Wield This Decision-Making Tool for Managing Change Successfully

November 18, 2014

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Tom Somodi’s latest article on Entrepreneur.com:

You love fishing. It’s the last day of vacation and you’ve had a disappointing day of catching fish. You’re by a huge lake and have just enough gas to return to the lodge when a radio announcement indicates that the fish are biting like crazy on the opposite side of the lake.

What should you do? If you travel to the other side of the lake, you’ll run out of gas and have to row back to the lodge. On the other hand, if you use the gas to return to the lodge now, you might eliminate the chance of having a great conclusion on your final day of vacation.

One concept in change science explains this situation to a T. It involves examining trade-offs when a change requires selecting between two alternative scenarios, both desirable. But these alternatives are interconnected in such a way that it’s not possible to have one alternative work without sacrificing the functioning of the other.

It’s time for organizations to recognize the impact of trade-offs on business decisions. For company leaders, such an awareness can lead to improved analysis and a better approach for executing crucial business moves. This will reduce the likelihood of an executive being blindsided after committing significant resources to an initiative or announcing a major strategy.

That’s the first thing I thought of amid al the hoopla surrounding Apple’s announcement off the iWatch. Would people sacrifice their desire to enjoy this miniaturized technology because of the trade-offs of cost (the $349 price) and limited capability?

As with the fishing trip scenario, there’s no correct answer. Some people would use their gas to travel to the fish. Others would rationalize that their vacation has already been great and would immediately use their fuel to head to the lodge.

Certain conditions yet unknown might skew a decision toward a certain direction. If I’d mentioned that a person in the boat had a heart condition, this might prompt a decision to immediately return to the lodge. On the other hand, if I’d mentioned that many boats in the area were willing to share their gas, heading to the new fishing spot might be the likely decision.

Projecting customer choice in advance could be more difficult for Apple because of unknown variables, such as the responses by competitors, media reaction or the company’s ability to efficiently deliver on production and distribution or even an unexpected frenzy about a particular app exclusive to the watch.

There’s an important lesson here for all business leaders responsible for accomplishing critical change. In business, trade-offs exist all around and can be the downfall of an attempt to realize a critical change in an organization.

It’s common for executives in large and small organizations to be blindsided by unexpected trade-offs that could create major failures in the implementation of a change that was supposed to have a high probability of success. Managers at an organization might be convinced that they are implementing the perfect system only to find out halfway through undergoing an expensive process that a significant trade-off exists.

Maybe it’s a trade-off between long-established engineering processes and a new scheduling system that the operations department wanted to implement. Or maybe it’s an unexpected trade-off between a new customer-support system and the cultural expectations of a large consumer group.

Executives can mitigate these situation by forcing their organization to determine, analyze and communicate in advance the known and potential trade-offs as a part of the decision-making process. By understanding and addressing the trade-offs that exist up front, organizations, even large ones like Apple, can improve their ability to realize the outcomes they desire.

No one would argue that most organizations already have procedures to assess the requirements and risks of executing a major change, however, these procedures often miss significant trade-offs until it’s too late and the damage has  occurred.

It’s also not unusual for individuals responsible for executing an initiative (approved by the executive) to automatically assume that if a trade-off arises, the conflict will be resolved in favor of executing the new initiative. Unfortunately, this will not always be the case, especially when the executive has been blindsided by an unexpected trade-off.

There will always be some level of risk associated when trying to effect a change. But by understanding and specifically focusing on the concept of trade-offs early in the decision-making process, leaders have the power to increase their success rate.

Read more articles by Tom Somodi at Entrepreneur.com.