But that�s also a bit of a problem; sometimes the most promising projects with long-term strategic implications are exactly those that are impossible to quantify.
Take Intel�s invention of the microprocessor. In the early days, when they were working on and (quite heavily) investing in it, did they have a business plan, a net present value calculation and a payback time? Heck no. They didn�t even know what they were going to use them for � they had no sense of a potential explanation (dreaming of sticking them into handheld calculators and lamp-posts) till IBM showed up and worked hard to convince them that putting the darn things in their PCs really had a future.
Would microprocessors ever have seen the light of day in that firm if Intel�s management had insisted on a �payback time� calculation? Nope, we�d still be using an abacus if they had (ok, now I may be exaggerating) and Intel would never have been the mega-success as we know it now (not exaggerating).
So why do we so incessantly insist on producing numbers if we�re talking strategy? Genuine strategy, by definition, deals with long-term issues, uncertainty and ambiguity. Hence, numbers don�t work very well; they are unreliable, potentially misleading and sometimes sheer impossible to produce in such a situation.
And I guess that is exactly why we/companies are so eager to see them. The long-term, uncertain aspects of strategic investment decisions make us rather insecure whether we�d be doing the right thing; therefore, we really really would like to see some numbers to lull ourselves into the belief that we�ve been thorough and have uncovered the facts and have a solid basis on which we�re accepting or rejecting the proposed course of action. Of course that�s just make-belief (you can make numbers say whatever you want them to say) and may make you quite myopic; missing the things that are difficult to quantify but much more important.
Am I propagating that we should get rid of numbers in strategy altogether? Heck no; forcing yourself to go through some sort of quantifying exercise can sometimes make you uncover and realise things that you hadn�t thought of before. But subsequently you should do what Tony Cohen, CEO of Fremantle Media, told me he always does when they�ve made financial calculations regarding new television production proposals: �Once we�ve carefully and painstakingly produced all the numbers we toss them aside and sort of make a decision based on our gut feel and experience�.
Numbers in strategy may form one (minor) input into your decision-making, but don�t mistake them for the real thing: make them, but then toss them aside and use your judgement and common sense.
