Z to A: Look forward and reason backward

Alice said, “Would you please tell me which way to go from here?” The cat said, “That depends on where you want to get to.” -Lewis Carroll

The cat is right!  You must identify your goal first before planning a path.  Looking forward and reasoning backward is an essential component of a sound decision-making process.

Where do you want to go?

Consider this basic situation:  A subcontractor is preparing a bid for work with a local general contractor.  The general contractor asks for a value engineered option (VE) to save costs.  This requires the subcontractor to creatively evaluate the project.  Ultimately, reaching a cost-saving solution could result in a significant competitive edge.  However, let’s take a look at the simple sequences that could play out.  The decision tree below illustrates player payouts as the game progresses:

decision tree

As you can see, the general contractor has clear incentive to gain the VE idea. Yet, the subcontractor is required to fully trust that the general contractor will take an honorable path in order to even have the possibility of any benefit.  If played purely to maximize benefit, there probably isn’t going to be much sharing!

In reality, business situations can be even more complex.  Simply thinking in a more process-oriented way forces a manager to think explicitly about incentives and the moves competitors might take.  So regardless of complexity, brainstorming can provide strategic insight even if a decision-tree cannot be created.

Practice looking forward and reasoning backward.  Not only will you gain clearer insight, you just might see a way to change the game completely.

It’s your move.  Make it a great one!

-LK

 

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One response to “Z to A: Look forward and reason backward

  1. Pingback: How can I see through a competitor’s strategy? | From Z to A: Thoughts on Strategy

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