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Article
Publication date: 10 December 2019

Joseph Calandro and Vivek Paharia

The books, The Innovator’s Dilemma and Fooled by Randomness were best-sellers, and both books’ authors rightly have legions of followers. Nevertheless, the dynamics each…

Abstract

Purpose

The books, The Innovator’s Dilemma and Fooled by Randomness were best-sellers, and both books’ authors rightly have legions of followers. Nevertheless, the dynamics each author analyzed so well continue to plague many executives. Why? Is there some way to close the analytical loop between these two extremes? Put another way, is there a practical method of being productive and profitable in “normal” environments while at the same time working to capitalize on the impact of volatile disruption? This paper presents a practical approach for doing so that builds on prior research.

Design/methodology/approach

This paper differentiates between the normal, linear environment of “business as usual” (BaU) and the volatile, nonlinear environments of disruption to both upside and the downside. It then profiles how to navigate each environment, illustrated by way of examples.

Findings

Our findings, which are supported by historical and contemporary examples, are that leading executives consistently navigate the environments of BaU and disruption due to explicit strategic decisions based on an “information advantage,” which is knowledge that their competitors either do not have or choose to ignore. Such advantages are monetized by efficient operations in BaU and by economically, which is to say strategically, benefiting from disruptive volatility to the upside and/or avoiding it on the downside, over time.

Practical implications

Managerial focus should be directed to potentially disruptive innovations and other kinds of ambiguous threats, which could develop to be strategically significant over time, and these need to be tracked in a meaningful way. To benefit from an information advantage, executives must selectively – that is, strategically – make small investments that could either payoff dynamically or economically mitigate the risk of extreme losses over time.

Originality/value

This paper offers executives a practical explanation why the environments of BaU and disruption must be analyzed and planned for separately by different functions. Doing so facilitates the efficient realization of corporate goals and objectives over time in both normal (linear) and highly volatile (nonlinear) environments.

Details

Strategy & Leadership, vol. 48 no. 1
Type: Research Article
ISSN: 1087-8572

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Article
Publication date: 20 January 2020

Robert M. Randall

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Abstract

Details

Strategy & Leadership, vol. 48 no. 1
Type: Research Article
ISSN: 1087-8572

Content available
Article
Publication date: 20 January 2020

Larry Goodson

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214

Abstract

Details

Strategy & Leadership, vol. 48 no. 1
Type: Research Article
ISSN: 1087-8572

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Article
Publication date: 5 June 2020

Joseph Calandro Jr.

The author offers executives a strategic process for proactively mitigating the risk of catastrophic unwanted Black Swan surprises that can severely, and often abruptly…

Abstract

Purpose

The author offers executives a strategic process for proactively mitigating the risk of catastrophic unwanted Black Swan surprises that can severely, and often abruptly, impair a balance sheet.

Design/methodology/approach

One practical way to apply the author’s approach is through hedging concentrated balance sheet exposures when market volatility is low or contracting.

Findings

Though no one can reliably anticipate pandemics and related stock market turbulence, executives do not have to predict the future to economically protect their balance sheets from Black Swan events.

Practical implications

Managers can construct Black Swan scenarios to assess how an unforeseen, disadvantageous future could develop and which risk management derivative would best mitigate it.

Originality/value

This strategic approach to managing balance-sheet-threatening risks could help a firm outperform its competitors during future crises and catastrophes.

Details

Strategy & Leadership, vol. 48 no. 4
Type: Research Article
ISSN: 1087-8572

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