Saturday, June 26, 2004

Planning under the influence of change

Planning under the influence of change
By Peter de Jager

Most strategic plans are premised upon a simple question: "Where do we want our organization to be in five years; what must we do, and when, to get there?" A good question, that, and the answer will definitely have the attributes of a sound objective.

Asking, "where?" invites us to paint a picture of what we want to achieve. That represents our "vision" or "vision statement", and creates a target worthy of attention. "What must we do, and when?," paves the steps towards a rudimentary project plan. Having defined the "what" and the "when", we now have a "To Do" list for the next few years. The objectives we choose may sometimes be overly simplistic - even ambiguous, as in, "We want to be the world leader in 'X'". But they provide us something to work towards. And that's the core issue. Unless the next problem is defined in terms of some hidden assumption, such planning cannot succeed other than by luck. We run into a snag here, a problematique. We cannot answer the "smaller" organizational question "where?" unless we answer a bigger and more complex question: "Where will the world be in five years?"

Crafting a strategic plan is like aiming to get to Mars, or catch a baseball: you don't go to where it is now but to where it will be. Obvious? Of course it is. Yet most strategic plans make no attempt to determine where the world will be. They assume that the world stands still in time when it is indeed heading off in some unknown direction under the influence of Moore's Law, politics, demographics, diminishing resources, new opportunities, aging populations, shifting alliances and a thousand other trivial and humungous forces.

We target the future on our understanding of the past. For example, when transactions have been growing at 10 percent per year, we plan for the future on the assumption of similar growth. But new-and often sudden-developments can erase all credibility from such reasoning. For example the sudden rise of digital music and the ease of sharing it on the Internet. The real challenge is in answering the question, "Where will the World be in five years?" As Yogi Berra, the great philosopher king and sometime baseball player, said: "It's tough to make predictions, especially about the future."

Tough? Yes, definitely. Impossible? No. Even if we choose to ignore them, there are developments we know will affect us in the future. Here are a few worthy of consideration: The Collapse of Constraints as a result of Moore's Law: IT and telecom are going to get more powerful, faster, cheaper, more reliable, more accessible, smaller, cooler, convenient.

Implications: Are there technologies that you want to implement today but can't because of limitations? Chances are in five years, technology will remove those constraints. Then what?

Reminders and implications:

· Digital Music => Copyright => Music Industry Sales?

· Telecommunications => Offshore Outsourcing => Local White Collar Work?

· Voice over IP => Personal Communications => Phone Companies?

· RFID => Inventory Costs => Privacy & Security?

· Flat Screen TVs => Redesign of living space => Furniture Sales?

New Markets & New Competitors: (The Third World is no longer Third) One word: China. The Implications? USA has 5 per cent of the world's population and consumes 30 per cent of its resources. Imagine the buying power, consumption, and resources of 10 USAs. Can you imagine a Future where this juggernaut of a country does NOT affect your business? These are just three developments you might choose to incorporate into your strategic plan. Which ones? depends on the throw of your projection, factors of potential threat, and/or opportunity.

We cannot predict tomorrow with great accuracy. But we can get a sense of it and strategize a plan that does well against other possible scenarios.

Wednesday, June 23, 2004

Heat Shelter

(星島日報報道) 酷熱天氣下,民政署昨宣布調整政策,日間開放三十八個社區中心供市民避暑,其中九個更通宵開放冷氣、提供免費蒸餾水和?位。但使用者卻寥寥可數,足夠容納二百多人的禮堂冷氣全日開放,只得一人使用。有關注團體批評,政府宣傳和配套不足,白白浪費資源。






Friday, June 18, 2004

Advice on Choice

The score of the test does not mean anything. You can either be a maximizer or a satisficer and live happily ever after. I score 3.6 which is in the middle third. Seems to be a bit boring as I then cannot enjoy the best choice of the maximizer nor the carefree life of the satisficer. But who would believe that our fate is tied to a three minute test.

I recall another test I got from a management course. Suppose you are allowed to walk through an apple orchard down a one way path. You cannot walk back. You can pick only one apple only once along the way. The test takes away simultaneous choices, but gives out choices one by one in sequence. One should normally pick the best apple that satisfies his standard. The choice of different people reflects their standard of a reasonably good apple. But it is a torture for the extreme maximizer, because they will pick almost the last apple on the path, irrespective it is the best.

Professor Schwartz did have some good observations and he offered a little advice, just to avoid that the tyranny of abundant choice may drive you to clinical depression. Here is his advice below.

Monday, June 14, 2004

Maximization Scale

Following the discussion on choice, if you want to know if you are a maximizer or a satisficer, take the test below. You can find out your rating on the maximization scale. I think this is one of the questionnaires used in Professor Schwartz's research. The research results show that about 10% of those answered were extreme maximizers, average score over 5.5, and 10% were extreme satisficers, scoring average below 2.5. I normally am skeptical about such research results, but it is interesting to go through the questionnaire just to see how we are measured. The statements on station and channel surfing hit me the hardest.

Tyranny of Choice

I recently read an article by Barry Schwartz featured The Tyranny of Choice. Professor Schwartz is in the Department of Psychology at Swarthmore College. It is a research report on how excessive choice affects people. You may be interested as it has some management content. The article has a lot of arguments, statistics and charts. But I just quote a few salient points.

Common sense suggests that having abundant options frees people to find the best route to their own happiness. But in fact, studies show that too much choice often makes for misery.

Different people have different attitude in making choice. The research targets on two types of behaviours on a linear scale for maximisers and satisficers.

Maximizers are those who always aim to make the best possible choice. They engage in more product comparisons, both before and after they made purchasing decisions, and they take longer to decide what to buy. They exert extra effort reading labels, checking out consumer magazines and trying new products. They also spend more time comparing their purchasing decisions with those of others. Owing to the diffuculties to investigate all options and the possibility that they have not really made the best choice, maximizers usually get less satisfaction although they may make better objective choices.

Satisficers are those who aim for good enough, whether or not better selections might be out there. Whenever they find an item that meets their standard, they stop looking. The term satisficers was borrowed from the Nobel Prize-winning psychologist and economist Herbert Simon.

The results of the research show that the greatest maximizers are the least happy with the fruits of their efforts. When reality requires them to compromise, i.e. to end a search and decide on something, they are worried on what might have been missed. When they compared their choice with others, they get little pleasure from finding out that they did better, but substantial dissatisfaction from finding out that they did worse. They are more prone to experiencing regret after a purchase, and if their acquisition disappoints them, their sense of well-being takes longer to recover. They also tend to brood or ruminate more than satisficers do.

The reasons:

- Opportunity costs of selecting is high. One of the costs of making a selection is losing the opportunities that a different option would have afforded.

- People may suffer regret about the option they settle on if it turns out the option is not the best choice.

- Adaptation dulls joy. Even for a good choice, we will get used to things, and very little in life turns out quite as good as we expect it to be. Because of adaptation, enthusiasm about positive experience does not sustain itself.

- The curse of high expectations. The amount of choice we now have in most aspects of our lives contributes to high expectations. If your perch is high, you have much further to fall than if your perch is low.

The consequence of unlimited choice may go far beyond mild disappointment, to suffering. Americans are showing a decrease in happiness and an increase in clinical depression.

Do you want to know if you are a maximizer or a satisficer, or your rating on the maximization scale?

Professor Schwartz focused on choice in consumer products. But the issue leads me to think in the direction of the Public Choice theory, that the public should be happy if they are given the choice of their leaders by election, but in what form? What if we are given abundant choice in election, will the problem of the tyranny of choice sink in? Will we be more unhappy although we made a better choice owing to the lost opportunity cost, regret for not making the best choice, adapting too fast to the joy of the good choice, or falling from high expectation of the chosen ones. The talks of universal suffrage, expansion of electoral college, expansion of LegCo seats of both GC and FC have caused more chaos than progress.