Strategy Leadership in the Face of Uncertainty
High above a sea of swirling fog stands a solitary figure. He is often called a wanderer, but that’s a mistranslation of Caspar David Friedrich’s famous painting. The German “Wanderer” is better translated as “hiker”. The distinction matters. The figure isn’t lost in the fog below. He’s intentionally sought higher ground, taking a purposeful stance as he surveys the uncertain landscape before him.
This image captures what it means to be a leader responsible for strategy when facing uncertainty. Effective strategy leaders don’t wander aimlessly — they use the tools of strategy to navigate through it with purpose, and their organizations and colleagues benefit. Uncertainty is the very reason strategy exists. Without uncertainty, we would only need plans, not strategy. We have long defined strategy as fundamentally being a coherent set of hard-to-reverse moves made in the face of uncertainty to build sustainable competitive advantage and create and capture value. When uncertainty arises, the need for a well-defined strategy — and strong strategy leadership to maintain it — becomes even more vital.
The science
The challenge of strategy under uncertainty runs deep. It’s not just about the external environment — it’s about how humans and organizations naturally respond to uncertainty. The science of human cognition shows we’re wired with predictable biases when facing uncertainty. We become overconfident in our predictions, especially in areas where we believe we have expertise. We seek false certainty through oversimplification. We anchor to existing beliefs and recent experiences. Most problematically, our innate loss aversion leads us toward overly defensive postures just when bold moves might be needed most.
These human tendencies manifest in predictable organizational behaviors. Organizations can treat uncertainty as binary — either everything is certain, or nothing is predictable. They default to short-term thinking and “wait and see” approaches. They miss the opportunities that uncertainty creates. They develop rigid plans that don’t accommodate adaptation. They create false precision in forecasts and projections.
The result? Strategies that neither defend against threats nor capture the opportunities that uncertainty presents, and which are wholly unable to be quickly re-evaluated in the face of new uncertainties.
But there’s an even deeper complexity at play. Companies operate in complex adaptive systems (some more complex than others) — environments where multiple interdependent actors interact, and cause and effect are often separated in time. Behaviors emerge that cannot be predicted by analyzing individual parts. This reality undermines many strategic planning approaches, and advantages companies with the most mature strategic management systems and cultures.
What does this mean for strategy leaders? They need explicit frameworks and processes to counter natural biases. They need languages and tools that help organizations efficiently understand and debate uncertainty. Most importantly, they need to build certain organizational muscles — the capabilities and comfort to sense, adapt to, and thrive in uncertain environments.
The strategy leader’s uncertainty toolkit
Five foundational tools are particularly important to tackling these challenges and leaning into uncertainty.
Language for uncertainty
Not all uncertainty is created equal. Four levels of uncertainty are worth considering. The first is a “clear-enough future,” where a single forecast is precise enough to set strategy. The second is when a few “alternate futures” are sufficient to define the future and assess options. The third is when a “range of futures” can be defined, but there are no natural scenarios. In this case, strategy development needs to become much more sophisticated. The highest level of uncertainty is “true ambiguity”, when there is no basis to forecast the future. At these last two levels, anticipatory intelligence and foresight are particularly important, to ensure top teams have the muscle to think through new scenarios and the signals to trigger debate.
Having a language for uncertainty is important, as debating the question “What level of uncertainty are we facing?” helps to head off cognitive biases before they undermine strategic thinking and decision-making.
Types of moves
While some strategies have moves that are treated relatively equally, companies facing higher levels of uncertainty in particular benefit from playing with three types of moves: “big bets” that require major commitment to shape the future of an organization, “real options” that are smaller investments to learn and build the right to move later, and “no-regrets moves” that make sense no matter what happens.
Categorizing a strategic opportunity into one of these types benefits from two key analyses. First, assess the move’s value across different scenarios — no-regrets moves create value in all scenarios, while big bets and real options may only pay off in some futures. Second, identify specific trigger points that would signal when a real option should be converted into a big bet. For example, a small investment in a new technology might warrant major scaling once customer adoption reaches a certain threshold.
The art lies in actively managing moves as uncertainty evolves. Real options that once seemed risky might become no-regrets moves as the environment clarifies, while others might need to be scaled into big bets as trigger points are reached.
Portfolio thinking
Strategy is more effectively managed under uncertainty as a portfolio of well-defined moves rather than as a single grand strategy in a polished diagram. This approach brings discipline to what could otherwise become either paralysis or undisciplined reaction when new uncertainties arise. Doing so involves robustly defining each of your major strategic choices as a strategy initiative or option and plotting it on a nine-grid matrix by time horizon and level of risk involved. By maintaining a clear portfolio view of their strategy, companies can better balance offensive and defensive moves, big bets versus real options, and the shape of risk and timing.
When paired with the right review governance and cadence, a portfolio of strategy initiatives approach is a powerful way of managing strategy under uncertainty. In particular, when facing new uncertainties, having moves explicitly defined and managed as a coherent whole allows leadership teams to better understand and actively adjust the shape of their strategy, rather than feeling they can only touch it once a year (or few years).
Purposeful mobilization
Even the best-crafted strategy is worthless without effective mobilization, and it’s too comomonly neglected. Many organizations stumble in uncertain times because they either paralyze in analysis or rush to action without alignment. The key is purposeful and professional mobilization, including empowering and engaging leaders and teams on any given strategic choice, ensuring its translation into real plans and projects, reallocating resources, and rewiring governance as needed. When a strategy is adapted, mobilization has to happen. This can’t be an annual exercise. It needs to be a muscle.
It also requires strategy leaders to have a seat at the tables where resources are reallocated. While many strategy leaders avoid this role, those who embrace it consistently report higher strategic impact. In survey after survey, resource reallocation is the least popular activity for strategy leaders to say they prioritize, but in 2022 those who said it’s one of their main focus areas were 1.7 times more likely than their peers to report they were driving exceptional impact. This makes sense. When strategy shifts, strategy leaders need to ensure resources do, too.
The learning loop
The final fundamental tool is disciplined documentation and testing of strategic assumptions. While this might sound mundane compared to bold strategic moves, it is crucial for building organizational learning muscle. Every strategic decision made under uncertainty rests on key beliefs about the future — beliefs that should be explicitly documented and systematically tested over time.
When facing uncertainty, the natural tendency is to move quickly, often rushing past the critical step of clearly documenting the strategic assumptions underlying our decisions. When those assumptions prove wrong, there’s a human bias to either forget them entirely or revise our memory of what we really believed. This prevents the kind of rigorous Bayesian learning that helps organizations get better at navigating uncertainty over time.
The best strategy leaders combat these tendencies by explicitly documenting the 3–5 key beliefs underlying each major strategic choice, building regular reviews of how those beliefs are holding up against reality, creating psychological safety for honest discussion when assumptions prove wrong, and developing institutional capabilities to detect weak signals that should trigger reassessments.
Organizations that build this discipline find they not only make better individual strategic decisions, but also develop superior institutional pattern recognition for dealing with uncertainty. They turn strategic learning from an occasional accident into a repeatable capability.
Case in point
Consider how one Head of Strategy and Transformation navigates uncertainty. She carries a single piece of paper everywhere: on one side, her company’s portfolio of ~20 strategic initiatives mapped across a version of the nine grid matrix noted earlier and the top 2–3 strategic beliefs that underpin each (it’s a very detailed page), updated monthly; on the other, a summary of their equity story. This isn’t just a memory aid — it’s a tool for driving focus and cutting through uncertainty in real-time.
When a major competitor announced an unexpected acquisition, she pulled her page out with dramatic flair. Instead of getting caught up in reactive planning, she redirected the conversation: “Let’s start with our existing priorities,” she said, pointing to their portfolio. “This move affects these three initiatives most directly — but it also doesn’t change most of our main beliefs, and creates new opportunities in these two areas where we’ve been building options.”
Within an hour, what started as a heated discussion about a competitive threat became a focused debate about opportunities and specific analyses to determine whether and how to adjust their strategy.
Closing thoughts
“When a region cloaks itself in mist, it appears larger and more sublime, elevating the imagination, and rousing the expectations” — Caspar David Friedrich
What differentiates organizations that flounder in uncertainty from those that thrive? It’s not luck or just having the right tools. It’s the leadership of strategy that brings it all together. If you don’t have a simple language for levels of uncertainty or a way of adapting moves in the face of it, introduce it so you can drive the right kind of debates. If your strategic priorities are not clearly defined within a portfolio, build them so that you can focus on strategic thinking and decision-making. If you don’t have a list of the few strategic beliefs or assumptions that underpin each strategy initiative or move, write them down so you can revisit them in the face of new information. And above all, be disciplined about how you cascade changes into your organization.
If you are a leader responsible for driving an organization’s strategy activities and you stand above a sea of fog, remember — you’re not wandering. You’re moving with purpose, believing in the potential of uncertainty, and helping your organization navigate through it toward opportunity. Don’t overreact. Go to your toolkit and help everyone have the strategic courage to lean in.
To go deeper: https://www.mckinsey.com/featured-insights/themes/how-to-manage-in-uncertainty
This was originally posted on November 6, 2024 in my LinkedIn newsletter The Strategy Executive’s Craft: The Art and Science of Strategy Leadership.
