THE CHANGING LANDSCAPE
Shapers need not make bets as enormous as the Malaysian government’s to be successful in level three or four situations. All that is required is the credibility to coordinate the strategies of different players in line with the preferred outcome. Netscape Communications, for example, didn’t rely on deep pockets to shape Internet browser standards; instead, it leveraged the credibility of its leadership team in the industry so that other players thought, “If these guys think this is the way to go, it must be right for us.”
Reserving the right to play is common but potentially dangerous in level four situations. A few general rules apply. First, look for a high degree of leverage. Say, for example, that an oil company is thinking of reserving the right to compete in China by buying an option to establish a beachhead and has a choice of maintaining a small but expensive local operation or developing a limited joint venture with a local distributor. All else being equal, the oil company should go for the low-cost option. Second, don’t get locked into one position through neglect. Options should be rigorously reevaluated whenever important uncertainties are clarified and at least every six months. Remember, level four situations are transitional, and most will quickly move toward levels three and two. The difficulty of managing options in level four situations often drives players toward adapter postures. As in level three, such a posture in level four is frequently implemented by making invest- ments in organizational capabilities.
The approach we have outlined offers a discipline for thinking rigorously and systematically about uncertainty. On one plane, this discipline makes it possible for companies to judge which analytic tools can and can’t help them make decisions at various levels of uncertainty. On a broader plane, our framework provides a way to tackle the most challenging decisions executives have to make, offering a more complete and sophisticated understanding of the uncertainty they face and its implications for strategy.