Strategy as active waiting

Area of Science:

• Business Strategy
• Market Volatility Analysis

Background:

• Executives from stable markets struggle in volatile environments due to flawed long-term strategy assumptions.
• Limited future visibility in volatile markets stems from complex interactions of technological, customer, policy, and capital market factors.

Purpose of the Study:

• To examine executive strategies in volatile markets.
• To identify effective approaches for navigating unpredictable business environments and capitalizing on opportunities.

Main Methods:

• Led a six-year research project on volatile markets (e.g., China, Brazil) and industries (e.g., software, telecommunications, airlines).

Main Results:

• Executives often fail in volatile markets by overestimating their ability to predict the future.
• Key finding: The importance of strategic action during periods of market calm ('active waiting').
• Companies cannot create major opportunities but can prepare for them by managing effectively during stable times.

Conclusions:

• Effective management in calm periods includes probing, resource preservation, and maintaining operational readiness.
• Leaders must have the courage to commit resources decisively when significant opportunities or threats emerge.