The window of opportunity to make positive changes in strategic decision processes is narrowing.
The upheaval of the economy and financial markets hasn’t completely subsided, but positive reports are coming in more frequently. Yet for some CFOs, this new sense of hope triggers urgency to make needed changes in decision processes.
When times were good, speed and instincts ruled the day. The recent turbulence both exposed weaknesses in old practices and fostered openness to new ways of doing things.
A common theme CFOs raised throughout the “Taming The Tiger” research was a heightened expectation from their CEOs to run a tighter ship and engage greater rigor to big decisions. Simultaneously, other senior executives begrudgingly acknowledged the need for better controls.
Now, as hope of genuine recovery rises, CFOs report that enthusiasm for making changes is declining rapidly.
An abating crisis means it’s once again harder to enact improvements to decision processes, but reliable disciplines are just as important as ever.
Few believe we will soon be awash in capital, so making do with less will continue to dominate most organizations. This demands that decision-makers receive ever better information and insights as they determine how to best deploy available capital and talent resources.
Understanding where we are is typically the best place to start with any endeavor.
Begin with a thorough and independent review of a handful of prior projects. The handful should include both some of the largest, most critical projects of recent years as well as a random sample of smaller projects ($50,000 is typically a good minimum threshold).
Key elements of the review include:
- Variances to cost and schedule, and causes.
- Variances to the benefits realized, and causes.
- What other solutions should have received greater consideration?
- What could have been done differently to produce a better decision?
Be prepared for substantial ambiguity in the results. At the best of times, understanding the true impacts of prior investments is challenging. The difficulty is multiplied if a follow-up plan was not prepared during the initial evaluation and approval. Also, don’t confuse lucky (or unlucky) results with good decision work.
Even so, if done well the above effort provides a preliminary diagnosis of where your greatest opportunities for improvement lay.
© 2012 Verax Point Consulting, LLC