This article is adapted from a Harvard Business School publication by E. Olmsted (HBSP, 9-391-192-1993). Olmsted’s concepts are as applicable today as they were 14 years ago.
Number One: Brainstorm
Develop a comprehensive and broad list of the ways the uncertainty you are facing will likely influence your industry and competitors. Some points might include changes in supply/demand; competitors’ strategic actions; changes in technology; changes in regulations; development of substitute products. Consider the chronological order in which the uncertainties are likely to be resolved.
Number Two: Identify Possible Courses of Actions and Their Interrelationships
Remember, both in this step and the one above, possible decisions and uncertainties should not be judged as and when they are presented or offered. The point of identifying the possible action steps is to see how these interrelated processes might develop and how you might in-fluence them rather than trying to take each and every decision to its ultimate point. As part of this, identify which ac-tion steps put the company most at risk, those the company can most likely influence and, finally, new aspects or ap-proaches that might minimize or mitigate the risks faced.
Number Three: New Versus Conventional
Develop new visions and scenarios. This will help focus the analysis of the uncertainties onto the competitive environment and will take you beyond conventional forecasting and enable you to develop reasonable yet alternative views of the future.
Avoid the “best case-worst case” approach. This approach often causes one to focus on the mid-point “most likely case,” and the resultant strategy really rests on the “most likely” and the delusion that the uncertainties have been addressed.
How Can You Change the Future?
Are there moves you can make or signals you can send that might bring about piv-otal events you desire? Can you beat the competition to the punch? Can you have an impact on laws or regulations? Will you awaken a sleeping giant? Can you build an insurmountable lead by moving now? Second to market rarely gains first position.
Number Five: One Size Does Not Fit All
There is likely not just one response to uncertainty for your entire company. Too often the approach to uncertainty is that there is only one possible choice. Different departments or units may be affected differently by the same uncertainty. Look at your company as a group of units each of which might, and possibly should, develop its own responses. You might tolerate a greater level of risk in one area to minimize the risk in another.
Number Six: Don’t Do Something, Stand There!
If your company’s response is the same regardless of the various uncertainties, then stop, step back and take a look. Either the uncertainty is not critical and the company should move on, or the uncertainty has been mischaracterized and needs further analysis.
Next month we’ll review six steps to help cope with uncertainty.
About the Author
L. Douglas Mault is president of the Executive Advisory Institute, Portland, Ore.