How will your strategies perform in a changing economy? Strategy Science makes the factors affecting profitability very visible. It gives you the means to safeguard against a downturn or prepare to capitalize on an upswing.
There are several ways of using Strategy Science to understand how much uncertainty affects your decisioning strategies and how comfortable you are with it.
1. Explicitly incorporate uncertainty into your decision models by specifying ranges of values for key variables. For example, an interest rate could incorporate a half point spread. The model will then create the optimal decision strategy for achieving your business objective given the range of uncertainty.
2. Explore uncertainties using Strategy Science visualization tools to modify decision components. Decision models can be modified to reflect different assumptions about how economic changes might affect consumer behavior. Changing even one or two assumptions regarding how decision components are linked together typically has ramifications on portfolio performance that cannot be calculated manually with any precision.
3. Simulate alternative futures. By making adjustments to various inputs and constraints, then running a simulation, you can understand how sensitive the levers are that connect these elements with your desired business objective. You can look at worst case and best case scenarios and determine whether the degree of potential variation is acceptable. If not, you can adjust it until it is. With the ability to run a huge number of scenarios in a very short period of time, you can explore many more possibilities than would otherwise be practical—and arrive at a comfort zone with your strategy sooner. Powerful reporting tools also help in communicating this complex information simply and clearly to colleagues and obtaining executive buy-in.
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