CHAPTER 19

Assess and Manage Trade-Offs

Even with clearly set priorities and a well-defined execution strategy, plans are naturally subject to change in the course of business. Consider the team working on a new product that is suddenly asked to speed up production to satisfy the needs of a major customer. Or the request to add new features to an app, when the development budget is almost maxed out. Deciding whether to adjust course on key objectives requires careful thought, and you’ll need to weigh the advantages and disadvantages of making a change. You need to manage trade-offs.

Making trade-offs involves understanding the real impact of your choice for your team, other departments, and the organization overall. Just because someone makes a request that affects your team’s priorities doesn’t mean that you have to take action. In assessing trade-offs, you can decide whether your team can feasibly adjust their workload, whether it’s in the best interest of the organization, and how to move forward if the requested action is, in fact, worth pursuing.

The following practices can you help you navigate through this difficult terrain.

List Pros and Cons

When you’re facing a change to your priorities—a new strategy for your group, an additional product to market and sell, a shortened development time line—first consider what alternatives you have. You may have only one option to meet the new objective, or you may have many. For each potential course of action, ask yourself what advantages and disadvantages might be associated with that plan.

Consider a manager who was recently asked to design a new feature for a product on a tight deadline. His team is unlikely meet every strategic objective—develop the new product feature that doesn’t threaten sales of earlier product versions, that can be sold at a sufficiently high price, avoids expensive redesign, and so forth. To see the trade-offs visually, he wrote down his list of pros and cons of adding the new feature. Table 19-1 shows how he conducted this assessment.

To create your own list, consider your company’s and unit’s strategic goals. Do these goals emphasize reducing costs? Improving brand awareness? Simplifying product-development processes? Asking these questions keeps organizational objectives front of mind as you consider alternatives. Your answers can help guide your decisions about what’s okay to trade off—and what isn’t—based on larger strategic objectives.

Your list doesn’t need to be long or detailed, but it should provide enough bullet points for you to understand what this change would be contributing to your team and organization, and what you’d be risking by moving in this direction.

Assess Short- and Long-Term Outcomes

Next, think through the potential short- and long-term impacts of potential courses of action. For example, suppose you’re wondering whether to cut prices on a product line that has experienced declining sales. You realize that adjusting prices in this way may boost sales this month or even this year. In the long run, however, this move could hurt revenue if consumers came to expect deep discounts on your company’s offerings. They may hold off purchasing your products until you provide another discount.

In order to think strategically about short- and longterm impacts, consider these steps:

1. Meet with your boss to determine how much time you and your team should be allocating toward short-term issues versus long-term goals.
2. Review the work that you and your team have done in the past month to determine what has been accomplished on both short- and long-term issues. If the balance is not aligned with your group’s priorities, set new guidelines for how your team spends its time.
3. Keep an ongoing log to determine how you and your team are spending your time. Every two weeks, evaluate whether you are giving the proper time and attention to short-term requirements and long-term goals. Readjust your focus if necessary.
4. When you face competing priorities, determine which are the most important and make those your first priority. When an urgent matter arises, determine how it fits into your daily plan and act accordingly.
5. Involve your team in decisions about how to make progress on long-term goals while addressing short-term needs. They may have a perspective on how to balance large objectives while still meeting immediate deadlines.

After a conversation with your boss and tracking your team’s work, you may discover that while a lot of team time and attention may be spent on this declining product line, your overall goal is to increase sales across all products for the year. You may then decide that a price cut for this line makes sense to boost sales in the short-term, since you can also test how the product performs at this lower price. While this experiment is taking place, your team can turn its attention to other products in an effort to increase their sales and ensure the company’s long-term growth.

Balance Unit and Company Needs

Some decisions involve trade-offs between your department or group and the company overall. Suppose you lead a sales group whose representatives have won numerous new accounts by promising customers early delivery dates on a new product. That’s great for your group. But it puts a burden on product development, manufacturing, order processing, and customer service—all of which must accelerate their processes in order to meet the promises your sales reps have made.

This situation may lead to several possible outcomes. For example, forcing product development to release a product early may jeopardize the quality of the product. This, in turn, might affect that unit’s strategic goal of raising the quality standard of all products. It may also cause a high volume of calls to customer service as users of the product complain about defects. Individuals in this department will be focusing more time on pacifying customers, rather than their own critical priorities. Your promise of early delivery could thus hurt relationships with other groups within the company and with longstanding, existing customers.

In this case, you need to consider whether to trade-off some new sales in return for smoother operation of the rest of your company’s functions, so your organization can serve all its customers, not just the newest ones. Always think about how changes to planned priorities may affect not only your group but others in the company as well.

Make the Final Decision

By taking these points into account, you can fully assess how to proceed when your priorities or plans change. (The box “Six Questions for Making Trade-Offs” provides a reminder of key questions to keep in mind as you make your decision.) Thinking through each of these considerations will help you realize what is most important to continue doing, and what trade-offs don’t line up with your organization’s strategic priorities.

It’s worth noting, though, that sometimes making a trade-off requires nothing more than specifying what you won’t do. For example, suppose your group is evaluating the possibility of creating tiered versions of a product—high-end, midmarket, and low-end. Your work throughout this process has revealed especially significant risks for low-end products: these offerings could hurt brand image and generate lower profits, neither of which align with company objectives. In this case, simply say no and explain your decision: “I don’t know what a high-end version of the product would look like. But I do know that we won’t do a low-end version. It’ll damage our brand image, and it won’t generate enough profit to justify production.”

By defining trade-offs in this way, you help your group focus on the acceptable courses of action—and determine where a change may hurt your team, other departments, or the company overall. By keeping the organization’s strategy front of mind, you can determine when and how to change course when the opportunity presents itself.

Adapted from Pocket Mentor: Thinking Strategically (product #13281), Harvard Business Press, 2010.