Cracking the Nut (Part 4) – Wrapping it Up

It’s time to get this decision landed.  What’s Slimy going to do?

Defining the Possible Solutions

Early in our project, we came up with a list of possible options for competing with BigSludge.  By this time, with all the discussion and analysis, we’re ready to update that list.  We’ve refined some of them, maybe some have crumpled under their own weight, maybe we have some new ones.

In our case, here is what came out of our investigations:

  • Direct head to head competition in their core markets looks like a losing strategy.  We went and talked to people on the front lines, we talked to some customers we’d like to convince to use our industrial slime, and we mapped out what kind of return we’d get from additional spending on marketing and sales.  It all looks lousy.  BigSludge is entrenched, they have relationships we can’t disrupt, the market is pretty locked in, and our products aren’t different enough to give us a unique value proposition.
  • We found some intriguing sub-markets where we are doing really well.  We’ve gotten serious traction selling slime for cleaning the grime out of industrial manufacturing machines.  And, you can cover buried power generation plants with it to reduce temperature fluctuation and do weather proofing.  BigSludge has no presence in those markets and our products work much better for these uses, so our specialized slime offerings are growing quickly and have a good head start.
  • The kid market for prank slime looks like a potential winner.  We’ve tested our slime out with kids, our test version is flying off the shelves, and it’s showed up in a couple of edgy TV shows as the Next Big Thing.  Word of mouth is strong.
  • The kid market will take several years to develop.  Based on every precedent we’ve looked at, it just isn’t possible to grow a large new toy market quickly.  No product we looked at that relied on selling through retail channels was able create a new category and grow to a large size in less than five years.

So our updated options are:

  1. Aggressively pursue the specialty commercial markets
  2. Aggressively pursue the kid market
  3. Do a blend of both

The next step is (yes, you saw this coming) to write them down.  We put together a summary for each:

  • Define the option in one page.  Capture the intuition for it, and keeping it short forces us to stick to the essentials.
  • What’s the plan – outline how we’d execute on this idea in very concrete terms.  Milestones, key steps.
  • What you have to believe.  I learned about this approach from a class I took on strategy, and I’ve found that it is a really useful way to capture the key assumptions for a particular option.  You write down the key things that you have to believe in order for the option to be viable/optimal:
Option What you Have to Believe
Pursue specialty commercial markets Slimy can make enough revenue from these markets to sustain our growth needs and can protect our position from BigSludge and other competitors.
Pursue kid market The market is big, viable, and will develop quickly enough to compensate for relatively flat growth in the core business.
Pursue both Slimy Inc is capable of effectively carrying both initiatives forward at the same time (resources, time/focus of management team).  And, the kid market will be slow enough to develop that we need some nearer term revenue.

Evaluating the Options

By the time you have written down the options in more detail, sometimes you will find that the decision basically makes itself.  It is obvious to everyone that one makes the most sense and you are done.  That’s a nice outcome.  But let’s assume we aren’t so lucky; how are we going to decide?

The next thing I do is to assess every option against every one of the criteria we came up with in part 2 (link).  There are two basic ways to go after this – quantitative and qualitative.

Quantitative – if you want, you can create a precise mathematical model to weigh your options.  You can build a spreadsheet with a numerical value for each of the criteria against each option and a weighting factor per criterion.  Then the spreadsheet will happily compute a score for each option, and the highest score ought to be the answer, right?  I’ve done that before, and it has been useful on occasion, but I think it generally gives a false sense of precision to the exercise.  Your tidy spreadsheet full of numbers and formulas can leave you convinced that you are engaged in a scientific analysis.  But you aren’t, really.  At the end of the day, you are making a decision based on (informed) guesses about the future and intuitively chosen priorities.  So I usually don’t bother to build that spreadsheet.

Qualitative – what I generally find more useful is to assign a rough score (maybe 1/2/3 or A/B/C/D/F) to each option for each of the criteria.  Have a justification for each score, so you don’t spend all your time arguing about B’s vs. C’s when people look at the table.  Then eyeball the result and you are in a pretty good position to decide, or to have the debate among the decision makers if it isn’t up to you.  The Slimy, Inc table might look something like this (note that we updated our criteria a bit):

  Specialty commercial Kid market Both
Medium term revenue (3 yrs) A C B
Long term revenue (5-10 yrs) B A B
Risk of revenue projection B D C
Ability to execute A C D

It might seem much too simplistic at first to distill many, many hours of analysis and detail into a little chart with A/B/C/D on it.  But I have found that there is remarkable power in simplicity.  It’s like the old line about writing a shorter letter if you had more time.  Having to summarize a mountain of analysis in a very succinct form forces you to commit.  Complexity is often a security blanket against making a hard call – as long you as you can say “on the one hand, on the other hand”, you can avoid making a decision.  By committing to the values in the table, it gets you in the habit and helps walk you towards the harder ultimate decision that you are trying to make.

And now that you have all the analysis done, and summarized .. get whomever you need in a room, and DECIDE!

Conclusion

I hope that this approach to analyzing issues has given you some tools that you can use the next time you are confronted with a difficult decision.  Use as many or as few of the tools as you need .. in some cases, as in Part I, you might just pick a couple of them.  Other times, when facing a really complex and involved question, you might need to throw the kitchen sink at it.

Remember that no tool or approach will make a tough decision for you – that’s your job.  And a hard decision will stay hard no matter what.  But a framework like this one can let you approach it with what I like to call systematic subjectivity – you make your judgments in a systematic and thoughtful way that helps you wade through unknowns and emotional entrapments.  Good luck!

P.S.  Slimy decided to aggressively pursue the specialty commercial markets.  They will continue to incubate the kid products to see whether they get further traction.

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