Real options : an unfinished revolution or a honey trap ?


Dominique JACQUET

Professor, University of Paris X-Nanterre and INSEAD-CEDEP


Henri PHILIPPE

Senior manager, Accuracy consultancy

Seminar Technological resources and innovation | Wednesday December 13, 2006 - 8h45 - 11h45

The concept of real options appears to be the ideal solution for managers who remain uncertain when strategic resources, such as R&D (research and development), talent, brands and other intangible assets, are allocated. Yet, in spite of a promising start, the concept has stagnated, meeting with theoretical interest, but scepticism in practice. Should its failure to gain support be attributed to academics who favour mathematical theory rather than practical application, or to managers who have not kept up with the financial revolution ? Although it would appear to be a financial instrument, the real options method has become a strategic and operational method of management which has clearly become more independent. However, if it is to be considered, as was the initial intention, as a purely financial method, it can be very beneficial to the manager. The speakers show the relevance of the real options method and its limitations by using practical examples, and at the same time discuss the reasons for its limited success.

The entire article was written by:

Élisabeth BOURGUINAT