Managers generally view today’s environment of increased competitive pressures and market turbulence and the increasing uncertainty this brings about, as threatening. This foreshadowing is astonishing when you consider that boundless opportunities for big-win investments lurk within uncertainty. We asked ourselves what causes firms and managers to generally regard uncertainty as a negative, when in fact opportunities for unusual prosperity lie in being able to exploit that very uncertainty. As we looked into the reasons why managers do not forge prosperity out of uncertain investments, we decided that it is really not their fault. We found that managers have not been given the right tools for investing in uncertain times. They are in the grips of a “Go/No Go vice,” using tools for investment analysis that were created for more stable times. Discounted cash flow (DCF) calculations and net present value (NPV) analysis have them fixated on “making their numbers” or being treated as failures. These blinkers keep them locked into a Go/No Go decision-making pattern, either proceeding full steam ahead or stopping in their tracks (which, in the face of uncertainty, is usually No Go).
Through years of research and actual experience, the partners at Cameron & Associates have optimized their breakthrough proprietary framework that enables organizations to take advantage of these opportunities.
The key to this framework is that at every decision point alternative paths are developed which facilitates sharing risks and increasing the flexibility of the outcomes. This dramatically differs from the current models that uses a binary decision, as described above, of Go /No go, creating a linear model which does not give the agility to the manger to hedge against different type of risks or react to different possible outcomes, which are required in uncertain environments.
How does it work?:
Instead of the decision makers committing on a single total investment on a new initiative and then being faced at every milestone with a decision to kill the total effort or go ahead with it, the Cameron & Associates platform allows the manager to decide, with a relatively small amount of resources initially, to learn about one to five of the top assumptions and then evaluate the investment by asking the question, “Now knowing about these assumptions what opportunities does that knowledge allow the organization to take advantage of?” This creates an investment structure that conveys the right, but not the obligation, to engage in the future funding of the initiative. This process is repeated at every milestone.
Cameron & Associates’ tools MarketBusting TM, Opportunity Valuation TM and Opportunity Engineering TM guide decision makers to select and manage new initiatives in which uncertainty may be created by the iterative nature of innovation or volatility of external environs.
MarketBusting™
You can’t outperform rivals if you compete the same way they do. To be a market leader, rather than a market follower, you must spur substantial new growth—quickly, profitably, and safely. How? With deceptively simple moves. For instance: Redefine your unit of business—what you bill customers for—to reflect what customers value. Then boost your performance on key metrics.
The MarketBusters approach dramatically reconfigures profit streams in an industry and upends conventional competition. Based on an intensive three-year research program, MarketBusters reveals forty MarketBusting™ moves used by firms to successfully transform their market spaces. These moves are mapped to five strategic lenses through which companies can analyze their current business, and includes targeted “prospecting questions” and corresponding tools to guide executives as they mine these areas for growth opportunities:
- Customers: View customers the way they view themselves, and intelligently tap into their experiences in order to change their perspective in your favor
- Products and Services: Transform your offerings to play up the positive attributes, lessen or eliminate the negative, and ultimately make your offering clearly superior to competitors’
- Redefine Your Business and Associated Key Metrics: Radically change some factor that drives performance in your industry, either to significantly boost your numbers or to help your customers become more competitive in their markets
- Anticipate or Exploit Industry Shifts: Capitalize on—or spark—a major upheaval in your industry before competitors do
- Create a New Market Space: Identify and exploit radically new opportunity spaces—whether wholly new markets or arenas your company has never competed in
Discovery Driven Planning™ Services
Discovery Driven Planning™ (DDP™) can be used to frame a new business idea or concept. DDP™ establishes essential foundations of business, and can be utilized as a precursor to the development of a business strategy which describes the proposed business activities, market, and competition in greater detail.
Uncertainty is inherent in any new concept that is new to the world, or at least new to the team developing it. Therefore the assumptions surrounding a new business concept need to be laid out and continuously tested. Some assumptions will be validated over time, while many more will be invalidated. The key is to learn quickly and inexpensively from this validation/invalidation process as the project unfolds, and make the necessary corrections to the project based on new knowledge.
Discovery Driven Planning™ can also serve as a roadmap for investment. Instead of committing large chunks of capital up-front to a new business concept, using DDPTM allows smaller amounts of capital to be used to test the critical underlying assumptions. Go/No-go/Redirect decisions can be made much faster, with better information, using less capital than more traditional approaches. The objective is to reduce your “knowledge to assumption ratio” quickly and cheaply, while framing the ultimate plan for your business.
The Discovery Driven Planning™ service was developed by observing new business creation in several large enterprises. While they tend to be very different in their styles, personalities, and interests, it turns out that five commonalities can be distilled from new business creators who are repeatedly successful. They are:
- Framing a worthwhile challenge
- Specifying key operations in the business model
- Identifying and documenting assumptions
- Identifying major CheckPoints
- Testing assumptions at CheckPoints, ahead of investment
Opportunity Engineering™
Opportunity EngineeringTM (OE™) works when high uncertainty surrounding an endeavor has rendered traditional management tools—like Net Present Value and Discounted Cash Flow—ineffective. Unlike these traditional management tools, Opportunity Engineering™ is both a tactical approach and a mindset. In other words, it offers a very specific way of valuing opportunities (we developed our own proprietary software that allows you to plug in the parameters of a project and determine its potential quickly and with minimal investment) and it helps inculcate a culture of innovation, where decision makers are not afraid to go after high-risk, high-opportunity bets. We call this Opportunity EngineeringTM because it separates risk from reward to create option like payoffs. Conceptually, a small investment now will tie up rights to a future stream of cash flows if the market or capabilities develops.
The mindset that develops as Opportunity Engineering ™ takes hold is a change in thinking from an emphasis on project completion to one of project sampling from a larger number of choices to determine the best use of capital. This stems from the viewpoint that projects are intellectual assets that may or may not materialize into real assets. Given this attitude, then the quest becomes how to cycle through a menu of projects to see which ones will be the winners, quickly and inexpensively. The result is a portfolio approach to innovation that allocates resources to exploit a variety of opportunities within the reality of making the numbers. Some of these will be iterative changes to existing products and others will be attempts to find the “new, new thing”.
We are often asked to engage in training and development for a large portion of a client’s employee population. To do that, we have partnered with BTS, Inc., the largest business training and simulation company in the world. Using both live workshops delivered by expert trainers and online simulations, we can train large populations, thus beginning to embed the methods and culture for managing and assessing high risk projects throughout the organization.
