Strategic to-do list for truly uncertain times

How do you create a strategy to go forward when the future is frighteningly unclear and even completely unknowable? By Suvi Nenonen.

I AM currently facilitating a strategy process for an organisation, which operates in an industry that will be disrupted, through and through. This is a known fact and everyone sees endearingly eye- to- eye on it. Unfortunately, this is where certainty – and management team consensus – ends. Nobody has the faintest idea when the forthcoming disruption will actually take place or what form it will take. And no, this is not a collection of executives that are somehow thicker than the average, quite the contrary.

It is just that their operating environment had turned from relatively predictable to truly uncertain over the last few years.

It seems that more and more organisations are facing the same dilemma: needing to create strategies when the future is frighteningly unclear, even completely unknowable.

So, what should you do when you really don’t have a clue about the future? Research in strategic management suggests three courses of action: waiting, focusing on purpose, and reserving the right the play.

WAITING ACTIVELY – AND AVOIDING UNNECESSARY DECISIONS

Especially in Western cultures there is a bias towards action: a good leader makes decisions, and then executes them swiftly. Any decision is better than no decision. However, when operating under true uncertainty, these traditional traits of “good leaders” can actually do more harm than good.

Managers that thrive in uncertain environments often practice something that we scholars have labelled as ‘strategy as active waiting’. The central tenet of this thinking is very simple: true strategic action is needed only when the operating environment offers a clear golden opportunity or an existential threat.

When such opportunities or threats don’t exist – or they are too vague to decipher – the task of the strategist is to wait patiently, and focus on operational and tactical tasks. Under this philosophy, deciding to postpone a decision is a decision – and a very valuable one for that matter.

HAVING CLEAR PURPOSE, WHILE KEEPING VISION FUZZY

Postponing bold strategic moves until the fog lifts a little is one thing. However, no organisation can stop all action altogether while waiting for better visibility.

This dilemma, interestingly, can be aided by redefining what ‘strategy’ actually is. Most people consider strategy as a combination of a vision for the future and an action plan that takes the organisation to that vision. Understandably, it is very difficult to generate “vision + action plan” type of strategies when the future that you should be working toward is utterly unclear.

Luckily, if the external world is in a flux, you can always rely on introspection to find more enduring starting points for your strategy. What is your organisation’s mission, purpose for existing? Do you have strong values or your own unique way of doing things?

If the answer to any of these questions is a ‘ yes’, then this could be a cornerstone for an uncertainty-proof strategy. No wonder that the old ideas about purpose and perspective have been resurrected during the recent years in popular works such as Simon Sinek’s Start with Why.

RESERVING THE RIGHT TO PLAY

As long as strategies are nothing but fancy sentences and Powerpoint presentations, it is relatively difficult to create massive damage – even if you get them dreadfully wrong.

But investments are another matter: money spent based on a faulty strategy is usually money wasted. So, how to make clever investments when the future is unclear?

In terms of investments under uncertainty, strategists talk about ‘ reserving the right to play’. These are investments that help the organisation to stay in the game while avoiding premature commitments until the operating environment becomes clear enough for formulating a traditional strategy and making more considerable financial investments.

For example, companies in various industries are currently developing their digital capabilities in order to reserve a right to play in the increasingly digital future operating environments – even though the exact shape of these futures are often very unclear. Associate Professor Suvi Nenonen works at the University of Auckland Business School’s Graduate School of Management and teaches in the MBA programmes. Her research focuses on business model innovation and market innovation.