An RBV and real options-based soft OR heuristic for solution strategising

Abstract

This paper develops a heuristic for applying the abstract and complex theories of real options and the resource-based view (RBV) to provide managerial prescription on promising technology solutions to business problems. We draw upon the tradition of soft operational research (OR) with its reliance on graphical techniques to develop a decision-making matrix called the CUReO Grid for identifying preferred solutions under different conditions of decision context uncertainty and the capability of the firm to exploit the technologies under consideration. Our grid is obtained by a two-stage mapping of the real options available in a technology solution, such as options for altering scale and scope or for strategic growth, to a two-dimensional space defined by contextual uncertainty and firm capability. We illustrate our general methodology by applying it to two very different but major contemporary problems: enterprise integration in information technology and lean production in operations management.