Unlocking Opportunities for Growth : How to Profit from Uncertainty While Limiting Your Risk

by van Putten, Alexander B.; MacMillan, Ian C.

• ISBN13: 9780132237901
• ISBN10: 0132237903
• Edition: 1st
• Format: Hardcover
• Copyright: 2009-01-01
• Publisher: Pearson Prentice Hall

Summary

"This book is a must for any Business Development Manager, Corporate Strategist, R&D Director, and anyone else who is accountable for growth in a corporation. It is an easy read that is practical and not fraught with useless academic theories." Ron Pierantozzi,Ph.D., CEO of PPT Research and Former Director, Business Development, Air Products & Chemicals, Inc. A Breakthrough Approach to Investing in Business Innovation Most companies analyze investments using tools that bias them against real innovation and lead them to avoid their best opportunities. This book introduces a breakthrough alternative:Opportunity Engineering. Drawing upon recent advances in financial analysis, but without requiring a lot of math, the authors show how to engineer the risk out of uncertain opportunities so you can pursue more high-payoff innovations. Yours"ll learn how to escape from the "go/no-go vise" and implement more flexible decision-making that considersallthe business alternatives, models, and opportunities associated with each project. Yours"ll learn how to systematically structure high-potential projects to limit downside exposure and boost your potential upside. The authors show how to define the scope of investment opportunities, identify key drivers of potential profits, document assumptions, design out major risks, and tease out key challenges and vulnerabilities. Using these techniques, you can escape the mindset that limits you to low-impact innovations and begin pursuing serious growth opportunities--and make business uncertainty workforyou,notagainst you. Why companies avoid their best opportunities for innovation Getting past risk-averse analysis that snuffs out experimentation and innovation Systematically engineering your opportunities Capturing the upside, slicing out the downside Beyond rigid "go/no-go" decisions How flexible, staged innovation creates more opportunities for delivering value Constructing an engineered growth portfolio of innovation investments Optimizing your mix of core-enhancing investments and high potential "long shots"

Table of Contents

About the Authors	p. xi
Foreword	p. xiii
Breaking the Go/No Go Vise Grip on Innovative Growth	p. 1
Making Uncertainty Work for You	p. 3
Managing Uncertainty	p. 5
NPV and DCF: When and When Not to Use Them	p. 6
The Opportunity Engineering Process	p. 9
Illustrative Case Study 1: Entering a Foreign Market	p. 9
Illustrative Case Study 2: New Production Process	p. 14
Another Source of Engineered Value: Trade or Sale of Uncertain Assets for Cash or Equity in Other Assets	p. 18
How to Engineer Opportunities: Stage I: DDP	p. 21
Framing Your Challenges and Your Key Vulnerabilities	p. 21
Ergonomic Desk Project	p. 21
More on the Consumption Chain	p. 36
How to Engineer Opportunities: Stage II: CheckPointing	p. 41
Structuring Your Approach to Ramping Up Your Reach and Eradicating Your Risk	p. 41
Identifying Engineering Opportunities to Increase Reach and Reduce Risk	p. 43
Office Desk Revisited	p. 45
Case 2: Opportunity Engineering Charting: Tasmanian Devil Project	p. 60
Creating an Engineered Growth Portfolio	p. 71
Building an Engineered Growth Portfolio	p. 73
New Product Opportunities	p. 75
New Market Opportunities	p. 77
Long-Reach Opportunities	p. 80
Growth Pathways	p. 82
Core Enhancements	p. 84
How to Use the Engineered Growth Portfolio	p. 86
Plotting Projects in the Engineered Growth Portfolio	p. 90
Applying Opportunity Engineering Throughout Your Business	p. 95
Joint Ventures, Licenses, and Alliances	p. 95
Ramping Up the Complexity	p. 98
Scenario Planning	p. 100
Mergers and Acquisitions	p. 103
Entering New Markets	p. 112
Opportunity Engineering in Major Contract Negotiations	p. 114
Strategic Planning under Uncertainty	p. 119
Managing Not-for-Profit Projects	p. 120
Project Valuation Using EVS Software	p. 123
R&D Project Example	p. 124
Valuing "What If" Future Events	p. 135
Other EVS Functions	p. 137
Cumulative Mass Function of EV	p. 137
More Complex Projects	p. 140
The Underpinnings of the EVS Software	p. 143
Notes: EVS Formulation	p. 147
Bibliography	p. 149
Index	p. 155
Table of Contents provided by Ingram. All Rights Reserved.

Excerpts

Foreword ForewordThe book you are holding is deliberately as short as we could make it because we assume our readers are busy and do not have much time to read. Instead of a longwinded discourse, you want results and to grow the top line. Despite its brevity, we hope we get the point across that you can engineer the financial returns of business investments much as you can engineer a product. Using the concepts of Opportunity Engineering (OE), you no longer need to accept the outcome of investments in R&D, M&A, new markets, new products, and strategic plans, as being largely the hand you are dealt. Instead, OE allows you to stack the deck in your favor, by limiting the downside while letting the upside run. The OE methodology is simple to use, yet disciplined, which makes it an effective management tool. This book is intended for both general and financial managers. General managers will find in it new ways of planning and directing business investments that creates maximum returns with reduced risk. The result will be a more agile organization that embraces change through true innovation. The OE concepts are as much, if not more, about a mindset and a culture than numbers. The financial manager will find a new way to look at uncertain investments through the updated valuation techniques found in OE that foster more effective management. We welcome your comments, questions, and suggestions, so feel free to get in touch: [e-mail] . Copyright Pearson Education. All rights reserved.