Strategic Foresight as Dynamic Capability: A New Lens on Knightian Uncertainty

J.  Peter Scoblic

Working Paper | HBS Working Paper Series | 2020

Strategic Foresight as Dynamic Capability: A New Lens on Knightian Uncertainty

by J. Peter Scoblic

Abstract

This paper proposes to treat strategic foresight as a dynamic capability, providing a new theoretical lens on managerial judgment. Formulating strategy under uncertainty is a central challenge facing the modern firm. Analogy is thought to help managers make sense of novel situations through comparison to past experience. However, from a Knightian perspective, uncertainty precludes analogy because such situations are unique. Even if one relaxes this conclusion, acknowledging “degrees of uniqueness,” analogy remains an unreliable guide because it triggers biases that encourage the adoption of difficult-to-change hypotheses about the future. Nevertheless, analogical reasoning suggests how managers might better respond to uncertainty. This paper argues that, just as we learn from the past by imagining counterfactuals, so too can we learn from the future by simulating experiences—a process that reduces bias and renders us more perceptive, flexible, and adaptable to environmental change. That is the premise of strategic foresight methods like scenario planning, yet such methods have struggled to find theoretical purchase in the general management literature. Noting that the basis of strategic foresight aligns with the microfoundations of dynamic capabilities, this paper integrates research on individual decision-making with firm-level perspectives to suggest a new theoretical approach to managerial judgment under uncertainty.

Keywords: foresight; dynamic capabilities; managerial judgment; Risk and Uncertainty; Management; Strategy;

Language: English

Format: Print

51 pages

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Citation:

Scoblic, J. Peter. "Strategic Foresight as Dynamic Capability: A New Lens on Knightian Uncertainty." Harvard Business School Working Paper, No. 20-093, March 2020.

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Strategic Foresight as Dynamic Capability: A New Lens on Knightian Uncertainty

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