Strategy under uncertainty: McKinsey Quarterly – Strategic Thinking

Revisiting a McKinsey article from 2000. If business leaders haven’t realised that we are facing, at least, Level 3 uncertainty they may just be stupid or lucky enough to “muddle through”…not much of a strategy though!

Whilst I agree wholeheartedly with the sentiment behind this article it is worth remembering: whilst we have a single history, we have multiple futures

Chart: The four levels of residual uncertaintyAt the heart of the traditional approach to strategy lies the assumption that executives, by applying a set of powerful analytic tools, can predict the future of any business accurately enough to choose a clear strategic direction for it. The process often involves underestimating uncertainty in order to lay out a vision of future events sufficiently precise to be captured in a discounted-cash-flow (DCF) analysis. When the future is truly uncertain, this approach is at best marginally helpful and at worst downright dangerous: underestimating uncertainty can lead to strategies that neither defend a company against the threats nor take advantage of the opportunities that higher levels of uncertainty provide. Another danger lies at the other extreme: if managers can’t find a strategy that works under traditional analysis, they may abandon the analytical rigor of their planning process altogether and base their decisions on gut instinct.

via Strategy under uncertainty – McKinsey Quarterly – Strategy – Strategic Thinking.

Banking: Understand systems first; DON’T over-regulate; save $200bn p.a. for starters…

I can see, precisely, where the headline-writer was coming from and why. The extract of the article from is below but I felt the need to bring this together with an IBM report (a link to the report at the end of this article) that gets closer to the root of the problem – it still falls short – but points in the direction of an alternate path…

imageBy my interpretation, IBM are telling banks to “look within for the answers they seek”. They have highlighted something pretty fundamental. Made even more tantalising when they quantified it at $200 bn per annum with an emerging market of $900 bn per annum to play for!

“The financial system on which Dodd-Frank is being imposed is far more complex than the lawmakers, and even most regulators, apparently contemplate,” wrote Mr Greenspan.

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So you thought “sustainability” was exclusively the domain of environmentalists!?

I have had to “travel back” to 2009 for this item that is certainly worth sharing. Particularly after KPMG told us that Sustainability strategies saves on energy and enhances customer and supplier relationships… KPMG Study Finds Businesses See Real Benefits from Sustainability Strategies

Like we could TRUST our elected representatives to run the country Banking and investments were safe in the hands of bankers House values only go up; credit can be free; jobs are for life; your cheque is in the post; Santa lives at… INSTITUTIONS are under severe pressure to change and many realised this a long time ago. So why have they failed to take the necessary action? So why have they not been seizing the opportunity to “steal a march … Read More

via Get “fit for randomness” [with Ontonix UK]