In our last blog, we shared the four major trade-offs improvement decision-makers regularly face:
- Insight…what kind and how much
- Complexity…what problem you’re solving
- Implementation…what action really looks like
- Impact…what the gains will be.
Finding the right balancing line may seem daunting, but there are some parameters we have found to consistently support strong decision-making. To balance trade-offs, we recommend decision-makers focus on:
- Risk – if a potential change has a high risk to your business – whether cost, legislative, safety, environment, operational disruption, reputation etc – then you will likely want higher confidence, which may mean more data in the ‘insight’ trade-off. If the risk is lower, you may not need that data rigour and may focus more on experience. Similarly, potentially high risk, coupled with high complexity levels, may expose your business to an extent that makes alternative choices, better choices. These are just some examples of how risk considerations help in navigating trade-off decisions.
- Asset area – we often talk about three core asset groups of people, process and physical. If you consider a potential change that may eliminate some human factors, such as moving to automation, you would typically want a heavily data-driven foundation to justify such a change. However, people may still be involved in implementation and ongoing operation of that new solution (such as maintainers and warehouse managers for spare parts). Leaders will commonly base a decision like that on return, capex, opex, timing, expected benefits and so on, but forget to consider the impact on people. Factoring in all impacted ‘assets’ is essential to striking the right balance in each of those four trade-off areas.
- Business objectives – business objectives are always central to decision-making. However, they can be even more critical when the trade-off appears unclear or even negative. For example, there may be a legislative requirement, a reputational driver, or even a cost imperative underpinning the need to tackle an improvement project that doesn’t ‘stack-up’ well in terms of trade-offs. These can be highly challenging projects to take on as they need 100% leadership alignment, which is somewhat rare. Nevertheless, an overriding business requirement can sometimes drive trade-off choices that may otherwise not be entertained.
These can be inherently uncomfortable decisions to make as you back one pathway or another using an imperfect foundation. For decision-makers, we encourage embracing the notion of failure as an opportunity in its own right. As long as you can demonstrate the process behind your trade-off choices, healthy leaders understand the need to contend with the unknown. This goes hand-in-hand with an attitude that values learning and curiosity. We also encourage surrounding yourself with experience and sound advice – where possible, from diverse sources. Finally, we encourage communicating right through the process, even with those who may shoot down your ideas. Others can provide valuable feedback to help you better navigate the trade-offs of your context and better position your decision – and ultimate improvement effort – for success.