The hidden profession of Strategic Decision Analysis
I LOVED Mythbusters… getting paid to blow things up would be a dream job!
Sitting comfortably in my sofa, it’s temping to think, “Hey, I could do that!” Whether dynamiting a cement truck or creating a massive fireball from non-dairy creamer (really!), I’m tempted to dismiss their “Don’t try this at home – we’re professionals” warning as mere hype.
The source of this over-confidence is simply that I don’t know what I don’t know. One thing I’ve learned over the years is that the less I know about someone else’s job, the easier it looks.
This is true of evaluating strategic investments. Analyzing capital expenditures seems straightforward – just model the costs and benefits and plug in an NPV or IRR formula. As a result, this task is often bundled into the job descriptions of accountants or budget analysts. It’s all just numbers in Excel, right?
Even worse, I’ve had folks from a variety of non-financial disciplines (marketing, engineering and IT) request a model they can just “plug the costs and benefits” into and generate the valuation themselves.
A Distinct Profession
I’ve been holding conversations with dozens of CFOs and CEO focusing on the quality of information and insights they receive in business proposals. One CFO commented:
“We need to treat strategic decision support as a profession in its own right, not just tacked onto the job description of anyone with a CPA or finance degree.”
He went on to rattle off a long list of skills and practices he demands from his team. These included valuation techniques to catch subtle distortions, insights into risks, and effective communication tools so everyone around the table has a clear understanding of the critical decision elements.
No Place For Amateurs
If an amateur like me played Mythbuster, it’s only a matter of time before my lack of competence was evident to all (singed eyebrows are a dead giveaway). Short of a glaring mathematical flaw in the Excel formulas, similar failure is rarely as obvious in amateur evaluations.
Look around your organization and ask: Is the decision-support performed by people trained in decision support… or was this tacked on to other accounting or budgeting duties?
If tacked on, then the information you rely on for your most important strategic decisions is being prepared by, well, amateurs.
Strategic Bets 