One of the great challenges for organizations in the current economy is making strategy under the uncertainties posed by turbulent environments, intensified competition, emerging technologies, shifting customer tastes and regulatory change. Executives often know they must break with the status quo, but there are few signposts indicating the best way forward.
Executives have long been exhorted to conduct analyses of internal and external environments and construct scenarios of the future. However, seeing strategy in this way has some serious weaknesses. It assumes that accuracy can be achieved through rigorous analysis and conscientious efforts to overcome individual biases in perception. It also assumes that the process will be relatively frictionless and primarily analytical. But research has found that most forecasting efforts fail to attain the desired precision.
To study how managers make strategy in conditions of considerable uncertainty, the authors took an in-depth look at five technology strategy projects inside the Advanced Technology Strategy Group at a communications technology company that was experiencing a period of high industry turbulence. The authors observed managers’ struggles to forecast the future and discovered that managers could not imagine new futures for the company without rethinking the past and reconsidering present concerns. A new future could not shape strategic choices unless it was connected in a narrative that showed ho
it relates to the past and the present. When managers settled on a particular narrative, they could make choices.
Strategy making amid volatility thus involves constructing and reconstructing strategic narratives that reimagine the past and present in ways that allow the organization to explore multiple possible futures. In comparing strategy projects, the authors found that the more work managers do to create novel strategic narratives, the more likely they are to explore alternatives that break with the status quo. In other words, to get to an alternative future, you have to create a story about the past that connects to it Furthermore, the authors found that to gain traction within an organization, strategic narratives need to be seen as coherent, plausible and acceptable to most key stakeholders within the company.