Daniel Shin is a venture capitalist and senior luxury fashion executive, overseeing corporate development at MCM, a German luxury brand.
Entrepreneurial trait: tolerance for ambiguity
By Daniel Shin
What makes entrepreneurial leaders visionary is their ability to have followers or potential collaborators see the world radically differently from the one they currently experience. Entrepreneurial leaders should deal with uncertainty. They should have the ability to make followers believe that the present world could be completely transformed into the new one. In the past, this type of transformation principally has been focused on religious, societal and political domains.
Now, innovation is a new power. Innovative new technologies change economies, markets and cultures by creating new opportunities and enormous new wealth. It also shifts the power dynamics among various stakeholders. Entrepreneurs are master provocateurs and demagogues. Some entrepreneurs would agree that they fake it until they make it. Though, they are prepared to catch the wave when the opportunity arrives. However, things change fast, perhaps too fast. Entrepreneurs and even visionary leaders with clear convictions feel that they often walk in the clouds.
According to the recent World Economic Forum's Future of Jobs Report, the most in-demand skill sets in the near future include analytical and creative thinking and the ability to use AI and big data. The report also didn't forget to point out universal leadership traits such as social influence, curiosity, and desire for life-long learning, problem-solving, self-management skills such as active learning, resilience, stress tolerance and flexibility. Other soft skills such as oral communication, teamwork, ability to possess initiative, and innovation were also included. This list can go on and on.
We should add one more important aspect to this, which is a tolerance for ambiguity. Tolerance of ambiguity is important because it reflects how comfortable a person is with uncertainty, complexity, and the unpredictability of the world. Leaders with a high tolerance for ambiguity can cope with ambiguous or unclear situations. They will eventually find creative solutions, but people with a low tolerance for ambiguity prefer simplicity and clear direction. It is like a fast food solution that gives immediate satisfaction. But the long-term perspective for health and nutrition is questionable.
Such tolerance for ambiguity may reflect openness. It is easy to see if someone is open to different possibilities or not by looking at their tolerance for a wide range of options. This individual trait may help them to be tolerant of the stigma that is sometimes attached to being a creative eccentric or unconventional maniac. Tolerance for ambiguity may be of great value to possess as a leader especially when one is working with unconventional people. This kind of interpersonal tolerance is frequently necessary in entrepreneurial settings.
Entrepreneurs should have a high level of tolerance for ambiguity because ambiguity is a constant feature of entrepreneurship. Entrepreneurs must be able to recognize and exploit opportunities in an ambiguous environment to unlock hidden value. Entrepreneurs should make ambiguity their best friend and embrace it because change is the only constant in the entrepreneurial world.
Tolerance for ambiguity can be also defined as the degree to which an individual is comfortable with multiple conflicting directions and market demands. Tolerance for ambiguity is manifest in someone's ability to operate effectively in an uncertain environment. Hence, people with a high level of tolerance for ambiguity are willing to take on new tasks without much prior experience. They look adventurous, but they also have no idea what they are getting into. People with a tolerance for ambiguity act even when they are unsure of the outcome. They are able to make a judgment call for critical decision-making with partial or extremely limited data.
Entrepreneurial leaders should survive and thrive in a volatile, uncertain, complex, and ambiguous (VUCA) world. They are flexible and adaptable. They are being proactive and well aware of their surroundings. Leaders with a tolerance for ambiguity can easily bounce back from setbacks. Their resilience is second to none. No matter what the obstacle is, they will keep pushing. They actively learn how to be more comfortable with change, and do not simply resist it.
Entrepreneurial leaders in the 21st century must be prepared to lead and navigate in an uncertain world. They should be able to equip their team and colleagues to thrive in the turbulence that is brought in by the reduction in funding, high expectations to prove themselves and demonstrate performance, and the ever-changing market landscape.
Embracing ambiguity allows people to seize opportunities and helps them to take well-calculated risks to tackle previously untapped opportunities. It really helps when they do not have all the answers. Tolerance for ambiguity can be acquired by choosing to be agile and flexible to quickly adapt to the ever-changing business landscape. Leaders with a tolerance for ambiguity commit to marching ahead with flexibility while looking for evidence to prove if they are wrong. This is really what we need.
Daniel Shin is a venture capitalist and senior luxury fashion executive, overseeing corporate development at MCM, a German luxury brand. He also teaches at Korea University.