Learn how to communicate uncertainty — Why it is going to be a critical skill in the future — Part 1
On the morning of Tuesday, September 11th, 2001, 19 terrorists from the Islamic terrorist group al-Qaeda executed the worlds most notorious terrorist attacks.
After hijacking American Airlines Flight 11 and United Airlines Flight 175 terrorists steered two planes into North and South towers, respectively, of the World Trade Center complex in New York City. Within an hour and 42 minutes, both 110-story towers collapsed. A third plane, American Airlines Flight 77, was crashed into the Pentagon.
The Immediate attacks killed 2,996 people and injured over 6,000 others.
21,000 of New York’s finest service men and woman have since suffered the after effects of the toxic hazardous air they breathed while trying to save the lives of others.
And the cost? Well the later wars in Iraq, Afghanistan and Pakistan post 9/11 have cost around $5 trillion.
That is enough to pay down one quarter of the total US national debt.
Avoidable?
The President of United States, George Bush, received a briefing on the 6th of August 2001. Here he was told of the potential threat posed by al-Qaeda in an article called the President’s Daily Brief (PDB).
This brief is the pinnacle of concise, relevant, actionable analytic writing in the U.S. Intelligence Community. The best analysts write it and senior leaders review it.
The PDB from August 6th was vague to say the least. Examples include:
- “Bin Ladin implied…that his followers would ‘bring the fighting to America’” (CIA, 2001, para. 1);
- “FBI information…indicates patterns of suspicious activity in this country consistent with preparations for hijackings or other types of attacks” (CIA, 2001, para. 10);
- “a call to [the US] Embassy in the UAE in May [said] that a group of Bin Ladin supporters was in the US planning attacks with explosives” (CIA, 2001, para. 11).[3]
Bush had earlier asked for an intelligence analysis of the possibility of al-Qaeda attacks within the United States. This result was the August 6th PDB.
Yet, the vague language lead to confusion at the White House. Both about the likelihood of an attack and when it would occur.
It made it close to impossible for the White House put in place any counter-measures that might stop al Qaeda’s actions.
Could better communication by the intelligence community have changed the course of history?
Why you need to learn to communicate uncertainty
Things change so fast these days. It is hard to be certain about anything.
“Today’s rapidly changing world, marked by increased speed and dense interdependencies, means that organizations everywhere are now facing dizzying challenges, from global terrorism to health epidemics to supply chain disruption to game-changing technologies. Stanley McChrystal, Team of Teams: New Rules of Engagement for a Complex World
We have even developed an acronym. VUCA. Short for volatility, uncertainty, complexity, and ambiguity.
You don’t need me to tell you how fast the world is changing — and how much this is affecting your business.
In an ever-changing world, things are less certain. Uncertainty is here to stay.
Businesses are decision-making machines. The quality of decisions is almost entirely dependent on the information upon which they are based.
In order to to make good decisions we need to face reality as we know it. Jim Collins and Ray Dalio talk about this.
Ray Dalio, founded the most successful hedge fund ever. He manages Bridgewater Associates with over $150 billion in AUM. He explains the importance of facing the truth:
… [my] most fundamental principle is: Truth — more precisely, an accurate understanding of reality — is the essential foundation for producing good outcomes. Ray Dalio, Principles
Jim Collins also explains this idea in his best-seller Good to Great. Some say it is the best management book ever written.
Productive change begins when you confront the brutal facts. Every good-to-great company embraced… the discipline to confront the most brutal facts of their current reality, whatever they might be. Jim Collins, Good to Great.
One key building block in creating a high performance organisation is facing the brutal facts of reality.
If the world is in constant change and things are uncertain we can say — it is not about removing uncertainty but communicating uncertainty.
Just like if I do a risk analysis. My job is not to reduce or hide the risks it is to communicate the risk involved to the decision maker.
So if you are an analyst and someone is investing millions of dollars on the back of your assessment — it is not about removing uncertainty, it is about communicating uncertainty.
What information is being used to make decisions at your investment fund or business?
How certain is this information you present? How certain is the information you receive?
Are you an analyst? Are you informing a decision maker about the likelihood of something happening? How do you communicate that things are uncertain?
Are you a decision maker? How do your analysts tell you something is uncertain? Are they vague in their communication?
Do people use vague phrases to weasel their way out of making assessments?
Weasel words
Have you used any of the following weasel words in a meeting before?
- Might
- Could
- Maybe
- A chance
- Cannot dismiss
- Suggest
- It’s conceivable
- May
- We believe that…
- Estimate that…
- Cannot rule out
- Cannot discount
- Perhaps
Weasel words are informal words or phrases. They are aimed at creating an impression that a specific or meaningful statement has been made. When, instead only a vague or ambiguous claim has actually been communicated wikipedia.org
When we use weasel words we avoid making an estimation of probability, certainty or confidence.
It’s less risky, we don’t have to stick our heads out. It makes us feel comfortable.
Imagine you are in a meeting with the board of directors
Say, for example, you are in this meeting and someone is presenting the viability of an investment or project. The board has to decide to fund the project or not.
The information they receive lays the basis for any decision they will make. So the CEO asks “how likely is it that this project will break-even?”
What does the presenter say?
How about, “We think it should break-even but we cannot discount unforeseen costs” I have heard sentences like these in before meetings. I am sure you have as well. Sentences like these are very vague and do not really add much value. They communicate next to nothing.
If we use weasel words we are vague in our communication. Thus, we push responsibility for estimating probability onto the decision-maker. The problem is they often dont have the requisite knowledge to make a good estimate of the probability. What is more they normally have enough other stuff to think about already!
Let’s flash back to the Intelligence briefed to the White House just before 9/11. By neglecting to make a prediction or assign any probability or certainty we can end up with pretty disastrous decision-making.
Decision makers end up having to make an unconscious estimation. Even though they don’t have the information or expertise to make one!
I hope I have managed to convince you that communicating uncertainty is important. So how do we communicate probability and certainty more effectively?
Coming up….
In the next part you will learn the best solution for communicating probability and uncertainty.
If you are an analyst you can learn the best way to communicate probability and uncertainty to your Portfolio Manager or boss.
If you are a Portfolio Manager, boss or leader you will learn the best way to get your analysts to communicate probability and uncertainty.
