Coping with Uncertainty

Planning: Coping with uncertainty by formulating courses of action to achieve specified results

Three Types of Uncertainty

         State uncertainty: Occurs when the environment, or a portion of the environment, is considered unstable

         Effect uncertainty: Occurs when impacts of environmental change are unpredictable

      Response uncertainty: Arises when the consequences of decisions are unpredictable

Planning: The Primary Management Function

Organizational Responses to Uncertainty

Defenders: Relying on a primary technology and/or a narrow product line to remain competitive

Prospectors: Seeking first-mover advantage by aggressively making things happen and not waiting for them to happen

Analyzers: Following the market leader and imitating what works, avoiding expensive R&D mistakes

Reactors: Waiting for adversity (e.g., declining sales) to occur before taking corrective action

Uncertain Environment Balancing Planned Action and Spontaneity in the Twenty-First Century

Command-and-Control Model

Top-down tight control of operations through exact planning which creates organizational inflexibility to deal with unanticipated events and limited success

Contingency Model

Planned action balanced with strategic agility to take advantage of unexpected opportunities and to cope with the need for change