Idea in Brief
The Problem
To cope with uncertainty and volatility, companies try to improve their forecasting and increase their agility. But these tactics have limitations. Forecasts quickly become obsolete, and perfect flexibility is costly to achieve—if not impossible.
The Solution
Complement your efforts with “strategic options” that serve as a hedge against uncertainty. These include temporary organizations, exploratory acquisitions, and disposable or modular factories.
Implementation Challenges
Persuading employees that the long-term benefits of options outweigh their high short-term costs. Building skills—for instance, in acquiring and integrating acquisitions. Changing the forecasting culture and focusing more on understanding risks.
To cope with growing uncertainty and volatility, most companies try to improve their forecasting and increase their agility. While important, both tactics have limitations. In times of rapid change, forecasts become obsolete almost as soon as the ink dries on them. And though responding quickly to market shifts is crucial, “perfect” flexibility and agility are costly to achieve—if not impossible.
