target audience: TECH BUYER Publication date: Mar 2023 - Document type: Tech Buyer Presentation - Doc Document number: # US50500623
Making Decisions in the Age of Permacrisis
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Abstract
This IDC Tech Buyer Presentation aids in decision making in the age of permacrisis.
We live in a time of uncertainty and volatility. In addition to the rapid pace of technology change, we now face an environment rich in disruption. The Collins Word of the Year 2022 — permacrisis — captures the condition of our times.
How can we best make decisions when volatility, disruption, and potential crises exist? Our traditional formal decision-making models — cost-benefit analyses that are designed to calculate a return on investment, net present value, internal rate of return, and so forth — depend on quantifiable inputs and so struggle with uncertainty as well as unquantifiable decision inputs. We can improve the quality of our decisions if we factor into our decisions both uncertainty and unquantifiable inputs.
The Business Value Model improves the quality of our decisions by adding to traditional cost-benefit analyses the use of "considerations." Considerations are the unquantifiable factors that could influence the decision. Considerations can include factors such as uncertainty risks (which are amplified in the age of permacrisis), complexity risks, regulatory requirements, and whether the decision builds future capability and whether it is a market necessity.
With two types of risk (uncertainty and complexity), specific risks might include technical complexity, technical uncertainty, business case uncertainty, uncertainty as to the state of the competition, and uncertainty about pending changes in regulations.
In the Business Value Model, we identify uncertainty and complexity risks that influence the decision.
We cannot quantify our decision considerations (otherwise we would include them as costs or benefits), but we can size and then prioritize them. The sizing can be as simple as "extra large," "large," "medium," and "small." Once we have sized and prioritized the considerations, we weigh and compare the considerations, costs, and benefits and make better decisions.
In some cases, the costs and benefits will drive the decision. In other situations, the decision will be heavily influenced by the considerations.
Making decisions in the age of permacrisis should lead us to shortening our decision/project timelines — the longer the timeline, the higher the opportunity for conditions to change.
"No matter their impact on the decision, the considerations can guide how we implement the decision. If our considerations include an uncertain business case and complex technologies, our implementation plan might include doing an early-stage, small-scale pilot to complete a rapid business case analysis," says Niel Nickolaisen, adjunct research advisor with IDC's IT Executive Programs (IEP). "In parallel, the plan might break down the technology into less complex elements and complete, early, the work that will most reduce the risks.