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How to use chance to your advantage

I have been thinking a lot lately about a little-known approach called effectuation. “How do successful business people deal with uncertainty and chance?” That is the question in this young discipline. The (un)surprising result emerging from empirical studies is that standard management approaches to planning and controlling as well as tools like market research are not the answer. Neither are gut reactions though. There are in fact five principles that successful entrepreneurs use to make decisions. Let’s find out what they are and see how we can use them along with chance to improve our chances of success.

Effectuation – five principles

Available Resources

Derive courses of action and goals from available resources (who am I, what do I have, what can I do, who do I know, what do I have immediate access to?) and not the other way around. A concrete goal is nothing more than a dream if you do not have the resources to achieve it.

Affordable Loss

Business plans (with expected revenue) are pure speculation when it comes to real innovation conducted amidst uncertainty. Every new business is a bet. So make sure that you can always afford the loss. Limit your possible exposure to damage by taking small steps and be aware that every step could be a mistake and could result in a loss.

Valuable Partnerships

Ask potential partners if they would like to contribute to your project. Make deals as partners. New resources will begin to arise from partnerships, as will new courses of action and new goals.

Useful Coincidences

Surprises happen – so why try to protect yourself against unknown enemies. Seek coincidences out instead, be ready for them and actively use them as an opportunity to achieve your goals.

Moldable Future Keep a firm grip on the steering wheel. Market research and analyses of technological trends cannot predict the future. Make sure you are a co-creator of your own future. You have probably noticed that I keep using the term “uncertainty”.

How chance can be used to your advantage

Using chance to your advantage

What exactly do I mean by “uncertainty”?

The world is becoming increasingly inter-connected, dynamic, unpredictable, volatile, unsafe, and pluralistic. Alongside the acronym VUCA (Volatility, Uncertainty, Complexity and Ambiguity) and the buzz word “digitization” the term “complexity” is becoming more and more popular. The causal logical associated with traditional management no longer seems to apply to it. There is much discussion about causes, effects and how to deal with increasing levels of complexity, e.g. at the blogparade at the PM Camp Berlin 2015.

By “uncertainty” we mean something very specific . It can best be understood in opposition to the traditional concept of “risk”. By risk we generally mean that something known could happen. Statistical information can often be used to calculate or at least estimate the approximate loss that could arise if a potential event takes place. By contrast, with uncertainty, literally nothing is certain. Not even the possible event, never mind the probability of the event actually happening.

You might say that it is a waste of time to think about something that you cannot predict, let alone prepare for. That is true in one sense but false in another. Classical risk management – with its focus on concrete results – is indeed not a good investment of time. But it definitely is worth your while to think about uncertainty and surprises, because they will come about.

What does this have to do with projects?

Business people do not have a monopoly on the problem of uncertainty. Uncertainty affects projects too. After all it is impossible to plan and execute projects without something unexpected happening.
In my opinion we enter the sphere of uncertainty as soon as other people are involved – whether they be users, clients, stakeholders, partners or old and new competitors. People are irrational and truly unpredictable. You can choose to ignore disruptions in the hopes of achieving your plan, or you can view the occurrence as an opportunity.
At the end of the day a product owner’s main task is to act in the interest of the product. What could be better than using successful business people’s decision-making principles as an orientation? Their principles are transferable to any project manager’s situation.
So what should we do? The answer is simple yet complex.

Use Chance!

Using chance requires an attitude!

When you get down to it what you really want is to replace a “yes but” with a “yes and”. Try to think about possible opportunities instead of possible damage. Remember, you are trying to avoid spending unnecessary energy on risk management, change requests, negotiation extensions etc.
The first step is to admit that chance occurences happen and that you cannot plan, control or manage every event. Then you need to be open and curious, and develop antennae for opportunities instead of pursuing a single goal with blinkers on your head.

Actively using chance

You can either wait for chance occurences to happen and then react, hoping that something positive will happen. Or you can actively look to “make your own luck”. Successful business people actively shape their own future, for example, by leaving the building (in thought and body), by observing users, speaking to clients and competitors and generally meeting interesting people to ask them questions. They try new things out and seek out inspiration from unfamiliar sources. By delivering results quickly, getting feedback and learning they are able to correct their courses.

Two concrete examples in actively participating in creating good fortune Unkonferenzen (non-traditional conferences) and Barcamps like the PM Camp Berlin are good opportunities to get inspiration. You could also put forward your own topics, questions and ideas for discussion. In so doing you will invite people to participate in creating a new future.
And in if you are under time pressure then I can recommend the company freikopfler. They have created a format designed for people who need new ideas quickly. They try to disrupt people’s thought ruts. They come from three very unique perspectives. They are spontaneous, free, open and available anytime and anywhere, not to mention free to non-corporate clients.
So what are you waiting for, get to work!

Heiko Bartlog has over 17 years’ experience as a consultant, trainer and coach in various facets of project management. He has been working with scrum, effectuation, lean startups etc. for many years and coaches companies in their use and scaling with agile approaches. Heiko Bartlog is an innovation host and co-organizer of PM Camp Berlin and the MANAGEMENT INNOVATION CAMP.

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