#15, January 2003
uncertainty- a new environmental analysis
dawn of the 21st Century has been marked by a
turbulent environment. Complacency has been
replaced by uncertainty, a level of flux that
impacts on all areas of life. This has turned
conventional planning processes upside-down.
Strategic planning for the future has to take into
account not only a greater number of factors but
also known factors with unsubstantiated impacts
and an increasing number of “wild cards” or
unknown elements. The state of the business
environment ranges from near certainty (the number
of people over 60, for example) through some
uncertainty (a good or bad summer?) to full
uncertainty or wild cards such as an environmental
disaster or terrorist activity.
forces of change or events that have made the
environment uncertain occur on both the macro and
micro levels. They are frequently not limited to
one country and events occurring in one area can
have a significant impact on others. Some examples
of such factors are as follows:
state of the economy.
has moved from local to global.
work and family environment.
of direction from (former) authorities such as
the church and state.
impact of unstable share prices on long-term
personal identity (global, regional, national,
are two outcomes of all this. The first is the
“ostrich” approach, burying the head in the
sand until the danger has passed. This can be
viewed in denial strategies, postponing investment
decisions and looking to avoid any risk. The
alternative is to adapt to what is looking
increasingly like the new reality. This involves
acceptance of uncertainty and provision for
an uncertain future requires the re-evaluation of
an organisation’s role. What does it do? What
does it do well? Increasingly we are seeing
companies retrenching their core competencies and
outsourcing all other activities. This enables
management time and effort to be focused and
efficient and allows for greater flexibility of
operation. Outsourcing enables companies to
specialise, to focus on doing a small number of
tasks extremely well rather than looking to cover
a wide range of tasks, most of which are not
directly connected with the company’s business.
retrenchment is one way in which an organisation
may seek to relate to an uncertain environment. It
eliminates wasted effort while its flexible
approach allows it to adapt and evolve as the
environment dictates. Lean, mean and highly
flexible has become the pre-requisite for an
organisation in an uncertain world.
will also require that the product and service
offer can be changed quickly. Built-to-order, a
Dell-type system, will become increasingly
important as companies will not only look to
minimise or eliminate costly inventory but they
will not want to be carrying unsold, obsolete
stock. All of this requires closeness to the
customer and close relationships with suppliers
and partners to be successfully implemented.
same time organisations have to change the way in
which strategy is developed. A more flexible
approach is vital to ensure that the organisation
is able to change its strategy, or at least the
implementation of it, as the environment changes.
Strategy could look to copy the manner of the
Internet protocol where it is able to take a
number of different implementation routes if one
way is blocked. While the long-term strategy
should be relatively stable, the paths to
implementation or short-term strategies priorities
can be very fluid.
consumer perspective is quite different. While
there may also be an element of retrenching such
as through delaying purchase of high-ticket items,
the consumer economy can continue to thrive. This
highlights the fact that despite media scare
stories about the world economy and plummeting
share prices, consumer sales can remain less
affected. Very low interest rates may effectively
cushion the consumer economy.
paradox of responses
apparent inconsistency between the business and
the consumer responses may turn out to one of the
elements of the new reality. The paradox can
result from the length of the purchase cycle where
businesses would have tended to have much longer
cycles in the past. This suggests that businesses
should be looking at shorter purchase cycles and
making investments pay back quicker.
Alternatively, there may have to be new ways to
evaluate investment opportunities and return on
investment. While consumers will be careful about
committing to expenditure, they do not face the
high levels of capital expenditure that business
does and can make decisions much quicker. Possibly
this is an area where business purchasing can take
lessons from consumers.
formulation has traditionally worked under a
number of assumptions. The principal competitors
and their behaviour were known, even if
complacency could hide the truth. Many markets are
now in a state of flux. New competitors have
brought different capabilities to existing markets
while other markets have been turned upside-down
by technological developments. Consequently,
existing assumptions about competitive behaviour
or market mechanisms may become invalid.
Furthermore, new competitors may frequently
operate in a different way to the existing
business structure. Competition may not be within
a category but through a different way of doing
assumption that has become or is becoming invalid
relates to mass production and mass
communications. This has meant that companies have
looked to sell as many products as possible to the
largest group of consumers using broadcast media
to inform about products and services. Industries
now have to learn to work under a new environment
where mass customisation or fragmented product
offerings have replaced mass marketing. In this
environment new ways of evaluating and
compensating communications agencies have become
is a factor that will always exist although the
level of uncertainty and the implications of
unknown or partly known factors will vary. This is
the new environment in which marketers have to
operate and not merely a temporary phase. The
factors that work together to promote this
uncertainty are both macro and micro issues that
impact on the business environment in different
result is that businesses will have to rethink
their planning processes so that uncertainty is
built in and the business is able to take a
flexible and adaptable approach. One of the ways
in which Through the Loop has worked with clients
has been to isolate the key factors that are
impacting on the environment and classifying their
level of certainty and extent of impact. This
enables a company to work with defined variables
that are certain and to isolate and prepare for
the less certain factors.
implication is likely to be moving decision making
closer to the customer. This has the effect of
making the company more flexible to respond to
consumer needs and opportunities.
often do you examine your strategic plan?
you able to flex strategic and marketing plans
according to rapid changes in the business
you have systems in place to identify
unexpected changes in the environment?
can you identify and respond to new