Not all roads lead to Rome
Experiencing the peace of mind of having considered and evaluated all possible strategies when deciding is a difficult dream to achieve. How does an executive know that key strategies have been evaluated? How can you avoid the fear of discovering a successful strategy too late? There are some key aspects that we could take into account.
Oftentimes an executive is faced with complex decisions that challenge their ability to make decisions. Changing environments, challenging goals, unknown long-term impacts, and misaligned teams often spice up strategic decision situations. However, the experienced decision maker must make these decisions in limited time, be able to communicate them to an organization and be responsible for their consequences. To do so, they will necessarily have to generate multiple potential strategies in order to evaluate them and choose the one that maximizes the result and mitigates the risks that the business will face.
Once the objectives of a decision are clearly defined, the direction is established and the team is aligned with respect to it, it is time to generate those possible strategies that will be evaluated as potential paths forward or solutions.
Here are some key aspects to ensure greater effectiveness in the analysis of strategies.
A structured logic to avoid a “false dilemma”
Executives frequently face situations that are presented as choices between two opposite alternatives (to do or not to do), and, in general, both opposites imply resignations that are difficult to accept; and therefore, difficult decisions to make. This false dilemma between two opposites implies a situation in which only two points of view are weighed as the only alternatives, when in fact there could be many more that were left out of consideration.
Deciding between opposites could mean giving up benefits we are not willing to forgo or taking risks that are too difficult for the organization to bear. Such a situation can easily end in organizational paralysis or endless bickering in favor of one or the other extreme.
An alternative to extreme simplification can be found by considering the entire spectrum of intermediate strategic options that allow achieving a balance that satisfies the multiple objectives pursued by an organization. For this, it is necessary to break down the extreme strategies and understand which of their components are both value generators and the cause of unwanted risks. Furthermore, strategic decisions do not usually appear alone; and in the case of a complex decision, it is generally composed of smaller, intertwining decisions that constitute it, shape it and define it.
Today, there are tools that can help the decision maker see more clearly if all the alternatives are being considered. A table or a map of strategies allows to show the key components of a strategy and thus, understand its conformation as a combination of multiple decisions.
The triple constraint trap
Decision makers often design strategies hoping they will be optimal for all the objectives they pursue at the same time. In real life, this is impossible since the triple restriction is present in all strategic definitions.
Every strategy can be defined based on the way in which it optimizes time, cost, or the quality of its consequences. When defining strategies this way, it will be observed that each strategy is able to optimize two of these elements, but not all three at the same time. In other words, a strategy will be able to achieve quick results at low cost but putting its quality at risk; achieve high quality standards in a short time, but paying high costs to achieve it; or, finally, pursue high quality at low cost, but taking longer than allowed.
This triple restriction, like it or not, will be present when designing any strategy. The key is to find the balance of these three forces that satisfies the objectives of the organization. Trying to optimize the three aspects simultaneously can entail high risk for the decision maker, since it will be nothing more than denying, or at least underestimating the commitment to fulfill any one of them.
Creative thinking to step out of our comfort zone
Organizational culture often shows us the right way to do things. In general, the culture shaped by the accumulated experience of the organization helps to make decisions in a way that has successfully solved similar situations in the past. Faced with contexts of high uncertainty, where the coming changes could require solutions different from those already used, the organizational culture acts as a barrier, often not allowing the executive to even consider a strategy different from the usual ones. In these uncertain contexts, the decision-maker’s challenge will be to push the limits of their comfort zone and propose the evaluation of strategies through a creative process oriented to action.
This creative process consists of a series of moments of expansion, free association, or divergence, necessarily followed by moments of concretion, definition and convergence. To start a creative process, it is not enough just to think of different, original ideas that no one has thought of. A creative process must always be oriented towards action and the realization of feasible results, and therefore, it will also be necessary to find a way to put these ideas into practice and have the courage to face the reaction of others.
Once the alternatives have been generated, it is time to evaluate them, understand the uncertainty inherent in each one, evaluate their contributions to the results and finally choose one of them to move forward. When the decision is made, it will also be necessary to optimize the chosen strategy, breaking it down into its fundamental parts in order to maximize its potential and mitigate its risks. But for this, it will have been necessary first for this alternative to be included within the strategies analyzed, and that is the previous challenge. In times of the Empire, the confluent fate of the Via Appia, the Via Aurelia, the Via Flaminia, the Via Ostiensis, and the Via Triomphale could have been certain. Now, in environments of high uncertainty, we know that not all roads always lead to Rome. But, if they did, which road leads to Rome faster, safer, or cheaper? In an environment of uncertainty, this is the new dilemma.
Partner at Tandem.