The need for Strategy under uncertainty

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The article "Strategy under uncertainty" by Courtney, Viguerie and Kirkland explain the strategic posture that can be used in shaping the future. The authors give an explanation of how the approach aims at playing a leadership role in the establishment of how the industry plays and operates. Most importantly the leaders of any business try to steer their businesses or the industry towards a new structure of their own devising. It should be understood however that the mastering of the posture is not a complete strategy on its own. This is because according to the authors particularly Courtney, there are basically three steps that are geared toward moving the strategic intent towards the face of shaping the desired future. The three main building blocks include the big bets, options and no regret moves.

The articles aims at answering questions such as what managers can and should do when they are faced by uncertainty. Should they hedge, should they wait, should they bet big, sit back and see? Any of the practices by the authors can create a distinctive strategy that companies use in the face of stable business environments. When there is uncertainty about the future the strategies created can be helpful and also downright dangerous. A look at what the authors, they state that the leaders of any business or industry should act in the same strategy portfolio management

The article goes further to show the levels of uncertainty and also ways in which a strategy can be tailored for that uncertainty. The very first level has the uncertainty of a clear enough future. This means that leaders should develop a single forecast for the future that is clear enough to have the development of a strategy. Though this view varies differently with the kinds of businesses that exist, it can help to a great extent to reduce the uncertainty that is inherent and create a strategic direction to take. In other words at this level the residual uncertainty is irrelevant in the making of most strategic decisions.

On the second level, the authors of the article talk of the alternate future where the future can be described as one of the alternate outcomes. Analysis of the future cannot always have the desired effect as it is not easy to identify which outcome will occur. It however would help in establishing the probabilities. Were the future predictable then most if not all of the elements used in strategy would also have to change. From the alternate future as described by the authors it becomes clear and distinct to see the options or the probabilities of the outcome but it becomes hard to identify which ones will occur.

On the third level there are a range of futures designed and can be easily identified. The range however is determined by a given set of limited but key variables. The outcome however lies in between the line in which these range varies. At the forth level there is a multiple dimension of uncertainty that mingle together to create a distinctly vague future that makes it hard to make any kind of prediction. Compared to the third level where there is a range from which the predictions can be made, it is difficult to predict the range of the potential outcomes in the forth level. It therefore concludes that the shapers and movers of any industry should aim at a structure of their own devising. They can either create new markets by shaking up the existing ones or can on the other hand steer the direction of the market. The adapters act to the opportunity offered by the market while those who reserve their right to play make incremental investment that put the company in a strategic position. In this way, they create their business in more certain environments compared to others.

Value innovation: The strategic logic of high growth

There are varying reasons as to why certain companies have high growths than others. There are also different reasons as to why these companies can sustain the growths while others cannot. Kim and Mauborgone spent approximately 5 years trying to figure out why and how these companies do it. Among the findings from the studied thirty companies, they found out that most of the less successful companies have the general idea of wanting to stay ahead of others. In contrast to these companies, those on the high end in terms of innovation do not have the need to beat their rivals. They instead focus mostly on making the rival companies seem irrelevant. This is achieved by the high end companies through value innovations. Value innovators companies or businesses for that matter do not use the other rival businesses as bench marks as to what they should do or not.

The rival companies use the number in customers as a way to set the main difference between them and other companies. On the other hand, the innovative companies try to generate products or services that customers have in common. They make the difference by not always going by the set standards of the business game but by being innovative to come up with ideas and opinions that are not yet established by others. An example of this is the idea behind the company that owned cinemas across Belgium. According to Bert Claeys he knew that the industry where he had done most of his investments in was shrinking. It would therefore have not been wise to make other investments especially on assets. He therefore thought outside the box into improving the performance in order to outdo his competitors. What he set to do was create not a better service compared to what his competition was offering but also to create something that was totally different. In his view, he created a service that reached out to the movie goers who had shared needs. In this way he struck out from what an ideal movie theatre should look like.

The conventional strategic logic however differs from the value innovation mainly on five basic dimensions of strategy. On the level of industrial assumption, value innovators do not set their strategies according to the industrial conditions which are already preset. Value innovators look for ideas that are out of this world in terms of what others have not tried to do. As in the case of Bert Claeys, he would not have created the mega-plex had he stuck to the ideas of what a normal theatre should look like and what it should offer. Many companies on the level of strategic focus compare themselves with the rival companies in order to create advantages over them. Value competitors do not as in the case of CNN where they created their own way of reporting news through real time news and thus emerging as the global leader in news production. Customers play a critical role in businesses. Businesses therefore aim at increasing their customer data base and in the process they end p creating finer segmentation. Value innovators have a different level of thinking.

They instead create commonalities with feature that customers have in common. Assets and capabilities are common things that most business gauges themselves with but for value innovators, they think beyond that into thinking of starting new ways. Value innovators cross the boundaries that are set by conventional businesses that offer traditional products and services. It therefore goes to show that for any business to be successful, it set its own standards that are not defined by the conventional businesses. This means creating a business that stands out and incorporates the needs of most customers. In this way, such businesses find themselves more successful and in the process end up attaining higher growths.

Delta model

The delta model by Hax and Wilde (1999), aims at placing the customer at the centre of the business management. It looks at options of how the customer can be linked and how this strategy can be achieved through a series of adaptive processes. The customer is usually at the heart of management and also in that of strategy. This means that the company owes itself to the customers as the customers are basically the reason why the business is running. In order to achieve this, the business has to therefore attract the customers, satisfy their needs and also try to retain the customers.

Most businesses base themselves on who produces the best product and in the process they become trapped in a product centric mind. The mass distribution channels that they use to distribute their products do not satisfy the customer's needs. A connected economy offers opportunities that create a better structure for customer relationship. The bond created goes a long way in creating awareness about the product and in meeting the needs of individual customers. On the contrast, competition that is based mainly on the product misses out on the process of profitability.

By the use of the triangle as created by the two authors it shows the development of a dialog which is the main and central vision. The inherent characteristics of a product are what attracts, retains and even satisfies the customer. This is what has been termed as the best product positioning. The strategic option of customer is base don offering products and services that meet most if not all of the customer's needs. In this scenario, the emphasis is not based on the product economic situation but that of the customer. A business is therefore able to create a range of products that can equally meet the needs of specific customers. The system lock in strategic option is mainly based on the key players that contribute to the creation of economic value other than focusing mostly on the product or the customer. The options detailed in the delta are not mutually exclusive and any business can instead use a combined and blended strategy. The best product strategy is mainly focused on the aspect of a win-win situation in either differentiation or through low costs. The main problem in applying the differentiation strategy is that competition finally catches up and imitation neutralizes the competitive advantage. Therefore low cost is the only way to go though it does not offer room for successful and gives forth undesirable effects such as imitators, rivalry and also adverse impact on margins. Due to the structural characteristics of best product positioning, many companies fall into the trap of seeing low cost as the only way out. There are however three main ways in which a company or business can set out to capture the customer.

The first step involves redefining the customer engagement process. This means that the customers are classified into different tiers that represent different priorities. The very next major step involves customer integration where the business can do some of the activities previously done by the customers. This ensures that there is more efficiency. Lastly, there should be possible expansion in which the business caters for the products and services that are being offered to the customer. In relation to the delta model, there is the need to involve the customer in most if not all activities. This helps in ensuring that the business will well strategically set to go with the flow of the customer needs and therefore and always staying at the fore front of all businesses.