There are new and effective ways to reign in uncertainty in the strategic planning process. So says Hugh Courtney, the author of 20/20 Foresight, a detailed guide for managers pondering the unpredictable.

The book, published by Harvard Business School Press, details techniques executives can use to systematically classify the level and nature of the risk they face in any business situation to reach appropriate strategic planning decisions. Foresight offers a checklist that walks managers through the task of measuring "residual uncertainties" – the unquantifiables that remain after rigorous analysis has been done – and outlines specific strategies to tackle those unknowns.

Courtney argues that this customized approach is far superior to the current situation, where many companies cope with uncertainty by either ignoring risk, or by subjecting themselves to painful overanalysis.

Foresight grew initially from the Strategy Theory Initiative (STI), an effort launched in the mid 1990s to introduce fresh ideas to traditional strategy-development thinking. This multi-year campaign brought roughly 60 McKinsey consultants together with academics and with executives representing more than 100 client companies to formulate, examine, and test new concepts and tools for strategy.

Uncertainty was one of the central topics STI hoped to tackle. Client experiences had taught STI leaders that managing uncertainty was a critical challenge facing executives – and that existing strategy frameworks were inadequate.

"At the time, Kevin Coyne [STI leader] and I were serving telecom companies struggling with where and how to place multi-billion dollar bets on the broadband business, when the demand, technology, and regulatory outlooks were highly uncertain," remembers Patrick Viguerie, an Atlanta-based consultant and core STI team member.

"It occurred to us that finding a way to help management better make these decisions could be incredibly useful." Courtney adds. "We started thinking about how you would approach the topic of uncertainty if you were to start from scratch, if you were going to invent a way to think about it that would be widely applicable to business and strategy work, yet independent of any particular economic climate."

As the team tested their ideas, they noted that clients found a more precise approach to uncertainty preferable to the standard "one-size-fits-all" strategy. "That gave rise to the notion," recalls Viguerie, "that there are actually levels of uncertainty… there are different tools and techniques that help you shortcut the strategy-formulation process."

Initially, the STI team tried to describe the entire effort for the readership of the Harvard Business Review. Capturing and summarizing all the issues, though, proved to be a daunting, almost undoable, assignment. "We were trying to boil down early STI results and we were having a heck of a time," recalls Courtney. "The editors told us it was because we were trying to say too much."

The team agreed, and drafted an article focused purely on the topic of uncertainty. Since its appearance in the Harvard Business Review, the residual uncertainly concept has become part of the curricula of many M.B.A. programs and one of the cornerstones of McKinsey's approach to strategy.

A former professor, Courtney stepped forward to further develop the findings of the uncertainty work into a book. A former professor, he had authored a 500-page doctoral thesis on the esoteric topic of asymmetry in business cycles.

Fortunately, Courtney was comfortable with melding the theoretical and the practical and with putting abstract ideas into words. It was clear from the beginning that the book would be highly theoretical and concept-driven, a departure from the traditional business publication.

"The book represented a more conceptual exercise than our average McKinsey research project." Courtney explains. "It was not driven by detailed financial analysis through long-term performance databases, nor was it a best practice book. It was a qualitative analysis that didn't involve what companies did but the types of problems people faced. "But bringing the abstract down to earth was one of the team's goals from the very beginning. "We had to develop hypotheses and carefully test them in our own client service teams to make sure they were useful," Courtney confirms.

The book cites numerous case studies and details how its toolkit can be applied to the different levels of uncertainty, based on the findings of the firm's client services teams. "The ideas were used in a couple hundred cases that I know of. In some engagements, the application was very deep and the logic was followed, but the majority took a few ideas from the book," says Courtney.

"We've found the material is a terrific discussion-starter with groups of executives," notes Ken Gibson, who heads the Asia-Pacific Strategy Practice.

The team is confident that the concepts remain viable, even in the wake of the events of September 11. Timelessness was one of their key goals.

"We resisted the pressure, since case studies for the book came together in the late 90's, to rely solely on e-commerce examples and we're really glad we did," says Courtney. "We wanted to make something that managers could always use and I feel we've done that."