Environmental uncertainty, foresight and strategic decision making

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Authors: R. Vecchiato

Publication Year: 2012

Source: http://dx.doi.org/10.1016/j.techfore.2011.07.010

Journal: Technological Forecasting and Social Change

Volume: 79

Issue: 3

Categories: Organizational Change, Gestalt Switch, Qualitative


Abstract

This paper explores how the foresight practices and techniques that might be used for coping with environmental uncertainty are coordinated throughout large corporations and how their results are used for supporting strategic decision making. Based on an in-depth and multiple study of several companies, we analyse the main characteristics of environmental uncertainty - complexity and dynamism - that shape companies’ approaches to strategic foresight and uncertainty management. We explore the impact of growing complexity and dynamism on these approaches and the role of prediction and control in their design and implementation. We outline a conceptual framework for strategic foresight activities - and their relationships with decision making under uncertainty - as a planned learning process about the future which enables managers not to know opportunities and threats in advance, but to detect them more promptly and to react more effectively as soon as they start emerging.


Critical Reflection

This article is really interesting especially with the notice that forecasting and predicting certain changes has helped big companies to overcome crisis situations more easily. It also introduces the notion of micro and macro environments, a notion that points out what en where a company should focus its forecasting resources on. The following quote emphasizes the role that information technology could play the upcoming years in collecting and understanding massive amounts of information through available sources. "... business environments are inherently unstable. This instability creates uncertainty for rationally bounded managers, since information about external changes is intrinsically difficult to collect, process and comprehend fully." It possibly is not possible to know when threats or opportunities will apear in the future. But rather to promptly identify a possible threat or opportunity in order to react faster and more adequately. "the basis of weather forecasting is looking though a satellite and seeing a storm coming, but not predicting a storm will form (Mandelbrot)". Like weather forecasting its very difficult to predict where, when and why a crisis will form due to the enormous sensitivity in input variables (chaos theory). Being on guard looking at sudden changes is the out business environment leads to a system where we are more in touch with the environment and can detect possible threats and opportunities in an earlier stage, making it possible to take measures earlier. This is also concluded in this article. "We argue that whatever the kinds of uncertainty, the main contribution that foresight efforts bring to strategy formulation lies not in predicting the future (i.e., in the predictions themselves that represent the outputs of foresight), but in preparing the managers of the organization to handle the future (i.e. in the learning process about the future enabled by these predictions)."