Strategy
Decision Tree
Creating a quick decision tree will help to clarify almost any situation. In many cases, a decision tree is the appropriate tool for evaluating of the range of financial results which are possible.
Risk vs. Reward
Risk Profiles, also called S-curves or Cumulative Probability Curves, create a graphic display of the downside financial risks, the upside potentials, and the Expected Values of the various strategies under consideration. Efficient Frontier plots are also useful for grasping the risk/reward tradeoffs between strategic alternatives.
Portfolio Management
Ultimately, the job of business executives everywhere is to take funds from the risk-averse investing public, invest those funds in projects and assets which may or may not individually meet the risk tolerance of their investors, and then manage that portfolio of investments such that the overall performance delivers an acceptable return and meets the risk tolerance of those investors. Decision Strategies has helped hundreds of clients to fully understand the risk profiles of their portfolios and to manage them to generate maximum value for their investors.
Sensitivity Analysis
As important as it is to understand the full range of possible outcomes associated with your strategic alternatives, it is perhaps even more important to understand which of the uncertainties have the potential to drive value up or down – i.e., which ones are the Key Value Drivers. Identifying these drivers enables you to focus limited resources on those elements which make the biggest difference.
Value of Information
More information is not always better. Acquiring information usually costs money and takes time; how do you know when it is worth it? Value-of-information (VOI) analyses can reveal when it makes sense to acquire additional information, and when the smart thing to do is to make the decision now, despite the uncertainty. Decision Strategies’ consultants are experts in VOI analysis.
Value of Control
Gaining information about key uncertainties can be advantageous, but having an effect on those uncertainties is often even better. Value-of-Control analyses tell you how much it is worth to you to change your competitor’s behavior, to increase sales through a heavy advertising campaign, to ensure that you don’t have any serious delays or incidents during project implementation, etc.
Qualitative Assessment
In relatively simple situations, a quantitative probabilistic analysis isn’t necessary. A simple qualitative assessment of the alternatives can yield enough insight to make a confident strategic decision choice. This can also be the case when deciding on a high-level strategic initiative; the value tradeoffs are often primarily qualitative in nature, rather than quantitative. Decision Strategies’ philosophy is to use the appropriate tool for each situation.
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