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Between 2005 and 2011, IMC published Daily Tips every weekday on consulting ethics, marketing, service delivery and practice management. You may search more than 800 tips on this website using keywords in "Search all posts" or clicking on a tag in the Top Tags list to return all tips with that specific tag. Comment on individual tips (members and registered guests) or use the Contact Us form above to contact Mark Haas CMC, FIMC, Daily Tips author/editor. Daily Tips are being compiled into several volumes and will be available through IMC USA and Mark Haas.

 

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#442: How to Be More Accurate With Uncertainty

Posted By Mark Haas CMC FIMC, Tuesday, November 23, 2010
Updated: Tuesday, November 23, 2010
We all know that the only guaranteed thing about all models is that they are wrong. There are too many uncertainties in any model, both in its inputs as well as its design, to do more than give us insights. How are consultants to respond to clients who ask them to build or use a model to predict future outcomes?

While true that models are not, and cannot, be accurate in estimating the future, this does not mean that they are not extremely useful. A model is a representation of the real world as well as we can characterize it. In both the building of the model and in collecting data to support it, we develop greater insight into how our (modeled) piece of the world works. The best think about models is that they can be tested and improved until you have a model that is "good enough," although criteria for that judgment vary with the client.

Where most models fall down is that they try to deterministically predict an outcome when the system they are modeling is probabilistic. Say you are building sales model. Product prices may range depending on economic factors. Number of sale staff may vary with the season. Sales effectiveness may vary as a result of a training program that itself has uncertain outcomes. When you try to build a spreadsheet model whose inputs area all uncertain, the outcomes are barely useful. You are left with saying to your client, "Based on average expected inputs, our best guess of sales is $3.5 million in the fall quarter, but it could be more or less."

There is a powerful alternative: changing a spreadsheet from into a probabilistic model using an add-in called @RISK. This commercial software program allows you to specify a distribution instead of a fixed "best guess" or average input number (including various shapes of the expected distributions). If inputs are correlated, you can even link these distributions (e.g., if customer traffic increases, the available time spent with each customer decreases, which may not be a simple relationship). The more you can model, the better you can understand how your business works.

Tip: How great would it be to say to your client, "We have used historical data on all the factors that affect sales and modeled the effects of enhanced sales training. The most likely impact is a $1.2 million increase in sales, with a 20% probability of it being $1.9 million and an 80% probability of it being at least $1 million"? Then you can tell your client which parameters are hiding in the model that have the greatest impact on decreasing the uncertainty in results. Just using this add-in gives you far greater insight into the business you are advising. Check out the add-in at Palisade.com.

© 2010 Institute of Management Consultants USA

Tags:  assessment  consulting tools  decision making  innovation  risk analysis  technology 

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#292: Using Movies to Improve Management

Posted By Mark Haas CMC FIMC, Tuesday, April 27, 2010
Updated: Tuesday, April 27, 2010
I have been training management teams in leadership, communication and negotiation for a long time. I have used just about every facilitation and leadership approach in the book. Do you have anything new?

What about taking everyone to the movies?

No, we don't mean packing everyone off to the local cineplex. How about using some classic movies as the basis of discussion? Some movies have rich characters, plot and storylines that would make for fertile discussion among members of a management team. Here are a few:
  • Twelve Angry Men (1957) is a story of a jury deciding an apparent open and shut murder case. The character development and evolving story line reflects common interactions in management team negotiations.
  • The Caine Mutiny (1954) addresses weakness of command, ethical dilemmas, communication between ranks, and executive decisionmaking. And you though running a company was easy?
  • The Godfather (1972) is all about what is business and what is personal, transfer of control, and about the impact of traditions on operation of an enterprise.
  • 12 O'Clock High (1949) is a look into leadership, betrayal, morale, discipline, and perseverance under duress. Strip away the war setting and you will find many elements of how teams behave under stressful settings and how they cope.
  • The Office - Not a movie but a weekly TV show with fertile representation of all too familiar personalities in many business settings. A smorgasbord of how not to manage.
Have managers watch these movies for discussion and comparison to their current individual and group behavior. Better yet, have the team watch them together on your next management retreat and discuss merits of the characters and team behavior.

Tip: OK, maybe getting your clients to watch movies is impractical. However, it doesn't mean you can't watch themselves and take the message back to them. Watch them with an eye to how you would advise those in leadership or decision making positions in these movies.

© 2010 Institute of Management Consultants USA

Tags:  client  communication  decision making  leadership  learning 

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