“High uncertainty tolerance requires you to develop analytical skills. High ambiguity tolerance requires you to develop insight skills. […] The risk of uncertainty wrangling is being wrong. The risk of ambiguity wrangling is seeing something where there is nothing, or vice versa.”
If we roll with Rao’s implied definitions, uncertainty is being unsure about facts, whereas ambiguity is being unsure about interpretation. (This is perhaps beside the point, but I’m not sure the distinction between the words “uncertainty” and “ambiguity” is actually so clear-cut.)
My guess is that most of Rao’s readers work in tech and probably a high proportion of them are aspiring startup founders (I’m not excluding myself from either of those categories). I can easily see how this uncertainty and ambiguity matrix applies to either investing or entrepreneurship.
Let’s say you’re examining a market. You don’t know how many people have XYZ characteristic. That’s an uncertainty problem. Or maybe you do know how many people have XYZ characteristic, but you don’t know what to do about it. That’s an ambiguity problem.
Rao’s proposed solution is free-form intellectual play — he encourages, “it’s not wasted effort because there is no concept of waste in true play.”