Developing an online business: what to do?

We’ve just finished a consultancy report for a client. They wanted us to help them make a decision: should they continue to develop an online business, or should they abandon it? How do you think about a problem like this? Well, using a decision-making framework helps, and for this issue we turned to the PrOACT system.

PrOACT stands for Problem, Objectives, Alternatives, Consequences and Tradeoffs (along with Uncertainty, Risk Tolerance and Linked Decisions). The framework helps you think about all the different aspects of the issue and clarify what a good solution looks like.

What is the problem? What do you have to decide? Are you making assumptions about what you need to solve? Is the real problem bigger, or more narrow?

What are your objectives? How will making this decision move you further forward?

What are the possible alternatives? Too often people see decisions in terms of the choices in front of them. Do I take the job or not? But if the problem is broader — What kind of job do I want? — then many more alternatives are opened up. You can only decide from among the available alternatives.

What are the consequences of each alternative? How well do they meet your objectives? What will happen in the short-term, and the longer-term?

Do you need to make tradeoffs? If you’ve got several objectives, the best alternative may not be obvious. Setting priorities helps you evaluate.

Are there uncertainties in the possible outcomes? What are the likelihoods of each of these?

The PrOACT system is introduced in a book called Smart Choices. The authors explain that quickly considering each area in relation to your problem gives you a sense of where you need to focus.

In the case of our decision, the problem was clear: Do we pour resources into developing this business? The objectives of the project were also straightforward: to make money and to raise profile and goodwill among the organisation’s constituency.

Conversations with the stakeholders started to generate some alternatives. Tradeoffs weren’t an issue, so the key areas were consequences and uncertainties.

This decision was all about resources: time and money. What were the consequences of our various alternatives? To find out we produced a range of cashflow projections, showing (for example) how different levels of activity varied the advertising income.

Uncertainties focused around success: if they chose to go ahead, how likely would the project be to succeed? What affected this success? We identified key issues such as internal leadership and competition, and then explored them.

It’s mostly common sense, but it’s in the nature of common sense that it’s not easy to articulate it. A framework like PrOACT structures your thinking, and ensures that the decision is tackled properly.

Our client received an analysis of the project, along with our recommendation, and are now considering whether to go ahead.