Decision Making: Using the environmental context to help choose


A recent article in the National Post (Long Term View Pays Off, by Jonathon Ratner, page C6, 1 February, 2012) Makes an interesting  proposition on how to handle uncertainty when making important strategic decisions. Ratner discusses how Daniel Goodman and Effie Wolle of GFI Investment Counsel approach this issue.

Goodman and Wolle acknowledge that “We can’t control the market but we can control the factors around a business.” Understanding this is a powerful decision making context around uncertainty and risk management.

They also make the important point that this is difficult to do if you are not prepared to identify what your organization will look like 10 or more years out. This is of course the ultimate strategic decision: “What do you want to be when you grow up?” Without some clarity around this, it is hard to imagine how we could discern the “controllable factors around the business.

Readers of this BLOG know I argue that when doing talent management there is a strong value and imperative to doing longer term scenario analysis of your critical talent need areas. Yet the argument I hear is that we are in a totally uncertain business context, hence long term for us means 6 weeks (maybe). Yes this is sarcasm. but anyone who holds this view is viewing their business operational budget as their long term strategic perspective.

From a talent perspective, assuming this is true, then your critical talent (as well as operating model) is extreme responsiveness. Responsiveness, no matter how fast is always a delayed decision/action. You have made a choice that others (anyone outside of your business walls) who is strategic like Goodman and Wolle will control your future.

When dealing with uncertainty, I think there are only two fundamental choices in life: be good at adaptation to future changes or make the future like you want and hope it to be. Of course in complex matters, it is possible to do bit of both. But if I read Goodman and Wolle correctly, it is imperative to take the initiative in those aspects of your business that matter, i.e., make the future.

It is only by planning a future that you can do serious program, project, and the like planning and execution. As we know the way we succeed in getting the future we hope for is to start incrementally practicing it right away.

If I were in a competitive business environment I would have a marketing strategy that would be targeted towards my competitors much like this:

“We are in an unknowably complex uncertain environment hence we should pursuer as our core strategy the option of being extremely rapid responders!”

I would more and more comforted by every instance where my competitors buy into this message.

One more thought as i finish this post: How can we do a meaningful uncertainty and risk analysis if don’t know where we want to be 10 20 years out?

 

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About 123stilllearning456

As a management consultant I am passionately interested in talent management and risk/uncertainty issues. In the area of talent management I propose that we seek strategies that look beyond the staffing/employee centric frames of reference. I have been frustrated at the "closing down on possibilities" by these more conventional staffing/employee centric approaches. I have been impressed where people have found systematic solutions to their talent management issues by going beyond the conventional approaches. In the area of risk and uncertainty, I am interested in making this topic relevant to more normal decision making situations. My conceptual foundation is to use the micro-economist's fixed/variable cost theme. I also think it is important to look at these issues for people through their emotional and psychological lens. As a premise I think risk and uncertainty only exist where there is a person who cares about possible events and its consequences. Hence, risk and uncertainty are social based concepts (no sentience, no risk and uncertainty). A major influence on my thinking in this area is Nassim Taleb of "Black Swan" fame. This BLOG provides me with an opportunity to express my thoughts on topics that interest me. As this is an online diary, content is more important to me than polish. I apologize if this distracts from readers' enjoyment and learning. Still I find this a useful way to live up to my namesake, learn more from others and hopefully provoke creative thoughts and ideas in others.
This entry was posted in Decison Making, Performance Management, Risk & Uncertainty, Strategy, Talent Manangement, Values. Bookmark the permalink.

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