Abstract

This article develops a conceptual framework and a practical procedure by which a firm in a turbulent environment can manage and plan for a strategic surprise by responding to weak signals. The recent petroleum crisis was a comparable event in the industrial world: large and important firms were suddenly confronted with a major discontinuity, although advance forecasts of Arab action were not only publicly available, but on the day of the surprise, were to be found on the desks of some of the surprised managers. Because of its pervasive scope, the petroleum crisis highlighted the danger of strategic business surprises. In the aftermath, it was argued that these corporations were caught unaware because they lacked modern forecasting and planning systems. But in the 1970s a majority of the firms caught by the petroleum crisis had such systems. In the mid-1960s, the management of one of the world's largest conglomerates proudly displayed its planning and control. A week after the public display, the same management made a red-faced admission of two multimillion-dollar surprises: a major overrun in its office furniture division and another in its shipbuilding division.