Life-Cycle Flexibility

Designing flexibility in a system with real options§is one method for managing uncertainty. However,§designing flexibility in a "complex system" is only§one of several tasks that must be accomplished if the§flexibility is to be deployable and of value. §§Many potential challenges exist throughout an§option s life-cycle that makes design, evaluation,§exercise and management of an option complex. Complex real options" are composed of more than a§single or simple change or addition to a system to§create flexibility. Rather, a complex real option is§likely composed of interconnecting technological,§organizational and process components. A complex real§option may be embedded in a complex system, which has§technical and social system components and the§behaviors that go along with this.§§To meet the need for considering flexibility in§complex systems the concept of Life-Cycle Flexibility§(LCF), or flexibility from cradle to grave , is§introduced. LCF considers both physical and social§systems and spans the entire life-cycle of an option,§starting with activities to ready an enterprise for§flexible systems and continues through system§monitoring and option exercise decisions. Designing flexibility in a system with real options§is one method for managing uncertainty. However,§designing flexibility in a "complex system" is only§one of several tasks that must be accomplished if the§flexibility is to be deployable and of value. §Many potential challenges exist throughout an§option s life-cycle that makes design, evaluation,§exercise and management of an option complex. Complex real options" are composed of more than a§single or simple change or addition to a system to§create flexibility. Rather, a complex real option is§likely composed of interconnecting technological,§organizational and process components. A complex real§option may be embedded in a complex system, which has§technical and social system components and the§behaviors that go along with this.§To meet the need for considering flexibility in§complex systems the concept of Life-Cycle Flexibility§(LCF), or flexibility from cradle to grave , is§introduced. LCF considers both physical and social§systems and spans the entire life-cycle of an option,§starting with activities to ready an enterprise for§flexible systems and continues through system§monitoring and option exercise decisions.