Bringing Logic to the Choices We Make
“Everyone has a plan until they get punched in the mouth.”
—Mike Tyson.
This memorable quote perfectly captures the reality of digital transformations. Often critical digital transformation projects go sideways despite the best laid plans. In fact, it’s best to assume any critical project will not go according to plan, making it vital that project leaders do extensive risk planning and are ready to help executive sponsors navigate tough decisions. When making critical decisions, leaders are often grappling with uncertainty and thus decisions must be made based on the best information available.
Choose Your Own Adventure
Running a complex digital transformation program or project can often feel like the famous children’s book series Choose Your Own Adventure, where the reader themselves makes choices to determine what happens next and ultimately, how the story ends. There are so many divergent paths to take on a project, and although each path sounds interesting, intriguing, and even “safe”, these decisions are important to create great outcomes. However, the decision, in this case, is not as easy as the hypothetical options presented in the books:
“If you choose to take the shortcut and fight the monster, flip to page 9.” Or,
“If you choose to take the long winding detour and avoid the monster, flip to page 11.”
Kidding aside, we’re often left grappling with which path to take, which becomes more challenging when an executive team struggles to make a decision. It can be easy to blame “indecisive leaders” for the challenges in your project, but our job as program or project leaders is to frame the decision in a way that enables decisiveness.
The Divergent Path
Let’s say you’re running a complex product launch, with a compressed schedule, plus all kinds of difficult decisions around customer experience, product design, pricing, differentiation, capturing transactions, sales channel mix, customer service, warranties, returns, fulfillment…the list is endless. Initially, when the project kicked off, the executive team agreed to launch with just the Digital channel and decided that the Retail channel launch could be postponed to a later phase. This initial decision was critical because it allowed the entire program team to focus on the subset of systems, fulfillment strategies, product mix, customer service training, revenue recognition, etc. that supported only the Digital channel. Although the workload was immense, that decision significantly reduced the workload and thus also reduced the risk of a delay to the critical launch date.
Then comes the inevitable surprise….the executive team is feeling pressure from their Retail partners, and they want the team to consider how to include a subset of their Retail channel in the initial launch. Uh-oh. There’s that dreaded fork in the road! Do you stick with launching just the Digital channel (as originally planned) or do you attempt to launch both Digital and Retail?
Expected Value Anyone?
Rather than flipping to a random page in the book to determine which direction to go, this is where there is power in helping the executive team make an informed decision about potential impacts and uncertain outcomes using “expected value” within a decision matrix.
An effective way to start is to think of the decision in the form of a 2x2 matrix (note: 2x2 is not required, it can be more permutations, as needed). One path (or choice) is the decision itself and the other path represents the possible outcomes. Let’s take a stab at the 2x2 for this problem statement:
Next, we assess each of the 4 paths by estimating the impact of the outcome and estimating the probability.
Then we do the math to come up with expected values (Impact x Probability):
So, the expected value math shows that Path 3 has the best outcome. However, that’s just the math. The decision should also consider risk tolerance and certainty of outcomes, which vary based on organizational norms, leadership preferences, or even program considerations.
Paint the Picture and Get a Decision
The last key step is to present the scenarios to the decision makers. When doing so, it’s important to talk through the probabilities of each path with justification for those probabilities. It’s also critical to explain the logic behind the outcomes.
In this situation, I would have recommended staying the course: launching just the Digital channel and deferring Retail to a later phase, leading you to either Path 1 or Path 2. Why? Because, despite the expected values, the story is truly in the probabilities. In this case, Path 3 has the highest expected value, BUT the highest risk. AND if that bet doesn’t pay off, the company would face the poorest outcome…Path 4.
Decisions Not Made by Chance
Problems can often feel overwhelming when leading a critical digital transformation with lots of pressure and ambiguity. It’s easy to get distracted or even stuck by the “choose you own adventure” moment. However, most situations can be broken down into paths and we can apply logic to each path based on probabilities and costs/rewards estimates. This enables the program or project team to present a consumable set of options and drive an executive team to make a critical decision with clarity.
—Nilay Thakkar