Strategy process

5 important questions on Strategy process

What biases are there in decision making?

Overconfidence and optimism
Confirmation bias & groupthink
Loss aversion
Statusquo bias
Preference for even allocations
Sunk cost fallacy

Counter confirmation bias?

Create a culture of change
Strong checks and balances with independent review
Establish a challenger team
Do a pre-mortem analysis

Counter loss aversion?

Establish stretch targets that are impossible to achieve through business as usual
Zero-based budgeting
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Counter status quo?

Adopt a radical view of all portfolio decisions. Everything up for sale
Risk analysis as rigorous as any change options

Counter sunk cost?

Full rigor investment analysis to incremental investments, only looking at incremental prospective costs and revenues
Be prepared to kill strategic experiments early
Use gated funding for strategic investments

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