Why certainty is under-valued

Decisions Decisions

We live in uncertain times. With uncertainty comes risk. With risk comes gain or loss, delay, mitigation, hedging, avoidance or even poor decisions.

Financial markets inherently benefit from uncertaity - because where there is risk there is reward. Managing the balance between the two is a trait of success. This is true of investing and portfolio management but also applies to business and life.

Certainty is also a key ingredient of long term investment and committment. It is what we seek to allow us to make decisions about the future. We accept some uncertainty but usually within a framework of stability.

At a macro level the lack of certainty around the stewardship of economies drives interest rates, inflation, FX rates, and stock markets. It's the reason that government treasury teams plumb the depths of negativity if they cannot shake off a reputation for (usually unpleasant) surprises as policies flip-flop and U-turn along the ideological path of economic (mis)management. Markets and business seek clarity on future taxation, business, and economic policy.

At a micro level, dealing with uncertainty is difficult....

Buying a service might start out with a focus on price. Inevitably compromised by the uncertainty of receiving a promised continued high quality service level. Promises without backing become uncertain. There is an old saying that "you will never be fired for buying IBM" which relates to the days when IBM was renowned for solid and reliable hardware not known for its low price or cutting edge innovation. We instinctively trade value (low price, improved features etc) for certainty.

When hiring new recruits, it's a familiar choice between the known and the unknown. The temptation to appoint a safe pair of hands over the lure of an apparently more talented but less-known outsider. We often opt for certainty.

In M&A, an acquisition is often not clinched by the highest bidder, but by the bidder most certain to complete the deal. I have seen this many times.

None of these examples are unfamiliar yet we often ignore the message behind these anecdotes that shouts at us loud and clear. CERTAINTY HAS VALUE.

Yet, certainty is so often under-valued. It may not transform the attractiveness of a poor product or service, or a poor candidate, or a low-ball bid. Understanding the value of certainty can however, mean that it becomes a core component of whatever is being offered.

In a sales process certainty ( of service, or quality or delivery) might add significant value to a client that they will pay for. In recruitment certainty assures. In M&A certainty of completion can add substantial value to a seller, Same for many other examples ( eg selling a house, selling a car).

As humans we all inherently, and often unconsciously, place value on certainty in our decision making.

So both as individuals and businesses why not invest in developing and adding certainty into whatever you offer. It is a core component of your value . Because....People will pay for it. Of that, I am certain.