Choice

I was very happy to be selected as a delegate to the TEDxToronto 2013 Conference being held in September in my original home town.

The theme of the conference this year is “The Choices We Make.”  And while the conference presenters may focus on individual choice and social choice, I’ll be participating with my “organizational choice” hat on.  I’m very interested in how companies choose among an infinite number of options and scenarios on how to deploy resources, where to focus assets, and what day-to-day actions to take in order to further their strategic objectives and performance outcomes.

I like to think that nirvana is where a company has implemented a process of rigorous debate, supported by a culture of curiosity and accountability.  Deliberately asking the questions “what-if” and then using all of the facts (data) and tools (EPM) at their disposal to expose the impact of their what-if ideas and thinking.  Here are some of the ingredients in this debate process:

• Financial and operational models
• Historical, actual, and forecast data (facts)
• External data (benchmark or competitive data)
• Overall strategic objectives and targets
• Drivers of the business
• Known constraints & potential constraints

In the debate process, multiple possible scenarios are generated based on probabilities of predictions actually happening.  For example, a manufacturer might have scenarios covering predications like:

• labor costs increasing 10% next year
• 20% more usage of alternative fuel sources
• hyperinflation in certain regions the company does business in
• new competitors introducing new products at lower price points
• a reduction in workforce
• new government regulations around emissions

At one conference I was leading with 100 finance executives across various industries, I asked how many scenarios managers would like to have ready and waiting should some of their predictions actually happen – one company answered “a thousand” if the data and systems could support it. Imagine how much more competitive you would be if you had already thought of changes in your industry and in the economy where you could re-deploy resources, re-price products, and make choices that were essentially made ahead of time in a thoughtful, deliberate debate.