Diagnosing unforeseeable uncertainty in a new venture
Author: Loch, Christoph H. ; Solt, Michael ; Bailey, ElaineINSEAD Area: Technology and Operations ManagementIn: Journal of Product Innovation Management, vol. 25, no. 1, January 2008 Language: EnglishDescription: p. 28-46.Type of document: INSEAD ArticleNote: Please ask us for this itemAbstract: Many startups undergo major adaptations of original business models before succeeding. When tackling new markets or technologies, unknown unknowns, or unforeseeable influences, emerge that cannot be planned for or mitigated by traditional risk management techniques. At the same time, important decisions about the management systems of the startup must be made at the outset, before unknown unknowns reveal themselves. How can this conundrum be resolved? Based on work in decision theory, we propose that a venture management team can diagnose problem areas vulnerable to the presence of unknown unknowns, although not the influences themselves. A case study demonstrates that a diagnosis of unknown unknowns at the outset of the venture is indeed possible under plausible circumstances. Based on the case study, we propose a diagnosis process for unknown unknowns. Successful diagnosis of unknown unknowns allows the management team to choose appropriate management systems for the venture. Although one case study is not sufficient to establish generalizability, it suggests hypotheses to be tested and avenues for further work in how to address situations of unforeseeable uncertainty| Item type | Current location | Call number | Status | Date due | Barcode | Item holds |
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Many startups undergo major adaptations of original business models before succeeding. When tackling new markets or technologies, unknown unknowns, or unforeseeable influences, emerge that cannot be planned for or mitigated by traditional risk management techniques. At the same time, important decisions about the management systems of the startup must be made at the outset, before unknown unknowns reveal themselves. How can this conundrum be resolved? Based on work in decision theory, we propose that a venture management team can diagnose problem areas vulnerable to the presence of unknown unknowns, although not the influences themselves. A case study demonstrates that a diagnosis of unknown unknowns at the outset of the venture is indeed possible under plausible circumstances. Based on the case study, we propose a diagnosis process for unknown unknowns. Successful diagnosis of unknown unknowns allows the management team to choose appropriate management systems for the venture. Although one case study is not sufficient to establish generalizability, it suggests hypotheses to be tested and avenues for further work in how to address situations of unforeseeable uncertainty
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