What-if analysis, if you agree that repeatedly asking “what if?” ad nauseam is analysis, is an indispensible part of decision-making.
If I decide to do thus and so, then “what if?” this and “what if?” that were to happen? Everyone in the group does this, together and alone, and then together again and alone again, ad nauseam.
Highly credentialed consultants may ridicule this notion and then, in private, secretly do it themselves, knowing that it really is critical.
What if market demand suddenly makes a drastic, rapid shift? How long might it take us to adjust and how might we do that depending upon the nature of the shift? What if we adjust but it takes us two years to do so?
What if we aggressively exploit the rise in the prices of oil, using every world eye blink as a claimed threat to stability in oil supply, causing highly fuel price-sensitive companies to go bankrupt? Do we make special allowances for the purpose of manipulating public opinion, or do we really give a tinker’s damn about public opinion?
What if we back date stock options and it is discovered?
What if we decide to engage in conflict of interest work? Arthur Anderson probably didn’t care about “what if?” because Enron was paying them $63,000,000 a year and asking them to bless unorthodox accounting for dangerous transactions and not ask a lot of questions in the process. The transactions were often so out of line that lawyers were asked to opine whether they were really bona fide transactions after being given misdescriptions of each deal (the Andrew Fastow transactions).
Why don’t we goad Barack Obama into going to the Middle East and Europe, saying that he so lacks international experience that without doing that he would not be qualified to speak about the Middle East and other international issues? Don’t the McCain people wish they had asked themselves “What if he goes there and it becomes a triumphal tour?” Maybe they did that and came up with denial responses. Probably they gave no weight to the charismatic potentialities and did no what-if analysis before goading Obama.
What if we do close on this acquisition and…?
What if we don’t follow the lead of our competitor in offering addictive promotional incentives?
What if we agree to license VPR Corp to use our proprietary technology with restrictions and they start to claim that the restrictions are vague or unenforceable?
What if we decide to cut the dividend to conserve cash until this financial crisis is over? What if we don’t?
What if we take these now fast-moving products away from brokers and give them to our own sales staff? What if brokers no longer will handle our new products because they don’t trust us to let them enjoy the fruits of their having built markets for us when the products are successful? And what if that seriously and adversely impacts our future acquisitions of companies that do use brokers for their products?
The list of what-if questions on each of these decisions goes on and on. I raise these only for suggestive examples of the importance of using this technique for crisis avoidance.
What if I stop here?