CHAPTER 8Uncertainty, Scenario Planning, and Real Options

There are few things we know about the future, except that it is uncertain. Although we may in our daily lives forecast a future that looks pretty much like today, the existence of surprises and black swans is a warning not to place too much confidence in these linear projections.1 The art of strategy is not just about the best positioning for today but the best positioning for the long term. In the highly interconnected world in which we live and develop our plans, shocks are the new normal. As we are writing this, forecasters are concerned how the US-Iran dispute will affect myriad previously loosely correlated events. The 2018 murder of Jamal Khashoggi, a Saudi citizen living in self-imposed exile, sent shock waves into Middle East relations. Khashoggi was a columnist for the Washington Post and a critic of the Saudi regime who was murdered after being lured into the Saudi Consulate in Istanbul. A United Nations special rapporteur concluded that Khashoggi was “the victim of a deliberated, premeditated execution, an extrajudicial killing for which the state of Saudi Arabia is responsible.”2 More recently, in the aftermath of the US killing Qasem Soleimani in a drone attack in Baghdad, Iranian forces shot down a Ukrainian passenger jet killing 176 people. Now, it is unclear what the geopolitical situation is. However, globalization, which has created an increasingly interdependent world, has led to interactions that ...

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