There’s a new window of opportunity to make positive changes in strategic decision processes.
The upheaval in our politics and financial markets fans new uncertainty and stresses in many industries. These new tensions trigger urgency to make needed changes in decision processes.
When times are good, speed and instincts ruled the day. The recent turbulence both exposed weaknesses in old practices and should foster receptivity to new ways of doing things.
A common theme CFOs raised throughout my “Taming The Tiger” research was a heightened expectation from their CEOs to run a tighter ship and engage greater rigor to big decisions. Simultaneously, other senior executives begrudgingly acknowledge the need for better controls — even if they don’t see the flaws in their own divisions they are annoyed by the waste in other divisions (given the benefit of an outsider’s perspective).
Turmoil may generate a variety of consequences including supply chain disruptions, tighter capital, or slackening demand. This demands that decision-makers receive ever better information and insights as they determine how to best deploy available capital and talent resources.
First Step — Assessing Where We Are
Begin with a thorough and independent review of a handful of prior projects. The handful should include both some of the largest, most critical projects of recent years as well as a random sample of smaller projects ($100,000 is typically the minimum size).
Key elements of the review include:
- Variances to cost and schedule, and causes.
- Variances to the benefits realized, and causes.
- What other solutions should have received greater consideration?
- What could have been done differently to produce a better decision?
Be prepared for substantial ambiguity in the results. At the best of times, understanding the true impacts of prior investments is challenging. The difficulty is multiplied if a follow-up plan was not prepared during the initial evaluation and approval. Also, don’t confuse lucky (or unlucky) results with good decision work.
Even so, if done well the above effort provides an initial diagnosis of where to up our game.