Visible options

Abstract

Purpose

Evaluating the potential payoff of an individual project in a portfolio, especially an innovative product development initiative, is a chronic problem with no satisfying solution. Because the commonly used tools to measure such opportunities provide limited insights, executives need better decision support technology.

Design/methodology/approach

Executives making difficult portfolio funding decisions must answer such questions as which of their projects seem to be most promising, whether they should act now or bide their time, and how much they should pay to stay in the game.

Findings

Executives can use the visible options approach to manage initiatives by taking the following steps: review the composition of the project portfolio; crosscheck the announced initiatives with the company's future value; don't leave upside‐intensive initiatives on the back burner; and use failure‐avoiding management to limit downside risk.

Research limitations/implications

The visual options method has yet to be extensively field‐tested and researchers need to collect feedback from early adopters.

Practical implications

Using visual options techniques, executives can scan a set of initiatives and quickly spot projects inspired by opportunities and those developed in response to threats; the projects with big potential future outcomes and those that have only modest prospects. They can now see urgent opportunities with windows that are closing rapidly as well as the proximate threats that are often easier to recognize.

Originality/value

First full description of the visible options technique. A visible options tool that displays the potential benefits of projects more graphically and gives a more complete picture of possible results over time could help managers make more effective decisions.

Citation

Linder, J.C. (2005), "Visible options", Strategy & Leadership, Vol. 33 No. 5, pp. 24-30. https://doi.org/10.1108/10878570510616852