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Strategic Dilemmas in Management: Choices, Risks and Uncertainties (Part 1)

Strategic Dilemmas in Management: Choices, Risks and Uncertainties (Part 1)

  • João Gomes • Partner @BlueBiz

This article comes from a consultancy project I’m leading1, with the aim of anticipating the professional qualifications and competences of the future2 (2030). And because there are so many possible strategic choices, a key question has arisen which, in this article, I invite my reader to answer: what dilemmas exist and how do they condition our strategic choices?

Let’s look at the topic of Strategic Dilemmas (SD) in turn:

  • Definition, structural characteristics, and a long list of SDs.
  • In this edition, we’ll analyse just two SDs and look at each of them:
  • What they consist of;
  • Decision support tools;
  • Practical recommendations;
  • Examples from and for Africa;
  • Bibliography;
  • Conclusion.

A. Definition

In my opinion, an SD occurs when the choice between different strategies involves sacrificing one important aspect in favour of another.

This simple definition captures the essence of SDs, emphasising the complexity of decisions and the need to balance trade-offs in an environment of uncertainty and risk.

B. Structural Characteristics

Let’s start by analysing the structural characteristics of an SD:

Duality of Choices: there are several options, each with advantages and disadvantages.

Uncertainty and Risk: predicting outcomes is challenging, with potential negative consequences.

Conflict of Values: each option reflects different values or organisational priorities.

Limited Resources: choosing how to allocate scarce resources.

C. A long list of Dilemmas

  • The aforementioned project culminated in the following collection of EDs:
  • The Dilemma of Planning without a Compass →
  • The Efficiency Dilemma
  • The Opportunity Dilemma →
  • The Capital Dilemma
  • The Complexity Dilemma →
  • The Measurability Dilemma
  • The Growth Dilemma →
  • The Dilemma of Underestimating the Future
  • The Consumer Dilemma →
  • The Diversification vs. Specialisation Dilemma
  • The Competition Dilemma →
  • The Globalisation vs. Localisation Dilemma
  • The Information Dilemma →
  • The Digital Transformation Dilemma
  • The Acceleration Dilemma
  • The Innovation Dilemma

Note: The research carried out has resulted in a large collection of EDs, some of which I promise my readers to share here in future editions.

D. Specific Analysis of Strategic Dilemmas

  1. The dilemma of planning without a compass

a. What does it consist of?

This SD arises in the absence of clear direction or concrete data on which to base strategic planning. The challenge is how to effectively plan for the future when traditional directions and indicators are insufficient or inapplicable.

b. Elements of the dilemma

Detecting this SD involves recognising the following signs:

Inaccurate Assessment of the Situation: assumptions about consumers, competitors, partners and costs are often inaccurate due to the complexity and uncertainty of the market. This leads to strategic errors, as companies tend to oversimplify reality.

Rewarding past performance with promotions leads to the recycling of old solutions to new problems. This limits the influence of future-orientated employees

Sacralisation of the Plan: once a plan is established, it is often treated as immutable, even in the face of evidence that certain aspects have not been considered. Changes to the plan are seen as threats rather than opportunities for improvement.

c. Tools to support the resolution of this dilemma

To speed up the resolution of this SD, the following tools are recommended:

SWOT analysis: assessment of strengths, weaknesses, opportunities and threats;
Risk Management: identification and mitigation of potential risks;
Critical Thinking: objective assessment of problems and solutions.

d. Practical recommendations for dealing with this Dilemma

Effective management of Strategic Dilemmas includes promoting diversity of thought

For the balanced resolution of this SD, the following best practices are recommended:

Critical and Continuous Analysis: regularly assessing the business environment to identify changes and emerging trends;
Decentralisation of Decision-Making: allowing different parts of the organisation to respond independently to specific challenges.

e. Practical examples in Africa

Some examples help to illustrate how this SD has been solved in African countries:

Telecommunications sector in Nigeria

Challenge: adapting quickly to technological changes and consumer expectations.

Solution: implementation of an agile approach to product and service development.

Result: ability to quickly launch new services while keeping the company competitive.

Agricultural sector in Kenya

Challenge: dealing with climatic uncertainties and fluctuating market prices.

Solution: use of forecasting technologies and crop diversification.

Result: reduced vulnerability to adverse weather conditions and market fluctuations.

f. Bibliography

Good Strategy Bad Strategy: The Difference and Why It Matters.

Author: Richard Rumelt.

ISBN: 978-1781256176.

Summary: This book discusses the importance of well thought-out strategies in an uncertain world, highlighting the difference between good and bad strategies.

The Art of Strategy: A Game Theorist’s Guide to Success in Business and Life.

Author: Avinash K. Dixit and Barry J. Nalebuff

ISBN: 978-0393337174

Summary: This book applies game theory to the world of business, offering insights into how to make strategic decisions in complex and uncertain situations.

g. Conclusion

This ED underlines the importance of not becoming continuously attached, carrying out regular critical analyses and decentralising decision-making in order to respond effectively to specific challenges.

  1. The Opportunity Dilemma

a. What does it consist of?

This SD involves the decision to pursue new business opportunities in the face of associated risks and uncertainties. Companies must assess whether they can capitalise on new market trends and emerging technologies, weighing up the potential for growth against the risk of deviating from their existing core competencies and strategies.

b. Elements of the Dilemma

Detecting this SD involves recognising the following signs:

Conformity and Comfort Zone: the bottom-up perspective teaches employees that conformity and non-challenge are rewarded. Consensus-based organisations move within a comfort zone, especially in uncertain and turbulent times.

Recycling Past Solutions: the practice of rewarding past performance with promotions leads to the recycling of old solutions to new problems. This limits the influence of future-orientated employees and can have significant negative consequences.

c. Tools to support the resolution of this Dilemma

To speed up the resolution of this SD, the following tools are recommended:

Risk Management: identification and mitigation of potential risks.

See Also

Benchmarking: comparison with the best practices in the sector.

Critical Thinking: objective evaluation of problems and solutions.

d. Practical recommendations for dealing with this Dilemma

For a balanced resolution of this SD, the following best practices are recommended:

Promote Diversity of Thought: encourage and value divergent opinions and new ideas within the organisation;

Reward Calculated Risk Taking: establish reward systems that value innovation and the courage to explore new paths.

e. Examples from and for Africa

Some examples help illustrate how this SD has been tackled in African countries:

Renewable Energy Sector in South Africa

Challenge: overcoming dependence on fossil fuels and developing sustainable energy sources.

Solution: investment in solar and wind energy technologies.

Result: creation of a robust renewable energy sector, reducing the carbon footprint and generating new jobs.

Digital Education Sector in Kenya

Challenge: limited access to quality education in rural areas.

Solution: development of e-learning platforms and Internet infrastructure in remote areas.

Result: improved access to education and increased literacy rates.

f. Bibliography

The Art of Opportunity: How to Build Growth and Ventures Through Strategic Innovation and Visual Thinking.

Author: Marc Sniukas, Parker Lee and Matt Morasky.

ISBN: 978-1119151586.

Summary: This book offers a practical and creative approach to identifying and capitalising on business opportunities by combining strategic innovation with visual thinking.

Good Strategy Bad Strategy: The Difference and Why It Matters.

Author: Richard Rumelt.

ISBN: 978-1781256176

Summary: This book distinguishes between good and bad strategies, offering insights into how to develop and implement effective strategies that can overcome complex challenges and capitalise on opportunities.

g. Conclusion

Effective management of this SD requires a multi-faceted approach that includes promoting diversity of thought, rewarding calculated risk-taking and a balance between stability and flexibility. Practical examples in sectors such as renewable energy and digital education in African countries illustrate how innovative solutions can overcome challenges and turn risks into sustainable opportunities.

1 For the Government of Cape Verde, with financial support from LUXDEV – Luxembourg Development Agency.

2 See Economia & Mercado magazine of 16 April 2021: http://tinyurl.com/mrd99ba5

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