Wharton School Professor Paul J.H. Schoemaker begins the latest in his long list of business books aimed squarely at senior management who are worried about the future by conceding that "business leaders traditionally have viewed uncertainty as the enemy.
Profiting from Uncertainty: Strategies for Succeeding No Matter What the Future Brings
By Paul J.H. Schoemaker
Free Press, July 2002
288 pages, $30
Wharton School Professor Paul J.H. Schoemaker begins the latest in his long list of business books aimed squarely at senior management who are worried about the future by conceding that "business leaders traditionally have viewed uncertainty as the enemy." Management, he adds, believes that "uncertainty is something to be nailed down and rooted out, an evil that detracts from one's ability to manage and control."
So why does he think there is money to be made in uncertainty? Two reasons—one emotional, the other financial. First, no matter how hard you try, things will happen—everything from recessions to acts of God—that are beyond a manager's control, so instead of agonizing over that fact, managers should embrace it. Second, as the stock market proves every day, the highest returns come from dealing successfully with the greatest risk.
How can you profit from uncertainty? Schoemaker lays out a four-step approach.
Prepare for the unknown. Determine the skills and resources you think you'll need to succeed in the years ahead, and then analyze what would happen if one of your pivotal assumptions changed. If you were the CIO of ABC Mainframe Inc. in the 1970s, would you have foreseen the rise of distributed computing and the rise of the PC? If so, what would you have done? What this means, in essence, is to prepare for multiple possibilities simultaneously, devoting the most resources to the ones most likely to occur.
Have a clear vision. Determine how you want your company to compete in each of the possible new world orders you imagine, then figure out what you need to do to get it there. This basically means determining how you want to employ your firm's "core competencies"—the things it is best at—going forward.
Build in flexibility. If your approach to strategic planning comes up with just one way of doing things, you aren't much farther ahead of the game than you are now. To oversimplify, how can you create capabilities that will allow you to both zig and zag—possibly at the same time? For the CIO, this may mean creating an infrastructure that can turn, if required, on the proverbial dime.
Recognize that things change. Develop an extensive and effective way of monitoring changes that could affect your industry. If you have the same sources of information as everyone else, you aren't going to be ahead of whatever changes occur. CIOs can play a major role here by monitoring new technologies and new ways to gain access to information.
The first step in planning for uncertainty is understanding that you should plan for uncertainty. Just because you predict a future, he notes, doesn't mean it will happen. In the mid-1990s, Monsanto Co. began prepar- ing for a world where the agriculture, food and health industries would merge by positioning itself as a "life sciences" company. But the jury is still out on whether people want to eat engineered foods. And he is particularly good at recognizing that most people are reluctant to address future threats. But as we come upon the first anniversary of Sept. 11, not thinking about the unthinkable is no longer an option.
Paul B. Brown is the author of 13 business books, including the international best-seller Customers for Life. Doubleday will publish a revised and updated version of the book, written with Carl Sewell, this fall.