Saturday, April 23, 2011

Assessing, Positioning and Deciding

Click on this link for an interesting article on how people analyzed complex business problems with the attitude of overconfidence and over-simplified solutions.

Compass Rule:
  • Assess the Big Tangible Picture before deciding.

There is always a trade-off and sometimes an unseen blow back for some major decisions. Some-one (or some group) usually gets penalized.

Talk show hosts, lawyers and politicians usually enjoyed the act of selling the message of "a Win and Win situation" or "We will all live happily ever after, because of that decision. ..." 

The masses buy it because they want a simple outcome and do not want to think more about it. It is always easy to sell the obvious message of "easy" risk benefit while hiding the truth of risk consequences.

Some of these people prefer to be focused on the positives, without ever focusing on the tradeoffs and the negative consequences. In public, their idea of deep thinking is contemplating on which of the three choices would be benefit them now.

The professionals focus on those points and then re-assesses which of the three choices are for real and what are the possible risk consequences.

Base Approach

  1. Collect relevant data relating to to your Big Tangible Picture.
  2. Pinpoint the positive points and the negative points from various different angles.
  3. Identify the risk benefits and and the risk consequences of each point
  4. Determine whether the settings behind the goal is predictable or unpredictable.
  5. Adjust your goal accordingly.
Proper assessment of the targeted settings usually enables one to determine the comprehension of the advantages and disadvantages.

Playing the Cyclical game
Some decision making process is similar to the game of dices. Everyone who plays the game, know that the current shooter will "crap" out (hit the seven) before making their mark sooner or later. When one has properly assessed that the possibility of crapping out becomes obvious. Then, it is time to bet against the shooter. ...

Did you know the smart and experienced players usually generate more cash, betting against the shooter than for the shooter? (It is quite similar to various future speculation schemes That is another subject matter).

In any economic situation, the smart strategic thinkers know that nothing stays the same. For every peak, there is a valley. They know when to exit before the game is over.

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