Decisions: Considering Alternatives

An ideal alternative perfectly fulfills every condition set for it without adding new difficulties. Unfortunately, ideal alternatives are rare. We must, therefore, evaluate each available alternative by measuring it against all of our objectives. It is the relative quality of that fit that concerns us.

If we must choose among several alternatives, we will have to decide which one will best fulfill our objectives with the smallest acceptable risk. In other words, we try to make a balanced choice. An alternative that best accomplishes the objectives but carries severe risks is not, after all, the best choice. Another alternative, perhaps less exciting but safer, may be the best balanced choice.

If there is only one alternative, we must decide whether it is good enough to accept. In this case our evaluation will focus on its relative worth compared with a perfect but unobtainable alternative.

If we must choose between a current and a proposed course of action, then we consider both to be alternatives. We evaluate their performance against our objectives just as we would if both had been proposed. Whatever is currently being done is, after all, an alternative; the choice is whether to continue that way or find another, better way.

If, in the absence of any alternative, we must create something new, we can usually build an alternative from available components. We then choose the best and most feasable combinations, treat each as a separate alternative, and evaluate all of them against an ideal model of an alternative.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Stakeholder Involvement

If we are to develop a new product that meets the goals for it (sales, profits, whatever), it must be acceptable to the end user. Therefore, a new product process should have end-user involvement. But, the buying/using decision is often a complex one, where advisors, resellers (and even vendors) play roles, and hence they are stakeholders. And, because it rather defeats the purpose of working for a year or so and eventually they don’t like it, the stakeholders should be involved from the very beginning, and often. And not just surveyed once or twice, involvement of stakeholders must be continuous.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

The Profit Economics

The following information is required, at a minimum, to understand the profit economics of a business:

1. How many dollars of assets are committed in each stage of each product/market business (e.g., R&D, materials, plant and equipment, finished stock, post-sale support)?
2. What is the fixed/variable cost relationship for each product/market business, that is, for each dollar of sales, how many cents are attributable to bedrock fixed costs, how many to structured or discretionary costs, and how many to out-of-pocket costs?
3. How do costs and profit change with swings in volume?
4. What is the break-even point at current volume and what actions could be taken to bring that break-even point down should volume potential decline?
5. What is the rate of incremental profit on each added increment of volume? What are the volume points where new increments of structured cost must be added?

A net profit and loss statement (after all allocations) and a balance sheet for each product line are essential for generating answers to these questions. Despite their claim that “we know all that,” very few managers actually have this information readily available.

Actually, most accounting systems are not designed to provide these kinds of statements and the accountants will argue that you can’t get them because many products run over the same machines, a lot of indirect costs can’t be allocated, and so on. To which we say, baloney! Shared fixed and indirect charges often represent the most serious cost problems in business situations where a cost disadvantage exists. And they are impossible to attack in the aggregate. They must be broken down and assigned to a discrete business unit even if done arbitrarily. Then a manager with hands-on responsibility can argue about fairness and whether there is value received for the costs involved. Although this is obviously not a precise exercise, it is effective and essential. Without full cost profit and loss and balance sheet statements managers cannot really understand the profit economics of their business. Further, they can’t make the types of intelligent business decisions and plans so important in today’s environment.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Decision Analysis

Every decision we make requires us to think in terms of objectives, alternatives, and potential risks. That choice may involve a thousand criteria plus the inputs and deliberations of a hundred or more people. Or it may involve only five criteria and ten minutes of deliberation by one person. The dimensions are immeterial because the basic process is always the same. And the final judgment is always: “This is what ought to be done.”

The decision situations fall into five categories:

• The complex decision that requires examination of a large amount of information, and involves the judgments of many people.
• The “Yes/No” decision that involves only two alternatives: to take or reject a course of action; to do something in a different way or continue as before.
• The decision as to whether a single proposed course of action is sound enough to be implemented.
• The decision in which an original alternative must be developed by the decision-maker or team.
• The routine decision: hiring, purchase of equipment or services, development of personnel policies, and other everyday decisions.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Writing Business Summaries

Businesspeople are bombardedwith masses of information, and at one time or another, everyone in business relies on someone else’s summary of a situation, publication, or document. To write a summary, gather the information (whether by reading, talking with others, or observing circumstances), organize that information, and then present it in your own words. Although many pople assume that summarizing is a simple skill, it’s actually more complex than it appears. A well written summary has at least three characteristics..

First, as in writing any business document, be sure the content is accurate. If you’re summarizing a report or a group of reports, make sure you present the information without error. Check your references, and then check for typos.

Second, make your summary comprehensive and balanced. The purpose of writing your summary is usually to help colleagues or supervisors make a decision, so include all the information necessary for your readers to understand the situation, problem, or proposal. If the issue you’re summarizing has more than one side, present all sides fairly and equitably. Make sure you include all the information necessary. Even though summaries are intended to be as brief as possible, your readers need a minimum amount of information to grasp the issue being presented.

Third, make your sentence structure clear, and include good transitions. The only way your summary will save anyone’s time is if your sentences are uncluttered, use well-chosen words, and proceed logically. Then, to help your readers move from one point to the next, your transitions must be just as clear and logical. Basically, when writing your summary be sure to cut through the clutter. Identify those ideas that belong together, and organize them in a way that’s easy to understand.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Crisis Communication

One of the most visible functions of the PR department is to help management plan for and respond to crisis. A good PR professional looks for potentil problems, constantly scans the business environment, then alerts management to the implications of such problems, and suggests the best course of action.

Disasters of earthquake proportions fall into the category of public relations nightmares created by sudden , violent accidents. Plane crashes, oil spills, chemical leaks, and product defects all belong to this group. The other type of crisis is the sort that builds slowly and occurs because of a company’s conscious, but ill-founded, decisions.

Whn disaster strikes , a defensive posture is generally counterproductive. The best course is to be proactive, admit your mistakes and apologize.

When disaster hits most companies respond, to some degree, through their public relations department, but they often ignore the audience that is likely to be hit hardest—employees. To minimize the impact of any crisis on employees, be sure to communicate honestly, openly, and often, actively encourage employees to share their concerns, and use caution when sharing personal opinions.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Involving Employees

To be successful when facing multiple tasks, often on multiple projects, more employees at all levels will need to delegate some of their activities and responsibilities to other organizational members. This means that employees are going to have to be give certain amounts of authority to make decisions that directly effect their work. Even though delegation was once perceived as something that managers did with lower levels of management, delegation will be required at all levels of the organization—in essence, peer delegation, or using influence without authority.

In addition to being required to take on more responsibilities, employees will be expected to make decisions without the benefit of the tried-and-true decisions of the past. And because all these employees are part of the process today, there is more of a need for them to contribute to the decision-making process. In most organizations, the days of autocratic management are over. To facilitate customer demands and fulfill corporate expectations, today’s employees need to be more involved. Group decision-making enables these employees to have more input into the processes, and greater access to needed information. Such actions are also consistent with work environments that require increased creativity and innovation.

Another phenomenon of involving employees will be an emphasis on work teams. The bureaucratic structure of yesterday—where clear lines of authority existed and the chain of command was paramount—is not appropriate for many of today’s companies. Workers from different specializations in an organization are increasingly required to work together to successfully complete complex projects. As such traditional work areas have given way to more of a team effort, building and capitalizing on the various skills and backgrounds that each member brings to the team.

Involving employees allows them an opportunity to focus on the job goals. By giving them more freedom, employees are in a better position to develop the means to achieve the desired results.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Strategic Leadership’s View about Investment in Innovation

The strategic leadership view argues that the strategic incentive to invest in an innovation or the failure to exploit it as a result of destroyed competence come only after a firm’s top management has recognized the potential of the innovation. Top management makes the decisions to invest in an innovation, or if such decisions are made by lower level managers, they still reflect the beliefs and values of top management. But incentive to invest in an innovation or its ability to embrace and exploit the innovation is a function of the extent to which the firm’s top management recognizes the potential of the innovation. This ability of top management to recognize the potential of an innovation is a function of its managerial logic, or view of the world, which in turn depends on management experiences, organizational logic, and industry logic. Thus whether a firm is a new entrant or an incumbent may not matter much. What matters is the strategic leadership’s dominant logic.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Development and Corporate Objectives

Development activities ought to reflect the situation and circumstances of a company, its business objectives and its key priorities. For example, there is little point in a company building hypothetical team skills without addressing the following:

• The purpose of the team. For example, a bid team might require specific bidding skills such as defining value in customer terms.
• Where team members are located. People in virtual teams may be widely scattered and they may need special training.
• The role of groups and teams in the management of change, the management culture and management style must be supportive.
• The clarity of the goals given to teams, and the relevance of their priorities to business objectives. People need to understand the broad boundaries within which they operate in terms of goals and priorities.
• The discretion given to teams, and the extent to which people are given the required freedom to act.
• The commitment of senior management to team work, and especially cross-functional and inter-organizational team work. They must be dedicated to ensuring that decisions are taken as close to the customer as possible, and people are enabled to do what is necessary to add value for customers.
• Prevailing attitudes, such as the extent to which people feel part of teams. Empowered team work should be pervasive, rather than the isolated experiment.
• The management cadre. Managers should counsel and coach, value diversity, and foster and encourage teamwork, collaborative activities, self-development and group learning.
• How open people are, and the degree of trust and confidence they have. People need to feel they are able to take initiatives without being paralyzed by fear of the consequences.
• Existing performance within teams, the tools shared within teams, and the approaches and support in terms of technology and process available to them. For example, there should be relatively open access to relevant information.
• Rewards and performance management. This should be supportive of, and should recognize, team work, the acquisition of team skills and the exhibiting of role-model behavior.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Shifting Attitudes

One of the most difficult issues facing many high-tech and industrial companies is how to overcome the lack of strategic thinking about market segments that has historically been a serious deficiency. For years, and in many cases generations, the management of these companies has looked for ways to strengthen R&D, sales, and/or production activities without a clear focus on defined market needs. Now these same managers must reorient their thinking first to define specific segments and then to determine what it takes to serve these segments more effectively than the competition. This attitudinal shift is much more fundamental than it sounds. For the many executives who have talked a good game of marketing without doing much different must now provide the leadership and direction to ensure that R&D, production, and sales activities are specifically geared to the requirements of selected market segments.

To change the corporation’s mind-set to strategic market segmentation, multiple-level and intensive management development programs are usually necessary. When managers have typically advanced through engineering and manufacturing or “operations,” a strategic market segment orientation is even more needed. These managers must learn that market segmentation and market selection are the starting points for all decisions and action programs.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight