In September 2011, the English language officially died.  That was the month that the Oxford English Dictionary, long regarded as the accepted authority on the English language published an update in which “literally” also meant figuratively. By 2016, every other major dictionary had followed suit.

The justification was simple: “literally” has been used to mean “figuratively” since 1769. Citing examples from Louisa May Alcott’s Little Women, Charles Dickens’ David Copperfield, Charlotte Bronte’s Jane Eyre, and F. Scott Fitzgerald’s The Great Gatsby, they claimed they were simply reflecting the evolution of a living language.

What utter twaddle.

Without a common understanding of a word’s meaning, we create our own definitions which lead to secret expectations, and eventually chaos.

And not just interpersonally. It can affect entire economies.

 

Maybe the state of the US economy is just a misunderstanding

 

Uncertainty.

We’re hearing and saying that word a lot lately. Whether it’s in reference to tariffs, interest rates, immigration, or customer spending, it’s hard to go a single day without “uncertainty” popping up somewhere in your life.

But are we really talking about “uncertainty?”

 

Uncertainty and Risk are not the same.

 

The notion of risk and uncertainty was first formally introduced into economics in 1921 when Frank Knight, one of the founders of the Chicago school of economics, published his dissertation Risk, Uncertainty and Profit.  In the 114 since, economists and academics continued to enhance, refine, and debate his definitions and their implications.

Out here in the real world, most businesspeople use them as synonyms meaning “bad things to be avoided at all costs.”

But they’re not synonyms. They have distinct meanings, different paths to resolution, and dramatically different outcomes.

Risk can be measured and/or calculated.

Uncertainty cannot be measured or calculated

The impact of tariffs, interest rates, changes in visa availability, and customer spending can all be modeled and quantified.

So it’s NOT uncertainty that’s “paralyzing” employers.  It’s risk!

Not so fast my friend.

Not all Uncertainties are the same

 

According to Knight, Uncertainty drives profit because it connects “with the exercise of judgment or the formation of those opinions as to the future course of events, which…actually guide most of our conduct.”

So while we can model, calculate, and measure tariffs, interest rates, and other market dynamics, the probability of each outcome is unknown.  Thus, our response requires judgment.

Sometimes.

Because not all uncertainties are the same.

The Unknown (also known as “uncertainty based on ignorance”) exists when there is a “lack of information which would be necessary to make decisions with certain outcomes.”

The Unknowable (“uncertainty based on ambiguity”) exists when “an ongoing stream [of information]  supports several different meanings at the same time.”

Put simply, if getting more data makes the answer obvious, we’re facing the Unknown and waiting, learning, or modeling different outcomes can move us closer to resolution. If more data isn’t helpful because it will continue to point to different, equally plausible, solutions, you’re facing the Unknowable.

 

So what (and why did you drag us through your literally/figuratively rant)?

If you want to get unstuck – whether it’s a project, a proposal, a team, or an entire business, you first need to be clear about what you’re facing.

If it’s a Risk, model it, measure it, make a decision, move forward.

If it’s an uncertainty, what kind is it?

If it’s Unknown, decide when to decide, ask questions, gather data, then, when the time comes, decide and move forward

If it’s Unknowable, decide how to decide then put your big kid pants on, have the honest and tough conversations, negotiate, make a decision, and move on.

I mean that literally.