examples of problems that need an end state

What I love about mbh and my role in the company is that we often get involved in developing cases for companies and governments to invest in potential solutions. What is frustrating, as per my previous post, is the lack of an overall guiding goal or end state to weigh up the worth of these investments. There are many large problems facing society that are being commented on in the mainstream press. What is often lacking from these commentaries is the end state or new world that we are trying to achieve.

The two main examples where we have been involved lately or where I have taken a personal interest is the current water and energy problems around the world. While both problems are world problems, their end state scenarios and solutions to reach said end states differ from region to region. At the moment, global warming and peak oil are being blamed for high energy prices and for problems countries are having with supplies of water. The amount of data in the marketplace on these two causes of problems (i.e. global warming and peak oil) is huge. As an example, check out this awesome website on energy http://peakenergy.blogspot.com/. Not only are the blog entries great, there are dozens of links to excellent and reputable websites for further information. It would be possible to write a business case on a variety of investment opportunities from the date linked within 6 degrees of separation from this one site. The problem would be distilling so much information.

It is almost impossible to distill information and analyse options if we don't know the end state of what it is we're proposing. However, once you put a stake in the ground, or define an end state, the options for investing are reduced to those that facilitate achieving the end state. As an example, this link to a video of a school friend of mine talks about a stake in the ground on CO2 emissions http://www.youtube.com/watch?v=wbwxF47x5ss. What Saul does is suggest an end state stabilisation of CO2 and then discusses how much demand needs to be reduced by as one option to achieving this end state CO2 figure.

I'd be interested to know societies expectations on these matters. It would certainly lead to better investment decisions if we debated what goal we were aiming for. Two answers I'd like are around water supply and energy use:

1. Is Sydney and most other Australian cities happy with permanent water restrictions or do we feel an end state of watering our concrete whenever we feel like it should be the goal or is it somewhere in between?
   
2. Is the industrialised world satisfied with Saul's reduction in consumption to meet global warming or the fact that we're going to lose various islands, flood parts of every coastal town in the world and have far more frequently dramatic weather events ok with is? Or again, is it somewhere in between and if so, what?
   

I know in a democracy that a definitive answer to these questions is impossible but gleanings as to general collective preferences would make government investment decision making a whole lot easier.

ramblings on investment decision making

I've been doing a lot of things around investment decision making lately. Reviewing business cases, teaching people how to complete feasibility analysis and compile business cases, actually compiling business cases for clients and assisting project teams to compile business cases. I've gotten to the point where I need to ramble for a few blog entries to get out of my system some thoughts that have been running around my head.

Real asset investment decision making has been a fascination of mine since University days. The process of discovering if an investment has potential is fascinating. The range of topics you get across is huge.

Over the years I've also discovered the massive political and emotional aspects to decision making too. I've experienced the political and emotional responses through observation rather than participation. Most of my experience in observing the emotive and political response to a problem has been through the review of business cases or cabinet submissions that have been written to get a certain decision up rather than testing and proposing the best option for decision makers. Other observed phenomena is the retrospective business case. This is where a document called a business case is written to cover for the fact that a decision has already been made. What I find interesting in these cases is discovering what was the business case that caused the actual decision to be made. Was it a conversation, a presentation, a site visit or something else. There is always something that is the catalyst for a decision maker or person in power to decide to act. Sadly, it is often some small, quick comment or observation rather than as a result of a sound and well developed business case.

The most frustrating thing for me has been the difficulty in understanding the overall thread or long term goal to investment decisions. They are so often made in isolation with the dependancy and impact on other initiatives rarely considered. Yes, the investment aligns to strategy but does it contribute to an overall plan that leads to some end state that the organisation, community or society finds desirable.

Many new management theories are being explored around complexity theory and the uselessness of trying to predict the future (e.g. through forecasting and modelling). However, I find it impossible to be motivated and commit to investing money in a project that has no clear purpose and cannot be defined as part of some overall goal or end state.

I understand that it is extremely difficult to define an end state, but without one, all common principles of strategic planning and business management are useless and the complexity theorists become 100% correct in their description of organisations as self forming organisms that bumble along much the same way life always has since that first single cell split and became two.