This article was first published in Harvard Business Review and is available via subscription.
The impact of policy on business is not new. What is different today is deliberate policy uncertainty that clouds economic visibility and makes business planning harder. BCG’s Philipp Carlsson-Szlezak, Paul Swartz, and Martin Reeves assert that institutionalized uncertainty must be met with institutionalized “optionality”: companies need to create more options that can improve their ability to operate within a variety of policy outcomes.
Building strategic options often, if not always, comes with a cost. At a minimum, this approach requires investing in preparedness—such as devising alternative sourcing plans and stockpiling greater inventory—and may involve rethinking product mix, design, and marketing. But it’s a price that companies should be willing to pay since those that create options most effectively are more likely to find a way to thrive.