life, the resilience of the credit market, to name a few.

Only after many years of walking in this direction will uncertainty start to diminish. In a broader take, this thinking could also be extended to the organisation or the individual.

If you’d like to speak to Esteban about some of his ideas on personal, organisational or worldwide uncertainty and how to address it, OR you’d like to find out more about his wife’s (excellent) new cd, drop him a line at