Sunday, November 8, 2020

Running a business

On the one hand:
Follow the science; follow the engineering; follow the facts; adhere to policy and precedent
On the other hand:
Listen to the customer; stay ahead of the competition; keep an eye on shareholder value; don't be late!
As one prominent CEO opined, business decision-making is all about a talent for making trade-offs. In effect, "situational decision-making" somewhat akin to "situational leadership". Different and multiple styles to be fitted to the situation:
  • Nothing is so simple as "follow the facts" and adhere to precedent. 
  • Nothing is so "lacking sense" as just "listen to the customer"

Here's another idea: seek stability and predictability. The fact is that without either, your only recourse is to apply a heavy discount to future value. 

Not so fast! 

Maybe your business model thrives on instability, in effect working off the 'rate of change' rather than the steady-state. 

Many 'transactionalists' work this way, making large bets on even small changes (very large times a very small number may still be a quite large number, aka: the "one-percent doctrine").

But if you are the business leader that heads toward the unpredictable, then you should be thinking of how to make your business "anti-fragile", to wit: to be able to absorb great shock without collapse.

  • By having interior firewalls to stop risks from propagating
  • By having redundancy to fill in for failed capability and capacity
  • By having reserves to cover losses
  • By not being totally "just in time" because there may not be time

No matter the model for decision-making, an internalized methodology that you can apply with confidence is your best tool, to be practiced and made like "muscle memory"


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