- You are a national telecom service provider with a leadership position in three core markets. With new entrants providing cheap telephone services based on VOIP technologies and gaining acceptance, you wonder whether you should join the race or continue to invest to upgrade your existing technologies such as integrating voice and text over the existing infrastructure. How should you develop your strategy?

- You are a leading photographic film and camera manufacture with leading market positions globally. The market believes that that digital photography will completely take over the film market in 2-3 years, but right now there are still some applications for which traditional film is still useful. How should you develop your strategy?

These are very common situations and these challenges are critical not only to long term growth, but also to the very survival of these organizations. These challenges shape industry structures, provide opportunity for new competitive advantages to be developed and change the basis of competition. Executives should think of these uncertainties as opportunities and focus on developing a growth plan riding on these disruptions. Most often executives undermine their opportunities to gain competitive advantage by using the following common, but flawed, approaches to deal with uncertainty:

- Simply ignoring the uncertainties, cut cost or move operations offshore to boost bottom line

- Ignore the uncertainty and bury themselves in gagabite-sized spreadsheets and extrapolate from current trends

- Acknowledge the uncertainty by simply increasing the hurdle rate for undertaking new projects

All the above not only fail to prepare the organization for the future, but also fail to develop and foresights about how the future may change, what are the critical technological and behavioral drivers of these changes or how the organization might respond to these future events.

First executives must acknowledge that these risks are unavoidable, therefore they must develop critical insights and foresights about the drivers of these changes and develop strategic responses to exploit these uncertainties. Executives should use scenario-driven planning that provides consistent, coherent visions of alternative possible futures. These scenarios then can be used to question the unstated assumptions, resident logic and strategic intent about the firm’s strategy so to develop a broader view of alternative strategies and action plans.

Develop consumer insights and market foresights are both art and science. Mechanistic application of any methodology or a rigid process for analyzing uncertainty is bound to be ineffective because the most important objective is to encourage new perspectives and allow managers to think outside the box. Once scenarios of these futures are developed, the next step is to consider what options are available and they usually come in three bold types: making big bets, developing options, and no-regrets decision.

- Betting the farm—these are large commitments, such as major capital investments, exit or entry of an industry or betting on a technology platform etc, that will produce large payoffs in some scenarios and large losses in others, usually follow by a corporate wide transformation;

- Strategic options—adapting and reserving the right to play do not. Options are designed to secure the big payoffs of the best-case scenarios while minimizing losses in the worst-case ones; classic examples include conducting pilot trials before the full-scale introduction of a new product, entering into strategic alliances for technology sharing or co-marketing or licensing an alternative technology in case it proves to be better than a current one. It is also an effective hedge for big bets.

- No-regrets decision—moves that will pay off no matter what happens. CEOs often focus on obvious no-regrets moves such as reducing costs, industry consolidation or verticalization. Sometimes, even under highly uncertain, certain strategic decisions such as investing in capacity and brand can also be no-regrets moves.