Abstract
This article traces the development of real options reasoning (ROR) and details how problems in assessing the value of real options have made ROR difficult to implement. The article then describes how in practice, instead of focusing on explicit valuation, organizations use analogous reasoning to develop, select, and implement options that enable strategic flexibility and so enhance value. An illustrative case demonstrates how financial options can help this process by buffering core operations from changing market environments. The same illustration also shows that ROR fails to simultaneously create future choices while limiting costs. Moreover, where it does generate future choices, it does not prevent decision makers from making poor choices. Thus, the engine of choice that ROR suggests organizations should create may in fact backfire on those decision makers who try to implement it.