Published on
Eight Billion Euros, Deep Uncertainty, and a Board That Wants Answers
A global industrial group had to make a strategic decision on a product platform worth roughly eight billion euros. The board’s requirement: full transparency on profit pools and break-even points, taking every material uncertainty into account.
The old setup consisted of error-prone Excel models and external support. Response time for a simple what-if question: over a week.
That was replaced by a value map as the driver model, a scenario manager for entering the key influencing factors, and ad-hoc analysis including waterfall charts.
Response time on ad-hoc board questions, which come up roughly every one to two weeks, fell from more than a week to under 30 minutes per new downside or upside case.
Three sentences from the project team stayed with me:
“We no longer discuss one number, we discuss ranges and probabilities.”
“The CFO was astonished that we could adjust the worst case live.”
“Without the driver model we would have had to follow up on every second question in writing.”
Decisions of this kind are not about predicting one possible future precisely. They are about being prepared for several, and knowing your own room for manoeuvre.
On a decision this size, computation time is rarely the problem. Waiting time is.