Why You Should Present Multiple Options To Clients - Separated By Risk And Reward
How Great Britain went from 36th to 2nd in the Olympic medal tables and why you should consider presenting options to clients rated by risk and pain involved.
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How A Painful Strategy Drove Great Britain From 36th To 2nd In The Olympic Medal Table
Great strategies always looks obvious in hindsight
At the 1996 Atlanta Olympics, Great Britain finished in 36th place in the Olympic Medal table (just behind North Korea, Algeria, and Ethiopia) with 1 gold medal, 8 silver, and 6 bronze. Since then, performance improved at every subsequent Olympic games from 2000 to 2016.
At the 2016 Olympics, Great Britain ranked second with 27 gold medals, 23 silver, and 17 bronze. That’s a stunning turnaround.
The strategy of UK Sport to achieve this feat was brutal but effective.
First, spending increased four-fold from £37m to £227m (controlling for inflation). All things being equal, the UK should have performed four times-better. But spending surged in most other countries too.
Second, they stopped spreading resources equally amongst all sports. Instead, they selected sports where single great athletes can win multiple medals in the same event (cycling, gymnastics, rowing) and concentrated on them. This often came at the expense of team sports like volleyball, handball, and basketball,
Third, they identified talent at a younger age than before and invested heavily in them.
Fourth, they allocated more resources to sports which showed the most progress over the years. Sports that didn’t achieve success lost their funding (wrestling, table tennis and football). Sports that produced winners received more funding.
This means money that might have been spent on better wrestling gear or table tennis equipment was instead spent on hiring the best nutritionists and state-of-the-art training facilities for cyclists.
All Strategy Involves Risk and Pain
If It Doesn’t, It’s Probably Just Common Sense
The success of UK Sport’s strategy masks just high risky it was.
If the strategy had failed we wouldn’t be sitting here commemorating its genius, but condemning the waste of 10s of millions of pounds on a suicidally risky approach.
Concentrating your resources on a smaller number of sports and athletes within those sports is about as high-stakes as you can get. A couple of injuries at the wrong time of year and you lose everything. If another country produces a freak Michael Phelps in one of those sports, you’re cooked.
While investing resources in sports and people who are demonstrating results seems like an obvious approach in hindsight, it’s not the approach most countries take.
Other countries invest more in the grassroots of sports to get a bigger pipeline of athletes coming through. This increases the odds of superior outliers emerging and gives them more athletes to choose between. Other countries take a diversification approach. They spread resources more evenly across different sports to give themselves more opportunities to be lucky.
It’s also worth noting the pain this strategy caused. When athletes have their funding cut, they don’t go quietly. UK Sports was constantly challenged about its ruthless strategy and endured plenty of criticism for its approach. Even after the success, people question whether it was worthwhile.
And that’s kind of the point….
A great strategy is essentially a set of decisions about where you’re going to invest limited resources to have the biggest impact. And like all investment decisions, there is an element of risk involved. If you’re too conservative, your odds of a spectacular outcome are limited. If you’re too risky, the odds of losing it all are considerable.
When you’re developing a strategy it’s important to identify the risk and pain.
Clients need you to identify the risks, and pain, and formulate the probabilities of success based on the available information.
If there is no risk or pain, you’re probably creating a strategy which is far too close to what the organisation is already doing or is far too conservative to achieve any significant outcome.
A key part of strategic consulting, at least at the independent level, is to get comfortable formulating options and making a recommendation based on a client’s tolerance for risk and endurance of the pain involved.
Formulating Options - Rating By Risk And Pain
I wasn’t in the meeting where the strategy was decided, but I’d like to think that in 1997 UK Sports was presented with (or considered) three options with different risk profiles from extreme to mild such as:
Concentrate resources on a few sports/athletes to maximise odds of achieving success within selected sports.
Diversify funding across many sports to maximise the odds of achieving success in more sports.
Invest more in grassroots to increase the pipeline of athletes to select from.
Those are three pretty distinct approaches for achieving a goal. Now it’s down to the organisation to decide their risk and pain thresholds and make a decision.
This isn’t a million miles from where consultants are expected to present strategic options to a client.
Let’s imagine I hired a consultant to provide advice on how to grow my consultancy practice. The consultant might undertake a bunch of research and present three options.Â
Option 1: Increase our reputation within our existing market. This could be achieved by upgrading our branding, improving social media outreach, and developing more targeted case studies at specific organisations. This is an improvement on what we’re already doing. It’s low cost and low risk. But this means the impact might be limited.
Option 2: Expand the services we offer to our existing market. The consultant might have studied the needs our clients have and suggested offering a design and development service, a data analytics service, or using retainer-based consultancy. We probably need to hire staff with the right skills to offer these services. This is new territory for us - so it would cost more to get going and is riskier. But the potential impact is potentially higher because we are selling entirely new services.
Option 3: Expand to a new market. This option might be to expand our services to customer support and customer success - providing psychology/data-driven suggestions to drive great results. This is high risk. It would take a lot of time and resources to reach an audience who doesn’t know us and earn their trust. We might need to open a regional office in the location and hire new staff in that area. This is the highest-risk, highest-reward option.
This is a simple example, but you get the idea.
You can present just one option if you like, but if you’re working with a client on a strategic direction, it’s usually best to present several options. These options should be rated by their risk level and identify the pain and negative consequences.
You can make a recommendation too if you like but, ultimately, like UK Sport, it’s up to the client to select the risk and pain profile which works for them.
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