1. Article SummaryStrategy Under Uncertaintyby Hugh Courtney, Jane Kirkland and Patrick Viguerie Group 4 Erika Brag (20200) Anna Ohlsson (20313) XinGuo (70397) Liang Wang (70404)
2. 2 Strategy decisions are dependent on the level of uncertainty that the firm faces - Managers tend to define risk as either existing or non-existing - Courtney et. al. defines four levels of risk:
4. Three types of moves can be taken to achieve these intents 4
5. Courtney et. al.'s four-level division of uncertainty can be used to clarify the practical implications of the strategic postures and actions: 5
6. Strategic postures and actions in Level 1’s Clear-Enough Future Most companies are adapters Strategies are made up of a no-regrets moves “Shape the future" strategy create uncertainty in an otherwise predictable market 6
7. Strategic postures and actions in Level 2’s Alternate Futures Adapter strategy can be formed based on the identifies discrete futures Small, up-front, commitments give a firm a privileged position, but no obligation, to ramp or alternatively discontinue development as the future becomes clearer “Shape the future" strategy attempts to lower uncertainty by increasing the probability that a desired industry scenario will occur Shaping moves should be created with options in case they fail “Shapers" too, must be able to adapt 7
8. Strategic postures and actions in Level 3’s Range of Futures Adapter strategy achieved through investments in organizational capabilities enabling quick reactions “Shape the future" strategy attempts to move market in a certain direction rather than create a discrete outcome “Reserving the right to play" is a common strategy achieved through investments 8
9. Strategic postures and actions in Level 4’s True Ambiguity The difficulty of managing options leads to many firms taking adapter postures, often through investments in organizational capabilities Although this situation entails the greatest uncertainty, it may offer high returns and low risks for companies with a "shape the future" strategy because it is transitional by nature No player knows the best strategy. the "shaper's" role is to provide an industry vision that coordinates other players' strategies “Reserving the right to play" is a common strategy, but dangerous since outcomes are so uncertain 9
10. Example: How a newspaperconfronts the uncertaintiesposed by the growth of online news distribution Key areas of uncertainty: - How customer prefrence in regard to online vs. paper-copy will develop, and how fast - Whether other newspapers will distribute news for free online - How attitude towards online Ads will develop - How prices of online Ads will develop In regard to the first point above, the newspaper faces level 1 uncertainty to some extent, but it also faces level 3 & 4 uncertainty in other areas (2) Objectives: - Maintaincurrentcustomerbase& revenue - Develop online offer = Capture new business opportunities The newspapershouldchoose a shaping as well as adaptive posture to attempt to coordinate a creation of a favorableindustrystructure, and adapt to the actualdevelopment (3) No-regretsmoves - Continouslydevelop Web page (e.g. collaborate with video makers) and AD offers to meet increasing customer demand -Options Offer charged online distribution -Big bets Complete focus on online distribution i.e. abandon paper copy production 10
