Originally published on thriveglobal.com
Uncertainty prevails in the current business environment, which can be detrimental to a business leader’s effectiveness. Identifying potential hazards that lie ahead and planning for them is essential for ongoing business health. Here, Adam Ferrari – CEO of Ferrari Energy, looks at current issues causing uncertainty to business owners and what they can do about it.
Business leaders are nothing if not risk-averse. The element of risk that business leaders dislike the most is uncertainty.
In economics, the distinction between risk and uncertainty is evident. Risk is present when future events occur with measurable probability. Business leaders measure risk and base decisions on the amount of risk evident. Uncertainty is present when the likelihood of future events is indefinite or incalculable. Until it can be measured, it cannot be acted upon.
There are few examples in history when business leaders faced more uncertainty than they do now. Two world wars, the great depression, and the Spanish flu pandemic of 1918 are the few examples that come to mind.
While they are arguably connected and interrelated, the top current causes of uncertainty are COVID-19 caused by the coronavirus, civil unrest, and political incivility. These elements of uncertainty are present across the US and the world simultaneously. The simultaneous presence of these three events puts an unprecedented level of pressure on today’s business leaders.
COVID-19
The coronavirus and its resultant COVID-19 illness have forced business leaders to implement extraordinary health and safety precautions. Nearly every business has found it necessary to pivot to a work-from-home workforce or shut down altogether. Many companies were ill-prepared for this turn of events.
For the most part, leaders have done an admirable job of adapting to this pandemic and providing the means necessary to protect their employees. Many are cautiously optimistic that the worst is behind them, and a vaccine and therapeutics are on the horizon.
Civil Unrest
Civil unrest and the resultant protests and riots have caused more than a few small businesses to fail. Large enterprises have also suffered losses that will need to be recouped through some means in the future.
Business leaders must walk the fine line between honoring the democratic process for change and protecting their business and employees. Decisions will need to be made that will not satisfy all stakeholders. A slow and steady hand will serve leaders well in these challenging conditions.
Political Incivility
Incivility has always accompanied American politics. Everything from political attacks in newspapers to duels with pistols has been a part of our history in bygone eras. Even so, few observers of history claim there has been a time when American politics was less civil than it is now.
Business leaders would be well advised to stay clear of politics. Many leaders feel an obligation to voice an opinion or take sides with one political party or the other. Rarely does this benefit the company in any way. Regardless of the leader’s political viewpoints, many of their employees and customers will adamantly disagree. In all circumstances, companies that take a political position gain unhappy employees and lose customers.
About Adam Ferrari
Adam Ferrari is an accomplished petroleum engineer and is the founder of a private oil and gas company, Ferrari Energy. Throughout various roles in the oil and gas industry, Adam was inspired to learn more about property rights and the inner workings of petroleum exploration and extraction. After gaining expertise in the energy sector, Adam obtained knowledge of the financial industry through his time at an investment banking firm. He then pivoted to bootstrapping his own business from the ground up as he blended his energy and finance knowledge.