2. Commercial decisions involve trade-offs

“Well that wasn’t very nice!” The participant exclaimed.

And it wasn’t. It was the start of the simulation and most teams chose to release valuable cash tied up in inventory. The problem was that this either involved cutting production so their unit costs went up and margins were squeezed. Or they could instead reduce price to stimulate demand… which would also reduce margins. Alternatively, they might prioritise margins, but forgo the cash they would probably want.

 

There wasn't a perfect answer. It was a choice between a handful of options which all came with problems attached.

 

We've seen teams wrestle with decisions like this on every programme. Commercial decisions rarely come with obvious right answers. More often, they involve balancing competing priorities, each with their own advantages and disadvantages.