How to Craft Winning Strategies in Uncertain Times?
It may come as no surprise that strategic decision making requires accurate forecasting to be effective. While forecasting in general can be difficult in the best of time it becomes extremely more challenging in times of uncertainty.To assist in improving the accuracy of forecasting, Cmczona highlights a simplified four-tiered approach to strategic planning that may come into play as market uncertainty (not just an uncertain economy) increases.
Level 1 – Uncertainty Level: Low
Forecasting Situation: A Clear Forecast
Strategic Outcome:
These are simple low-risk strategies about product positioning and demographics (also termed as adapter strategies). Level one adapter strategies should try to make radical changes in the way the industry works and create value-added products and business processes. Although, being an innovator helps to counter level one uncertainty it increases amount of uncertainty for others in the industry.
Examples of Uncertainty: Typical market cycles
Level 2 – Uncertainty Level: Low – Moderate
Forecasting Situation: Alternative Future Forecast
Strategic Outcome:
Market “shapers” or business leaders emerge to prevent competitors from creating excess capacity and reduce margins. Before an upswing in demand they would create capacity or consolidate their position through Mergers and Acquisitions.
Examples of Uncertainty: Regulatory Framework
Level 3 – Uncertainty Level: Moderate – High
Forecasting Situation: Future Range
Strategic Outcome:
Shapers try to lead the market and take it into a different direction through improved, technology, products or service.
Examples of Uncertainty: Entering a new market / geographic region
Level 4 – Uncertainty Level: High
Forecasting Situation: Ambiguity
Strategic Outcome:
The shaper should provide vision to the industry as there are no potential products developed yet; no knowledge about competition, demand and technological standards is available yet. Companies should create a high degree of leverage and evaluate all the options rigorously and regularly.
Examples of Uncertainty: Transitional and emergence after an economic/ technological/ regulatory shock