Friday, 20 November 2009

Understanding IMPACT of a decision

Probability is the likelihood that a particular outcome will occur.

Impact is the effect that a particular outcome will have if it does occur.

Impacts can be positive or negative.  We call positive impacts 'upsides' and negaive impacts 'downsides'.  A single decision may involve the potential for both upsides and downsides.

Considering impact helps us
  • weigh up different possible outcomes against each other,
  • to assess how bad they will be for the business (if they are downsides), or
  • how much benefit they will realise (if they are upsides).

We can think of impacts as 'hard' and 'soft'. 

'Hard' impacts affect areas of the business such as:

  • financial:  losing or making money; changing profit margins; changes in share price
  • performance:  changes in turnover; changes in business volumes; problems with quality, or improvements; losing or gaining customers; growing the business or seeing it decline
  • business continuity:  whether business operations can continue when problems arise; whether new demands, or peaks in demand, can be met; the availability of business-critical systems
  • individuals and groups:  physical safety; financial status and reward; working conditions; workload; level of responsibility; status and authority; prospect for the future.

'Soft' impacts affect areas of the business including:
  • reputation and brand equity:  how the business, its products or services and its actions in society are perceived in the wider world
  • morale and motivation:  how people feel about working for the business
  • faith in management:  whether people believe in mangement's abilities and vision for the future
  • sense of community:  whether people identify with the business and its aims and fell part of the business's culture
  • social standing:  people's sense of value or relevance to the business; their sense of authority or power.

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