MANAGING UNCERTAINTY

A Wharton insight-building conference presented May 3, 2002 by: The Mack Center for Technological Innovation, The Risk Management & Decision Process Center, and The Goergen Entrepreneurial Management Program

 
              

How can managers plan in an environment of high uncertainty? 
Approximately 70 senior executives and faculty attended this extremely timely conference on how to devise the most appropriate strategies for dealing with high risk and uncertainty - something all organizations are facing, particularly in the wake of September 11, the dotcom shakeout and several corporate "meltdowns."

One of the top research priority’s of the Mack Center is to better understand and improve how firms manage uncertainty, especially those related to emerging technologies.  Rapid technological innovation imposes uncertainties that challenge decision makers at all levels of the organization.  This conference explored what approaches, tools and framework firms use to manage high levels of external as well as internal uncertainty. Multiple perspectives were presented, from individual attitudes towards uncertainty to project level analyses to organizational architecture and leadership issues. Each matters in how uncertainty is dealt with.  Breakout groups explored the effects of uncertainty on the reinsurance industry, biotech/pharma, government and other sectors, and discussed strategies and tools that might be used by decision makers. 

Hugh Courtney from McKinsey shared the "four levels of uncertainty" framework developed in his recent book 20/20 Foresight, Crafting Strategy in an Uncertain World;  whereas Paul J. H. Schoemaker (pictured above) will present  a strategic compass from his forthcoming book Profiting from Uncertainty.  Hugh Courtney described the "four levels" of uncertainty, from Type I dealing with known factors with historical precedent, to Type IV "chaos" where virtually nothing is known and everything is unexpected with no precedent or guides from the past.  

Prof.  Schoemaker described the current "tools" available to managers for planning and implementing strategies to deal with uncertainty (scenario planning real options, etc.); he also described a major research project in progress that he is directing, to assess the effectiveness of various strategies and frameworks for managing uncertainty.

David Haushalter and John DeMartini presented industry perspectives from the reinsurance and options trading industries.  

Prof.  Ian Macmillan described how "Discovery Driven Planning" can help address uncertainty when planning for entrepreneurial ventures, and cited several examples.  

Paul Kleindorfer addressed key issues and considerations, especially for the insurance and reinsurance industries and their clients, that were seriously impacted by the events of September 11.   

The Mack Center co-sponsored this conference with the Risk Management & Decision Process Center and Goergen Entrepreneurial Management Center at Wharton.  More than 60 senior executives and faculty participated.  We will publish a conference report online for those who were unable to attend in person.   

AGENDA

Location: First floor amphitheatre, Steinberg Conference Center, 38th & Spruce St.

8:30 - 9:00 Continental Breakfast

9:00 - 9:45  "Challenges and Opportunities Posed by Uncertainty" 
Paul J.H. Schoemaker

Prof. Schoemaker is Research Director, Mack Center for Technological Innovation and Adj. Prof. of Marketing at the Wharton School; and Chairman, Decision Strategies International.  He is the author of the forthcoming book, "Profiting From Uncertainty" and co-editor of the book, "Wharton on Managing Emerging Technologies."

9:45 - 10:30 "Levels of Uncertainty and Implications for Business Strategy"  - Hugh Courtney

Hugh Courtney is a Teaching Fellow at Robert H. Smith School of Business, University of Maryland and an  independent management consultant; he is former co-head of McKinsey & Company's Global Strategy Practice responsible for client service, research and internal training modules on strategy under uncertainty and competitive dynamics; he is the author of the book, "20/20 Foresight." 

10:30  Break

10:45 - 12:00  Industry Cases of High Uncertainty
Paul Kleindorfer, Moderator 

Paul Kleindorfer is Universal Furniture Professor; Professor of Decision Sciences, Economics, and Business and Public Policy at the Wharton School.  He is also Chairperson of the Operations and Information Management Department and Co-Director of the Risk Management and Decision Processes Center.

10:45 - "Profiting from Uncertainty in Options Trading"
                 David Haushalter, Susquehanna International Group

David Haushalter  is Educational and Corporate Research Associate at Susquehanna International; and Assistant Professor at the Lundquist College of Business, University of Oregon where he teaches corporate risk management and corporate financial analysis.  His industry experience also includes equity and foreign currency options trading.  He received his Ph.D. in finance and economics from Purdue University in 1996.

11:25 - "Managing Risk and Uncertainty in Reinsurance" 
                 John DeMartini - Vice President, Towers Perrin Reinsurance

12:00 - 1:30 Lunch & Breakout Exercise: "Special Challenges of Managing Uncertainty" 
Roch Paraye, Doug Randall and Paul Schoemaker

1:30 - 2:30 Debriefs of Breakout Groups

2:30 - 3:15  "Discovery-Driven Planning: A Systematic Approach"
Ian Macmillan

Ian Macmillan is Fred. R. Sullivan Professor; Professor of Management at the Wharton School.  He is also Director of the Sol C. Snider Entrepreneurial Research Center and Director of the Goergen Entrepreneurial Management Program at Wharton.  He is the co-author of "The Entrepreneurial Mindset" (Harvard University Press, 2000).

3:15 - 4:00 "Critical Issues" Panel - Paul Schoemaker, Paul Kleindorfer, Ian MacMillan 

4:00 ADJOURN

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DIRECTIONS: From Philadelphia International Airport, the Wharton campus is a 30 minute taxi ride, and from 30th Street Station (train) it's about 10 minutes by taxi. This event will be held in the amphitheatre on the first floor of the Steinberg Conference Center, on 38th Street between Spruce and Walnut. IF DRIVING: Park in the large enclosed structure at 38th and Walnut, walk back on 38th Street to the Center.

HOTEL ACCOMMODATIONS: To check on room availability please contact the administrative coordinator at the Mack Center at 215-898-2104.

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