The value of choice
Mark Robinson, Chief Executive at Market Harborough Building Society shares his opinion on why choice is important.
Deciding is hard; there is never enough information and always too much time to reflect how you may have made a bad choice. Just think about the times have we envied our fellow restaurant diner’s plateful.
But decisions must be made – hundreds of them. They form much of the activity in a business; trivial decisions right up to make or break ones.
Being decisive has a lot a macho associations and there is an argument for “just decide” when confronted with a thorny issue where doing nothing is not an option. Dithering just isn’t great.
The idea of options is a good one though. In financial markets “options” have value as they allow value creating choices or limiting losses. In my industry, a variable mortgage which offers you the choice of fixing your rate in the future will cost more than one which doesn’t. Business strategy is about understanding options so that changes in the future allow some flexibility of response.
It’s good in making business decisions to see where options are cheap or free. It can certainly lead to better decisions. An example might help; when putting a single storey extension on your house it makes sense to makes the foundations strong enough to support an extra storey. The extra cost today is modest but the decision gives you wider and lower cost choices in the future. In business the equivalent might be about a lease/buy decision of production machinery or premises where demand for your product is uncertain. A lease might cost more (per month) but gives the option to walk away or buy the asset later depending how things pan out.
The trick is to recognise which decisions close off options and which leave them open. Great businesses really understand this and use it to evolve as markets change.