I finally finished reading this paper on strategy from HBR. I’m not quite sure how it ties into my project yet — it seems to me like user research could help inform any of the strategies for dealing with uncertainty listed.
In the paper, the authors basically classify the degrees of uncertainty in business situations and outline the appropriate strategic responses. They then address the impact of some of the strategic postures and actions on the different levels of uncertainty. Summary follows after the jump.
Courtney, Hugh; Kirkland, Jane; Viguerie, Patrick. “Strategy under uncertainty.” Harvard Business Review. (Nov.-Dec. 1997): 67-79.
Courtney, Hugh; Kirkland, Jane; Viguerie, Patrick. “Strategy under uncertainty.” Harvard Business Review. (Nov.-Dec. 1997): 67-79.
n Traditional strategic decision-making processes that rely on financial models breakdown in periods of uncertainty, when the necessary precision isn’t possible (68)
n Types of uncertainty:
o Knowable unknowns, ie. performance attributes for new technology, elasticity of demand for certain products
o Unknownable unknowns/“residual uncertainty,” ie. outcome of standards body
n Four levels of residual uncertainty:
o Clear enough future
§ Degree of uncertainty: There is residual uncertainty, but it’s irrelevant to strategic decision-making
§ Strategic toolkit: “Traditional” strategy toolkit
§ Example: Strategy against a low-cost airline
o Alternate futures
§ Degree of uncertainty: Possible futures limited to two or few possibilities
§ Strategic toolkit: Decision analysis, Option valuation models, game theory
§ Example: Betamax vs. VHS
o Range of futures
§ Degree of uncertainty: Possible futures constrained by few variables, but outcomes rest on a continuum between extremes
§ Strategic toolkit: Latent demand analysis, technology forecasting, scenario planning
§ Example: Working in an emerging market
o True ambiguity
§ Degree of uncertainty: No basis to forecast the future
§ Analytic tools: Analogies, pattern recognition
§ Example: Emerging markets
User research can be used to inform the various types of analysis.
Different strategic postures companies can adopt(74)t:
n Shaping the future
n Adapting to the future
n Reserving the right to play
Types of strategic actions (75):
n No regrets moves
o Ie. Google buying YouTube
n Options
o Ie. joint ventures, increasing capacity: Microsoft investing in Facebook
n Big bets
o Ie. large acquisition or capital investment: Sony on Blu-Ray
Different strategic postures have different impacts at different levels of uncertainty. Shapers increase uncertainty in level 1 situations (FedEx introducing overnight delivery) while trying to decrease it in levels 2-4 by imposing their order on the world.
