Sunday, March 24, 2019

Align Risk and ROI analysis with success

Risk and return on investment (ROI) are usually evaluated separately. Yet, they share striking similarities.

Both need an internal (strengths and weakness) as well as external (opportunities and threats) analysis. This is also known as SWOT Analysis. They both analyze the two directions in which any effort can go, risk measures possible monetary loss while ROI measures possible monetary value. But what is at the core of risk analysis and ROI analysis? Impact and Likelihood.

Businesses, organizations and individuals are required to be productive for which they need to be effective and efficient. To be effective they need to have an impact. What they do, must return as high as possible monetary value with as low as possible chances of monetary loss in the lifespan of the delivery. To be efficient they need to be predictable exhibiting the highest possible success likelihood. How they do it, must use the leanest, fastest and highest quality possible approach (the lowest possible entropy solution).

Understanding this simple fact is one thing but learning it is another.

Since businesses are ultimately led by managers, success comes 100% of the time down to the individual. Hiring full stack leaders is at the core of low risk and high ROI results.

As a professional, you the reader, will not have more value just because of your success likelihood based on your skills but also because of the impact your decisions will end up having. In other words, it is not enough to be efficient, you must also be effective. I see too many people focusing on efficiencies but few people out of them are actually focusing on effectiveness for whatever reason. This most likely is the result of a simple fact: common sense is rare.

If I could give a sentence of advise that would be "Align productively towards the definition of success". I have tried to explain what to do and how to achieve this objective above.

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