Why Reserves are Key to Face Uncertainty

It is a well known fact in military command that Reserves are the key to success in the uncertain world of battle. As exposed by General Vincent Desportes in his book “Decider dans l’Incertitude” (in French), an excellent book about decision-making in uncertain conditions, reserves are the main tool to manage uncertainty.

How often do you run without reserves? Is that wise?

The higher the uncertainty, the more courage the commanding officer must have in increasing the size of its reserves. According to Churchill, engagement of the reserve resources is indeed the utmost responsibility of the one in command (and it often makes the decision in battle).

Jim Collins and Morten Hansen, in the book “Great by Choice“, come to the same conclusion: those organizations that thrive on the long term have a far more conservative view on balance sheet and establishment of financial reserves. They don’t necessarily seek the just-in-time; they don’t over-borrow; they don’t extend themselves too thin, even if they find an opportunity to do so. They make sure they are resilient to uncertainty.

Individually and in our organizations, reserves are important. Even if it means some loss of efficiency, they can make the decision when it comes to the realization of specific, unpredictable situations. Not to mention that reserves gives peace of mind when facing the usual ups and downs. Having some reserves is an important approach I also use in my small start-up even in growth mode.

What about you? Do you have enough reserves to face uncertainty? What about your organization? What will you do about it?