The price of regret

I learnt a new term at lunch the other day: regret cost. Apparently this is the cost incurred to re-platform or replace a tactical solution when it can no longer scale to support current demand. If we’d just built the big one in the first place, then we wouldn’t need to write of the investment in the tactical solution. An investment we now regret, apparently.

This attitude completely misses the point. The art of business is not to take the time to make a perfect decision, but to make a timely decision and make it work. Business opportunities are often only accessible in a narrow time window. If we miss the window then we can’t harvest the opportunity, and we might as well have not bothered.

Building the big, scalable perfect solution in the first place might be more efficient from an engineering point of view.  However, if we make the delivery effort so large that we miss the window of opportunity, then we’ve just killed any chance of helping the business to capitalise on the opportunity. IT has positioned itself as department that says no, which does little to support a productive relationship with the business.

Size the solution to match the business opportunity, and accept that there may need to be some rework in the future. Make the potential need for rework clear to the business so that there are no surprises. Don’t use potential rework in the future as a reason to do nothing. Or to force approval of a strategic infrastructure project which will deliver sometime in the distant future, a future which may never come.

While rework is annoying and, in an ideal world, a cost to be avoided, sometimes the right thing to do is to build tactical solution that will need to be replaced. After all, the driver to replacing it is the value it’s generating for the business. What is there to regret? That we helped the business be successful? Or that we’re about to help the business be even more successful?

Posted via email from PEG @ Posterous

Posted under: Business-Technology, Strategy

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11 comments

  • Rod Hamilton on 2009-11-25 at 10:35 pm said:

    Completely agree… And one might say that the 'regret cost' of doing something tactical and it not working is a lot smaller than the 'regret cost' of spending truck loads of time and money only to find that the idea was never going to work anyway…

  • Peter Evans-Greenwood on 2009-11-26 at 5:49 am said:

    You've picked up on what seems to be a common pattern at the moment: people and teams with such a great fear that major initiative won't deliver that they're terrified into inaction, spending their time in endless workshops and requirements gathering.

  • Nigel Walsh on 2009-11-26 at 1:14 pm said:

    what about the cost of doing nothing at all?. This is madness.. Nothing stands still, tactical solutions have their place in almost any problem in business and life. If we all strive for the perfect answer/solution – it assumes that the problem wont change either. Its simply unrealistic. Isn't speed to market & agility important?

  • Peter Evans-Greenwood on 2009-11-26 at 4:17 pm said:

    I see it as a hangover from old school IT, where every problem was/is approached as a major engineering challenge. This used to be the right attitude, however the pace of business (and IT) has accelerated to the point that (as you point out) speed and agility to market are often more important than getting it right. Changing world views takes a long time.

  • Nigel Walsh on 2009-11-26 at 6:14 pm said:

    what about the cost of doing nothing at all?. This is madness.. Nothing stands still, tactical solutions have their place in almost any problem in business and life. If we all strive for the perfect answer/solution – it assumes that the problem wont change either. Its simply unrealistic. Isn't speed to market & agility important?

  • Peter Evans-Greenwood on 2009-11-26 at 9:17 pm said:

    I see it as a hangover from old school IT, where every problem was/is approached as a major engineering challenge. This used to be the right attitude, however the pace of business (and IT) has accelerated to the point that (as you point out) speed and agility to market are often more important than getting it right. Changing world views takes a long time.

  • andymulholland on 2010-01-18 at 7:33 am said:

    my own recipe to be a successful CIO is to have a hidden strategy with tactical delivery. Why hidden? because the board will not be interested or even understand it, so it must be achieved through tactical moves against immediate pressures and budgets.

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