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vii The strategic-planning and decision-making approaches used by most companies assumed that, with the right analysis, the future could be forecast with enough precision to identify the right strategy. Yet rapid change and high levels of uncertainty were making it increasingly difficult for companies to develop such forecasts. As a result, many companies were abandoning analytical rigor altogether when making strategy decisions, while others were burying uncertainty in meaningless point forecasts. In both cases, strategies emerged that neither addressed the threats nor captured the opportunities that high uncertainty brings. There had to be a better approach.
p.1 In choosing strategy under uncertainty, there are no easy answers... "tried-and-true" approaches, designed to optimize strategic decision making in predictable environments, systematically fail in times of high uncertainty, as we are experiencing today.
p.2 Foresight - an accurate view of the future - is essential in generating the best forecasts and making the right strategy choices.
p.3 this book starts with a very simple but powerful idea: If you want to make better strategy choices under uncertainty, then you have to understand the uncertainty you are facing.
p.4 If you can identify the residual uncertainty in your business environment, you can achieve 20/20 foresight... residual uncertainty always takes one of four - and only four - forms. The lowest level of uncertainty, called Level 1, is so low that the traditional methods that employ point forecasts can be used with great success. On the other hand, the highest level, called Level 4, is a situation where analysis cannot even bound the range of possibilities, let alone generate reliable point forecasts of key value drivers.
Between these two extremes, however, are Levels 2 and 3, the levels of uncertainty most likely to face managers. In Level 3 situations, managers can bound the range of possible outcomes. And in Level 2 situations, managers can take this one step further and identify a set of distinct possible outcomes, one of which will occur.
p.5 Decision makers always face one of the four levels of residual uncertainty... But the four levels framework is more than just a foresight gauge. All aspects of strategy - including the processes you use to formulate strategy as well as the actual investments you make to implement your strategy - should be tailored to the level of residual uncertainty you face.
p.10 If typical strategic-planning and decision-making processes are inappropriate in highly uncertain business environments, what alternative processes should companies use to monitor and update their strategies over time? ...Not surprisingly, the best approach for your company depends on the level of residual uncertainty it faces.
p.11 This book is intended for strategists across a broad range of industries, from high-tech sectors... to industrial sectors
p.29 Lehman Brothers, for example projects...
[JLJ - Oops, they went bankrupt in 2008]
p.41 Polaroid in instant photography...
[JLJ - Oops, Polaroid went bankrupt in 2001]
p.41 Early e-commerce strategies also fundamentally reshaped traditional retail business systems. Amazon.com in books is the most vivid example.
[JLJ - Amazon does much more than book sales today.]
p.50 For example, JVC's VCR-licensing strategy...
[JLJ - Oops, no one uses VCRs anymore...]
p.59 Circuit City's Divx strategy...
[JLJ - Oops, they went bankrupt in 2009]
p.64 Enron had true foresight about the market potential... Like Enron, your company, too, can craft winning strategies
[JLJ - Oops, Enron went bankrupt in December 2001.]
p.68 By postponing, staging, or making more flexible investments, strategists minimize irreversible commitments.
p.69 Real options give companies the flexibility and preferential positions required to reoptimize their strategies as the business environment evolves... In particular, look for three types of real options: growth, insurance, and learning... Growth options provide a preferential position to reinvest in the future
p.70 Insurance options protect against the downside losses associated with uncertainty by facilitating quick and relatively inexpensive changes in strategic direction... Learning options... allow a company to postpone commitments until more information is available... Learning options protect against the downside losses often associated with premature big bets under uncertainty.
p.116 There is a better way. It requires tailoring your strategy toolkit to the level of residual uncertainty you face.
p.165 most strategy decisions... are interdependent. The best strategy for one company often depends vitally on the related strategy choices made by its competitors, customers, suppliers... Game theory is the study of how strategic decisions are and should be made, given these interdependencies. Its insights are not limited to business strategy
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