Marcus Clifford explores: does print investment decision making get any easier?
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Some years ago, I co-researched and wrote a report on the decision-making processes surrounding investment across our sector. I have always been fascinated by people’s decision-making and the process they adopt. The psychology around approaches to risk, the degree or not of market research and analysis undertaken, the sleepless nights mulling over the should and should nots by those putting up the capital and borrowing the money, the seeming hyper confidence of those who ‘just’ seem to know it’s the right thing to do!
Getting it right seems even more critical now with a business world characterised by the favoured business backdrop Special forces train to overcome, VUCA, Volatility, Uncertainty, Complexity and Ambiguity.
But...
I have read a lot of vendor posts recently on social media highlighting their technology roadmaps, inciteful market research, analysis, and more transparent ROI data, and I see a more tangible partnership approach to seeking successful post-investment outcomes. Vendors have had to change and adapt as much as anyone.
Why Invest- A lot of big print shows are coming up!
■ Staying ahead of the competition.
■ Reduce costs.
■ Improve profitability.
■ Improve service and value delivery.
■ Ability to grow.
■ Concern about being left behind
I would add to this list: instil and fully understand the delivery of Innovation and exactly what competitive advantage looks like in the eyes of a customer. Innovation revolves around creating an organisational mindset and process which does not just reside in pockets or certain functions. Customers buy competitive advantage, so map it and understand it fully. Greater profitability resides in these areas of delivery.
Does making Investment decisions get any easier? Well no but you can make the process work for you more effectively by adopting a process, involving a wider range of people, choose and work with your supply partners on a partnership basis.
In the report, I characterised decision-making across a number of scenarios and here is an extract from the uncertainty section:-
A company can assume a number of strategic postures vis-à-vis uncertainty, and a number of actions can be used to implement that strategy. Managers need to catalogue systematically- Through situational analysis, what they know and what it is possible to know.
Even if it is impossible to develop a meaningful set of probable, or even possible, outcomes, managers can gain a valuable strategic perspective by such a qualitative process:
STRATEGIC POSTURE – Define the intent relative to current and future state of the industry.
SHAPING – Seek a new structure for their industry of their own choice. Very disruptive and opportunistic.
ADAPTING – They take things as they are and adapt accordingly or react accordingly.
RESERVING THE RIGHT TO PLAY – Do things incrementally in the best possible way. Through superior information, cost structures or relations between customers and suppliers that allows the company to wait until the environment becomes less uncertain before formulating a strategy.
Where do you feel you sit in all of this – if any?
A PORTFOLIO OF ACTIONS -Big bets, options, and no-regrets moves. Three types of moves are especially relevant to implementing strategy under conditions of uncertainty.
BIG BETS Large commitments such as major capital investments or acquisitions that will produce large pay-offs in some scenarios and large losses in others. Not surprisingly, shaping strategies usually involve big bets; adapting and reserving the right to play, do not.
Options are designed to secure the big pay-offs of the best case scenarios while minimising losses in the worst case ones; classic examples include conducting pilot trials before the full scale introduction of a new product, entering into limited joint ventures or collaborations to minimise the risk of breaking into new markets, and licensing an alternative technology in case it proves to be superior to a current alternative.
Companies reserving the right to play rely heavily on options, though shapers use them as well, either to shape an emerging but uncertain market as an early mover or to hedge big bets.
Our sector is always undergoing structural and strategic change, change to supply and demand, changes to the supply chain and accelerated pace of technology integration and convergence which creates VUCA!. It plays havoc or providing opportunity. As ever it depends on where you sit or what’s your perspective is.
Some see a clear enough future, some a combination of alternate futures and a range of futures. Many don’t want to see anything but ambiguity and these if they don’t adapt and change will suffer the most.
Written by Marcus Clifford, 0774 381 8806
