Uncertainty and risks: Lessons from the army (2/2)

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The previous article described how risks are managed in the army. In times of peace, military leaders use a strong structure and well-defined procedures, two elements that allow them effectively to enforce measures able to reduce risks. Such was the case, for example, with lowering the number of traffic accidents which in the French Army accounted for 25% of casualties. Risky activity was identified and subsequently discouraged by certain incentives.

Wartime

In contrast to the situation described above, when there is a war raging risks are no longer the main source of troubles. Now it is uncertainty that becomes more - even critically - important. Strategic surprises may strike - and with great power. According to the knowledge.insead.edu website, the military is able to distinguish between those leaders who are good at handling risk and those who are better at dealing with uncertainty. In the corporate world we need to cultivate a similar culture, enabling us to adapt in times of crisis.

Dealing with uncertainty

Dealing with uncertainty requires a different approach to that when facing risks. Soldiers need leaders; they are not looking for managers. In times of war, soldiers at lower levels in the hierarchy are given more autonomy, the hierarchy is not so strictly enforced, the rigidity of the overall structure is reduced and the incentives are no longer so clear. Your reward is now connected to actual outcomes: the dominant and most important factor is personal commitment. In times of war, the role of quasi-contractual incentives as a means of motivation almost completely disappears.

The example of tanks is a good illustration of this development. When the army is involved in a war, tanks are reparameterised so that the tank commander has much greater control over them. Any safety mechanism, which in peace time would stop the tank automatically, can be overridden if the situation requires it. Now everything depends on the responsibility and experience of the given tank commander.

-jk-

Article source INSEAD Knowledge - INSEAD Business School knowledge portal
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Uncertainty and risks: Lessons from the army (1/2)

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Uncertainty and risks: Lessons from the army (2/2)