Idea in Brief
The Problem
Few companies use the strategic tool kit—scenario planning, Monte Carlo simulation, and real options—for strategy development under uncertainty. Most have stuck with conventional techniques for strategy-making, to the detriment of customers, shareholders, and other stakeholders.
Why It Happens
Executives complain that the tools require data that is impractical to gather and analysis that is too expensive to perform routinely. Moreover, the output can be counterintuitive and complicated to explain to senior leaders and a company’s board.
How to Fix It
Business leaders need to think of strategy-making as a continuous process that generates a living, dynamic plan. That demands a new approach and mindset for making decisions along with a new model, proposed here, for strategy development and performance monitoring.