Strategy under uncertainty
Title: Strategy Under Uncertainty , By: Courtney, Hugh, Kirkland, Jane, Viguerie, Patrick, Harvard
Business Review, 00178012, Nov/Dec97, Vol. 75, Issue 6 Database: Business Source Premier
Strategy Under Uncertainty
Contents
Four Levels of
Uncertainty
Tailoring
Strategic
Analysis to the
Four Levels of
Uncertainty
Postures and
Moves
WHAT MAKES FOR A GOOD STRATEGY in highly uncertain business environments? Some executives seek to shape the future with high-stakes bets. Eastman Kodak Company, for example, is spending $500 million per year to develop an array of digital photography products that it hopes will fundamentally change the way people create, store, and view pictures.
Meanwhile, Hewlett-Packard Company is investing $50 million per year to pursue a rival vision centered around home-based photo printers. The business press loves to hype such industry-shaping strategies because of their potential to create enormous wealth, but the sober reality is that most companies lack the industry position, assets, or appetite for risk necessary to make such strategies work.
A New Approach to Uncertainty
More risk-averse executives hedge their bets by making a number of smaller investments. In pursuit of growth opportunities in emerging markets, for example, many consumer-product companies are forging limited operational or distribution alliances. But it's often difficult to determine if such limited investments truly reserve the right to play in these countries or just reserve the right to lose.
Alternatively, some executives favor investments in flexibility that allow their companies to adapt quickly as markets evolve. But the costs of establishing such flexibility can be high. Moreover, taking a wait-and-see strategy-postponing large investments until the future becomes clear-can create a window of opportunity for competitors.
How should executives facing great uncertainty decide whether to bet big, hedge, or wait and see?
Business Review, 00178012, Nov/Dec97, Vol. 75, Issue 6 Database: Business Source Premier
Strategy Under Uncertainty
Contents
Four Levels of
Uncertainty
Tailoring
Strategic
Analysis to the
Four Levels of
Uncertainty
Postures and
Moves
WHAT MAKES FOR A GOOD STRATEGY in highly uncertain business environments? Some executives seek to shape the future with high-stakes bets. Eastman Kodak Company, for example, is spending $500 million per year to develop an array of digital photography products that it hopes will fundamentally change the way people create, store, and view pictures.
Meanwhile, Hewlett-Packard Company is investing $50 million per year to pursue a rival vision centered around home-based photo printers. The business press loves to hype such industry-shaping strategies because of their potential to create enormous wealth, but the sober reality is that most companies lack the industry position, assets, or appetite for risk necessary to make such strategies work.
A New Approach to Uncertainty
More risk-averse executives hedge their bets by making a number of smaller investments. In pursuit of growth opportunities in emerging markets, for example, many consumer-product companies are forging limited operational or distribution alliances. But it's often difficult to determine if such limited investments truly reserve the right to play in these countries or just reserve the right to lose.
Alternatively, some executives favor investments in flexibility that allow their companies to adapt quickly as markets evolve. But the costs of establishing such flexibility can be high. Moreover, taking a wait-and-see strategy-postponing large investments until the future becomes clear-can create a window of opportunity for competitors.
How should executives facing great uncertainty decide whether to bet big, hedge, or wait and see?