Cost of an Opportunity
By Ian Richardson, Managing Partner, Richardson & Richardson Consulting
Opportunities are exciting – everyone enjoys a good opportunity. A chance to do something new, the ability to build something, that exciting momentum as the project takes off. Reality however can sing a different tune. What about the cost of an opportunity? What impact can it have on the organization’s finances, human capital, and other efforts?
Sometimes the right thing to do with an opportunity is to say “No.”
Opportunity is Vision
My business partner is a visionary – Carrie’s mind runs a million miles per second, and she’s able to see 50 moves ahead on the chess board. Often, she’s correct about the potential for revenue generation through a particular strategy, tactic, or offering.
She does not however see the operational impacts of her opportunities. Capacity has no meaning in her world – people can simply work harder. Finances are an abstract concept, and infrastructure, process and procedure, technology, and human capital have no place in her opportunity-oriented mindscape.
Many of our conversations end up circling around her being excited to pursue the “next new thing” and myself being stuck in the “drudgery of reality.”
Vision is important: It motivates teams, creates revenue and impact, allows for growth, and generates return for shareholders. It is however important to make sure that your organization’s “eyes” are not bigger than its “stomach” from time to time.
Opportunities need anchors as well as wind in their sails
Properly scoping the cost of an opportunity is a vital part of business health and success. If you have too many open opportunities that you are pursuing, you can create chaos and havoc in your worldview. The impact of too many opportunities being active can be widespread throughout your organization:
- Your team will be confused at best on what their priorities are.
- Your sales team will be ineffective at closing deals because of too much noise in their world view.
- Marketing will never keep up with demand for collateral creation.
- Delivery will suffer because standards and process will not be developed.
- Finance can be strained or overextended
It is important to create anchors through effective scoping on opportunity-oriented visionaries, so they do not overwhelm an organization with their ideas.
What is the cost of an opportunity?
Areas to consider around an opportunity include:
- What teams will be involved in pursuing this opportunity?
- What is the human capital required from each team?
- Who will be accountable for ensuring that their team delivers on the opportunities needs?
- What is the target market for this opportunity?
- What pain points, situations, or dynamics lead to your opportunity being valid for a prospect?
- What resources will your team need to expend to recognize or assess the above list?
- What finances are needed to pursue this opportunity?
- What one-time costs are involved in the opportunity?
- What ongoing costs are involved in the opportunity?
- Are there licensing, regulatory, or legal costs involved in the opportunity?
- What items need to be forgone to allow for this opportunity to be pursued?
- Are there current offerings that are in direct conflict with this opportunity?
- What does the competitive landscape look like this with opportunity?
- What is the managerial overhead needed for this opportunity?
- KPIs? Metrics? Process, Procedure, Policy requirements?
- How will the opportunity be documented? In what systems?
As you can see – there are a lot of questions that come up with opportunities. These questions need not lead you and your team to saying “No” to opportunities. Many times, the answer becomes “soon”, “next quarter”, “let’s get more information together” or some other variation of the same. (See our blogs about the IDEA DRAWER, as well as the Opportunity Strategy Checklist for more on this topic) Making sure that you have a proper assessment of costs for an opportunity will lead to better outcomes for your organization and client base.
If you’re struggling to evaluate which opportunities to pursue or get your team onboard with the need to do so, Richardson & Richardson can help. Check out our case studies for stories of organizations that we’ve assisted with similar issues and download our white papers for deep dives on tools you can use in your organization. If you’re wondering where to start, book a complimentary session with one of the Richardsons today to come up with a plan on how to move forward.
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