Panagiotis E. Petrakis

The Unknown Future

Time introduces the concepts of volatility and risk, both of which affect decisions about the future. Accompanying changes and uncertainty often make future planning difficult or even impossible. However, change is very common. While some changes simply involve variations of existing trends, others are fundamental; change may even be destructive and result in devolution.

The Inevitable Trends: Returns and Uncertainty

The speed of economic and social development is a key feature of the twentieth and especially the early twenty-first centuries. The associated changes affect all participants in the world economy, whether national economies, businesses, or individuals.

Scenarios Under High Uncertainty and Low Returns

The assessment of future entrepreneurship using existing traditional evaluation methods has great difficulty incorporating the conditions expected to prevail in both the short-and long-term, which can be summarized by high-frequency uncertainty and low nominal returns.

Entrepreneurial Decisions under Uncertainty

The analysis in this chapter focuses on how enterprises make strategic decisions regarding their future development in an environment of uncertainty. The strategic planning of enterprises on issues involving long-term investment activity, R&D, innovation, identification, and exploitation of entrepreneurial opportunities is based on a background comprising various sociological, psychological, and economic starting points. Simultaneously, issues are highlighted in relation to the identification of uncertainty that can alter strategic planning and cause the failure of traditional investment evaluation methods.

Futuring and Visioning as Strategic Instruments for Predicting the Future

One of the critical roles of leadership is to provide guidance for the future. A “leader” is a person who creates and develops a vision, which must be realistic, reliable, and attractive. A vision, among other things, is created to inspire and motivate members of an organization to work to their full potential and thus achieve their goals. Insightful leaders can predict trends, identify patterns, understand the causes and effects of relationships, and deal with significant changes. Leaders are usually well informed about various trends (economic, demographic, social, consumer, and technological). But the most important characteristic of leaders is that they “see” developments others do not. Not only do they have a vision of a desirable and feasible future but also specific ideas on how to achieve this future.

Entrepreneurial Behavior and Foresight

Numerous factors negatively affect the formation of rational and accurate forecasts that influence the future and determine the impact of such forecasts. The factors that hinder rational decision making are based on both specific individual characteristics and exogenous factors. More specifically, the most important factors related to the personality of individuals that affect strategic decision making are the role of predispositions and biases, wishful thinking, recent experience, and self-fulfilling prophecies regarding forecast accuracy. Exogenous factors that increase uncertainty in decision making are lack of information, ambiguity and inaccuracy of available information, and the role of closed systems and observation.

How Will the Future Be Shaped

Most organizations that provide long-term global economic forecasts expect a slight decrease in average rates of global economic growth and a significant improvement in the position of emerging and developing economies relative to developed economies. These developments are also expected to significantly affect long-term rates of return.

Strategic Scenario Thinking

Individuals try to handle future situations by using scenarios that are weighted according to their probability of occurring. This form of weighting thus introduces the concept of risk. In contrast to risk, the concept of uncertainty describes a set of undefined factors that cannot be attributed an occurrence probability.

Entrepreneurship Opportunities and Future Competitive Advantage

Entrepreneurial opportunity is the cornerstone of any entrepreneurial initiative. The topic is very important for anyone wishing to become involved in entrepreneurship at the theoretical and practical levels.

Strategy for Future Competitive Advantage

Enterprises must make decisions in various areas related to the choice and realization of market opportunities, the suitability of the market in which they operate, and so on. An enterprise must devise strategies as necessary to avoid adverse developments, and appropriate strategy is essential to its success. Strategy allows enterprises to remain competitive and can also force strategic change in response to movements in the wrong direction.