economic forecasts and legal due diligence were consolidated by the loan officer in a draft report with a white cover. After these officers have agreed on the draft, they were forwarded to the division chief who worked on drafts with yellow cover. Once they agreed, the next hurdle was the area and functional directors who deliberated on the drafts with a green cover. Once they agreed, the loan proposal was presented to the board of trustees with a blue cover. Finally, after the board has approved the loan, an anaesthetized version with a green cover was disseminated to all World Bank offices around the globe. This rather torturous process ensured that higher order thinking left no stone unturned while deliberating on loan proposals. Frankly, the World Bank had too much thinking going on. However, the point being made is still valid. Very few organizations actually demand such rigor in thinking.
This book hopes to help business executives and managers make better decisions. It is designed to improve the many ways of higher order thinking. Each step in the decision making process is partnered with a thinking method. It is anchored on the belief that if a business manager acquired the lifelong skill of “learning to think better”, then he or she could tackle a difficult subject matter with greater ease and success.
Business Decision Making is a journey of the thinking mind through the labyrinth of the whole brain. Deliberately, the book is meant to stretch the business manager’s thought processes. Uncompromisingly, it tries to elevate business decision making to a new art form, replete with solid scientific methodologies.
CHAPTER 1: THE BUSINESS CASE
TOPICS COVERED
What is a good Business Case?
Proponents of a Business Case and Skills Required
•Exploiting Opportunities
•Solving Problems
•Strategizing and Operationalizing
A Business Case is a management proposal to enter into a product, project or program opportunity or to solve existing and/or potential problems that would lead to the attainment of business objectives. The opportunity or problem presented may be of a strategic intent or one that is merely tactical or operational in nature.
A Business Case is a planned course of action that needs to be decided and implemented by managers in a methodical and systematic way in order to assure the best possible outcome(s). Usually, but not always, a Business Case will affect more than one functional unit of the organization, thus requiring a cross-functional perspective and approach in the case analysis and synthesis. A Business Case will normally require substantial investments in terms of people, money and physical resources. This demands a good cost-benefit and a thorough risk-return analysis.
A Business Case will, invariably, need considerable buy-in from other managers in the organization (if not from the top management or the board of directors). This would entail a more participative and consultative decision-making process. A Business Case will, most probably, tap the expertise of several people. This would imply a team approach or, at the very least, ready and easy access to these experts. Their opinions may make or break the case.
A good Business Case:
1.Clarifies the goal or objective to be achieved. What impact does the attainment of the goal have on the organization? Is it a priority objective?
2.Examines the situation at hand using critical thinking
a.What are the relevant areas for consideration? (What is relevant?)
b.What are the important or critical factors that would significantly influence the attainment of the objective? (What is important?)
c.Determine the magnitude and direction of the trends, patterns, movements and future scenario of the relevant and important factors? (Where are the magnitudes headed?)
d.What issues, obstacles or hurdles must be addressed first before others in attaining the objective? (What is urgent?)
e.What is the business capable or not capable of doing now and in the future? (What is doable?)
3.Designs a decision framework using systemic thinking to aid in decision making. (What is the best framework to use?)
4.Defines the criteria to be used in evaluating the many alternative ways to reach the objective. (What are the measures of success?)
5.Generates the most appealing alternatives using creative processes to reach the objective(s) set. (What are the best alternatives?)
6.Evaluates the alternatives in a logical, structured way by using the criteria established, by applying the most sound, reliable and valid methodology, and by presenting credible evidentiary proof. (What is the proper evaluation methodology?)
7.Recommends or makes a decision based on both qualitative and quantitative analysis and synthesis. (What is the recommended decision and why exactly?)
8.Prepares for uncertainties and potential problems, and provides responsive contingencies. (What preventive or contingency measures should be taken?)
9.Clarifies how the decision would be implemented. (How to implement properly?)
Proponents of a Business Case and Skills Required
Business Cases come in several generic forms. The first generic form entails exploiting opportunities in the marketplace. The second form involves solving existing or potential problems that hinder an organization’s ability to achieve its expected performance outcomes. (Problems are, thus, significant deviations from performance expectations.) The third form is to choose the best means, among several alternatives, to attain an objective or desired end result. The choice may be of a strategic or an operational nature.
The third form differs from the first in the sense that the first form focuses on one or more concrete opportunities that are being presented while the third form is still in search of potential opportunities that could be converted to strategies and operational programs.
1. Exploiting Opportunities
The first generic form has four varieties. The first variety deals with exploiting opportunities which an enterprise is already familiar with, thus making it easy and attractive to pursue.
The first variety includes: (a) expansion of existing product lines to serve customers in geographic areas that have not yet been tapped; (b) extending the product offerings to new product lines that would cater to different segments of the bigger market; (c) introducing product variants (with additional or different features) that specifically cater to the other subsegments of the existing customer base.
A second variety of opportunities that could be exploited encompasses both vertical and horizontal integration. Vertical means going forward to the downstream market (e.g. from manufacturing to distribution to retailing) or going backward to the upstream supply chain (e.g. from processing, to semi-processing to raw materials production). Horizontal integration exploits opportunities in related and ancillary businesses such as after-sales services, financing of customers, complementary products (e.g. accessories to fashion wear) and piggy-back offerings (e.g. promotional toys in fastfood stores).
A third variety of opportunities seeks to improve the Quality, Delivery and Price (QDP) value proposition to customers. Different customers have different QDP expectations. This suggests that a “one-size-fits-all” strategy would not be able to delight all of the customers.
Quality improvements include measurable, palpable and experientiable attributes such as durability (lasts longer and does not break down), serviceability (easy to maintain and operate), taste (sweeter, spicier, saltier, more sour, more bitter, crunchier, softer, etc.), elegance (looks sleek and classy, opulent and indulgent, modernistic and aesthetic) and feels good (comfortable, soft, right fit, flattering).
Delivery improvements mean (a) consistently