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Choose the decision and uncertainties
Start with a real commitment, such as expansion, hiring or a new offer. Identify the uncertain factors that could materially change its consequences. These might include customer demand, payment timing, supply availability or the pace of implementation. Keep the exercise focused enough to inform an actual choice.
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Build coherent alternatives
Describe a plausible set of conditions for each scenario and explain how they connect. Consider operational and cash consequences as well as sales. Avoid changing every assumption by the same percentage without a reason. Make clear which inputs come from evidence and which are judgement-based testing assumptions.
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Connect each scenario to an action
For each situation, identify early signals, available responses and the time needed to act. Note options that work across several scenarios and commitments that are difficult to reverse. Agree who watches the signals and when the decision will be revisited. A scenario that changes no action may need a clearer purpose.
Use this in your business
A trigger-and-response sheet
- Decision: the commitment being tested.
- Conditions: what changes and why it is plausible.
- Consequence: effects on customers, capacity, cash and people.
- Signal: what you can observe early enough to respond.
- Response: action owner, lead time and review point.
Illustrative example
What this could look like
A business considers adding capacity ahead of expected demand. Test a slower sales ramp and later customer payments together, then identify when the cash position would require a response. The exercise may favour a staged commitment even when the central forecast looks attractive.
Your next move
Bring the decision into focus.
Pivot Point's strategy and decision-framework services provide a relevant starting point for testing a consequential choice. Bring the decision and assumptions you are least comfortable relying on.
Start a conversation Meet the advisory teamThis guide is general preparation information. Advice on legal, tax and financial consequences needs to reflect your circumstances.
Further reading: Business.govt.nz