Strategic option formation

Published on November 28, 2021   9 min
Greetings and welcome to this session on strategy and practice. My name is George Tovstiga and I'm Professor of Strategy at EDHEC Business School in France. In this session, we examine the crucial step between strategic analysis and option formation.
Decision-making is a critical element of strategy. In strategy practice, strategic decisions that lead to the formation of strategic options are derived from the outcomes of a foregoing inside-driven strategic analysis. Insight-driven strategic option formation implies a central role of insights in the formation of viable strategic options. Strategic decision-making and practices are based on a reconstructed big picture that invariably features missing pieces of the puzzle, i.e. insights. This is due to the complexity and ambiguity of real business contexts. Strategic decisions are, therefore, made on the basis of a reconstructed strategic landscape that, although incomplete, it nonetheless, provides sufficient details of the main contours that shaped irrelevant competitive playing fields.
In preceding sessions, dealing with strategic analysis, the focus has been on making sense of the firm's current reality in light of a particular strategic challenge. Strategy, however, is about positioning the firm for a competitive advantage in the future by making choices today. The future is uncertain. This raises questions about the future relevant to the firm's strategic challenge. What will that future entail? What is the time horizon of that future? We will never be sure about this, of course. To help mitigate the uncertainties, we deploy scenarios to scope possible futures and time horizons. We note that scenarios are not predictions. They are imagined futures with varying probabilities of happening.