Strategic planning under uncertainty: Long-term muddling-through
Companies have used strategic, tactical, and operations planning for these often-catastrophic events, focusing especially on clawing back lost revenue opportunities as quickly as possible.
In my Insights column, “Decision-making under uncertainty,” I discussed planning under uncertainty and risk.* A payoff matrix supports rationale decision-making (DM) for both. It fully delineates the implications of what might happen should each of the possible courses of action be taken when a future outcome occurs.
Once developed, it is used differently for DM under risk vis-a-vis uncertainty. The former assumes one can reasonably estimate the probabilities of random futures occurring (by using historical data). On the other hand, DM under uncertainty recognizes that the chances of futures occurring are realistically inestimable. By and large, the relevant body of knowledge deals with rationale DM under risk.
Scenario planning
In 2004, I managed the launch of MIT’s Supply Chain 2020 (SC2020) Project. My last column, “SC2020 Project Update: Uncertainties,” provided an update on major uncertainties identified during its second phase.** During the third phase, scenario planning-based approaches were developed by the team for strategically planning for long-term futures that might occur.
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In my Insights column, “Decision-making under uncertainty,” I discussed planning under uncertainty and risk.* A payoff matrix supports rationale decision-making (DM) for both. It fully delineates the implications of what might happen should each of the possible courses of action be taken when a future outcome occurs.
Once developed, it is used differently for DM under risk vis-a-vis uncertainty. The former assumes one can reasonably estimate the probabilities of random futures occurring (by using historical data). On the other hand, DM under uncertainty recognizes that the chances of futures occurring are realistically inestimable. By and large, the relevant body of knowledge deals with rationale DM under risk.
Scenario planning
In 2004, I managed the launch of MIT’s Supply Chain 2020 (SC2020) Project. My last column, “SC2020 Project Update: Uncertainties,” provided an update on major uncertainties identified during its second phase.** During the third phase, scenario planning-based approaches were developed by the team for strategically planning for long-term futures that might occur.
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Article Topics
MIT Center for Transportation and Logistics · Planning · Strategy ·It’s high time to go beyond visibility Driving supply chain flexibility in an uncertain and volatile world View More From this Issue