Pay-Back Using Option Solving

Tougher times spur greater scrutiny of both investments and expenses. However, stalling on investments and expenses can potentially kill innovation. Breaking out of either an organizational stalling or shrinking mode, induced by these tougher times, requires maximum innovation. So how do organizations find the right balance between these two conflicting requirements: squeeze or innovate?

This is where option solving can play a useful role. Our professionals, specialists or support staff suggest a new idea or request an investment in developing their skills. Instead of being put-off with, “We don’t have the budget for that right now,” the individuals concerned should be encouraged to pursue their proposal. Such put-offs are highly commonplace in today’s difficult environment. It dampens people’s desire to make investment suggestions or innovations because there’s no point.

As an alternative, their team leaders (or executives) should either introduce them to or suggest they utilize a Pay-back Option approach: that is, figure out the approximate investment required for that new idea or skill development and then consider options on how that investment can be met.

Now their team leaders (or executives) can readily invite their team members (using the option solving technique) to produce the right question relative to key considerations: see the latest example. Between them they can arrive at “bookends” to challenge their intuitive minds’ creative capabilities: at one end, Leave it to my boss to take care of, at the other end, Postpone the investment. These are clear options, but the least likely ones. Ultimately they can come up with a range of potential viable options to cover the likely investment. From this they can choose the best payback option. (Note: Where a team member is already acquainted with option solving – see book – they can figure out the likely options themselves and then propose the best pay-back option.)

The outcome: either a pay-back solution to cover the required investment – hence a zero-sum-game outcome – or proposers agree to put their suggestion on hold for the time being. This way proposers’ initiatives are not squashed arbitrarily (for pure budgetary reasons) and innovation is encouraged: even if the two parties agree to postpone it for the time being. (Note: During difficult times like these, it is potentially the moment where initiative is strangled rather than encouraged.)

Where they agree to proceed because they have found a suitable pay-back option, now they have to go and slug it out with their Controller! Never an easy task at moments like these, but this is where Controllers and their leaders have to become that much more flexible, in order to encourage organization innovation. That’s the key ticket right now. It is called Zero-Option Investing.

Thanks Option Solving. (NOTE: Next posting in 2 weeks: “Forward-Looking Options: figuring out where the organization should go next.”  Make your COMMENTS or go to peter @ileadershipsolutions.com to connect with the author.)

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