Managing the risks that go with high-impact strategies in uncertain markets

Author: Leavy, Brian

Source: Strategy and Leadership, Volume 35, Number 4, 2007 , pp. 43-46(4)

Publisher: Emerald Group Publishing Limited

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Abstract:

Purpose - <IT>The author offers a perspective on the complex new concepts of Michael Raynor and others on managing strategic risk.</IT> Design/methodology/approach - <IT>The author explains Raynor's theories of strategic paradox, strategic options, requisite uncertainty and strategic flexibility, all of which have special meanings in the Raynor vocabulary.</IT> Findings - <IT>The strategy paradox arises from "the collision of commitment and uncertainty." Since the mark of high impact strategies requires making clear commitments in the face of future uncertainty, the key question is, how can the risks involved best be mitigated? One option is to shy away from making clear strategic commitments. This is the route to mediocrity.</IT> Practical implications - <IT>The management of "strategic uncertainty" and "strategic options" employs a four-phase methodology: Anticipate (build scenarios of the future). Formulate (create optimal strategies for each of those alternative futures, distinguishing between core and contingent elements). Accumulate (determine what strategic options are required to cover the contingent elements). Operate (manage the portfolio of options, exercising or abandoning them, as the future unfolds).</IT> Originality/value - <IT>Leavy provides an explanation of Raynor's unconventional wisdom that corporate leaders will find helpful.</IT>

Keywords: Risk management; Strategic management; Uncertainty management

Document Type: Research article

DOI: http://dx.doi.org/10.1108/10878570710761381

Publication date: 2007-07-10

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