We make choices every day, but what are choices? A choice is a decision between two or more options. There are trivial choices we make every day, from what we eat to the clothes we wear, and then there are non-trivial choices like choosing a job, the relationships we have in our lives, or our finances. Decision making consists of two steps – divergence and convergence. First, we diverge and create options from which to choose. Then we analyze the tradeoffs between those options to converge and choose the best option. Choices also play an important role in business.
Leaders planning strategy for their company should look at their strategic decisions through four lenses – financial performance, market opportunity, competitive advantage and operating model. Viewing your business together through these interdependent lenses helps companies seize new opportunities for growth.
Viewing decisions through the financial lens helps companies understand what is needed to create more value in their business by setting a benchmark for financial performance and developing a market momentum case (MMC) that allows executives to evaluate how to prioritise big moves or new initiatives for the business.
The operating model lens helps companies understand whether the business is set up for success in its current form. This helps companies allocate resources, understand their team’s talent and capabilities, and manage performance.
Looking at decisions in terms of market opportunities helps companies identify growth opportunities in their current market and adjacent markets and compare them to strategic options. In this way, companies can determine if they are in markets that will drive growth over time. Analysis of adjacent markets helps assess risks that may arise in the future with respect to competitors.
Viewing your business together through these interdependent lenses helps companies seize new opportunities for growth.
The competitive advantage aspect, as the name implies, helps companies determine what it takes to succeed in their chosen market relative to their competitors. This can be done by comparing progress with competitors, but also by looking at potential disruptions. This allows companies to determine if they have what it takes to dominate the current market or if major changes are needed.
Strategic decisions in business are not limited to seeking financial opportunities, but should follow a holistic process that takes into account the important considerations that are essential to a company’s success. Looking at strategic decisions through the four lenses helps create a strategic plan that is supported by the right business decisions – from making the right investment to allocating resources.
About the Author
Aamna is a graduate from Kings College London, having secured her LLB in 2021 she has decided to venture out and explore areas such as management and marketing. Having previously worked at startups, she is currently working at InnowayIt as a content writer.
Nice article