Pathfinder – Business update – Business question of the month (September)
Tim Levey, Partner and Head of Business Advisory, runs two groups of Business Leaders in Kent. One of the members recently asked “How should I approach strategic decision making?”.
Many years ago, I read the Jim Collins book “How the Mighty Fall”. He talked about the need for businesses to avoid “big bets” that could blow holes below the waterline and sink the ship. The approach to strategy and decision making made so much sense to me that I have kept using it for myself and clients ever since.
The process was this. When faced with a key decision to make, ask yourself three questions:
1. What is the upside if events turn out well? This gets you thinking about all of the positive things that could result from pursuing this action. If the results aren’t persuasive then don’t go any further…
2. What is the downside, if events go very badly? This gets you thinking about all the negatives and potential difficulties that you might face.
3. Can you live with the downside? Truly? If the worst that can happen is that the business fails, leaving you and your family without an income, then you would need to think really carefully before pursuing that course. If the worst that can happen isn’t a disaster and the positives are quite strong then it’s surely worth the risk?
But having used this process for a many years, I have now added a fourth question.
4. Is there action that you can take now which will reduce the risk of the worst happening? So rather than be put off by the risks, can you take out insurance or otherwise deal with the factors that represent the biggest risks upfront, before they have a chance to occur? Can you incorporate a safety net into your preparations, which prevents the downside events from happening in the first place? If you can do that then you will probably have a better chance of making sure that the best that can happen is closer to reality.
If you use this approach, or something like it, in your own plans, then I would be interested to hear from you. Please contact me about this, or to learn more about our Business Leader groups, at firstname.lastname@example.org or on +44 (0)330 124 1399.
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