Rationally analysing the impact of decisions made, or about to be made, is a crucial and challenging task.
Most people instinctively overestimate their ability to generate favourable outcomes from a decision, and underestimate the difficulties of implementation.
In my local shopping strip recently, an optimistic young couple opened a pizza place. A few seats, for eat in, but too few to be called a restaurant. They clearly invested quite a bit of money, and being a local I gave them a try, and had a conversation at the same time. The owner had not really considered the fact that there was a long established, and heavily patronised pizza place about 3 minutes walk away, with better parking, and that there was a very pleasant and cheap Italian restaurant that has Pizza on the menu just 4 doors down in the strip. This is in addition to the wall to wall promotion of home delivery pizza by the big chains. Even in the face of those facts recited to him, he remained very confident that they would succeed, without any solid reason why that was to be the case. To my mind it was blind optimism in the face of overwhelming odds, and while the pizza was OK, it was nothing special.
I expect it to close any day.
Tool 1. A Pre-Mortem.
Had he done a pre-mortem, he may have avoided the mistake.
Let me explain.
A pre mortem is obviously, the opposite to a post mortem, conducted after death. In this case, it is conducted before the final decision is made to invest.
In a corporate environment, you gather the responsible people in a room before the switch is flicked and conduct a simple exercise, with a challenge. “The project proceeds as planned, but you are now a year into the future, and it has been a disaster. Examine the reason for that disaster”.
This sort of thinking assists in removing the blinkers, of curbing baseless optimism, and of mitigating the impact of the noisiest proponent of a project.
Had the young couple down the road conducted such an exercise, they may have anticipated what was obvious to an outsider, even with a quick glance.
Tool 2. A Post-Mortem
The second tool is obviously a post-mortem, done after death. In a commercial context this is often described as an ‘After Action Review’ or AAR. In this exercise, you examine what worked as planned, and what did not, for lessons to be applied in the future. Post mortems are common after a capital expenditure, a review of the degree to which the outcomes of a Capex matched the forecasts in the capital plan, but they are rare in my experience in other areas of an enterprise. They should be an essential part of every activity, as only by examining the logic behind a decision with the benefit of hindsight, can we learn to make better decisions.
When it would help to have someone around who does this stuff routinely, give me a call.
Header cartoon is again by Hugh McLeod of www.Gapinvoid.com. While you may not be able to be the only one in the world, be the only one in the street, or locality, or you will fail. When you cannot define your differentiator to the few who might care, you will be in real trouble.
