Optionality

Optionality, the availability of something to be chosen, has made its way into the business world and is a favorite term to be referred to in discussing strategy.  It’s easy to overlook that to maintain optionality, we pay a premium for it.  In many cases, I’ve seen optionality be the enemy of business leaders rather than their friend.  Recently, serial CEO, advisor and my friend Tom King described some of the optionality overuse he has observed in the habits of business leaders he works with. He cautioned that leaders “sometimes spend time and resources on maintaining their optionality rather than having the strength to focus on a few key priorities that will add value to their enterprise.” I was reminded of it recently at BIO in Philadelphia by the ex GC of a large pharma company. “I see too many diluting their focus.  They take on one more business option or product and don’t realize how quickly the resources, time and people, become overwhelmed.”   I’ve noticed a lesson from the creative world, film specifically, where directors will intentionally narrow their options or restrict their playing field, or are already restricted by budget even. In a world that has no pre-defined boundary, much of the creativity in art comes from working within limits.  Some greats will say real creativity won’t happen until you limit choice. For those of us that have led people, a large component of managing change and driving value is not maintaining optionality, it is understanding optionality in an unclear future but also creating focus. On a practical level I’ve looked at it as 

·       Understand as much as possible of your world and accept you can’t know it all

·       Asses the time and resource cost of maintaining your current optionality, i.e. the cost of not choosing

·       Over some chunk of time, it’s your choice, what are the clear things you can do to drive value and which option can you commit to for that time.

·       Focus your resources and if maintaining your other options is robbing you of your ability to add value, the premium is too high

·       Put the alternatives in a parking lot, spin them off to others, but don’t spend your precious time on them

·       Last, be prepared to focus and devote  much more than you realize the time, and effort, and people to prepare to rally around the limitation of choice but stay with it knowing most great results come from choosing a narrow path and not the broad one.