Opportunity exploitation — the positive side of risk treatment
Opportunity exploitation plans
The IMS-Smart approach to opportunity exploitation makes use of the time theory by relating opportunities to benefits through a series of Opportunity Exploitation Plans (OEPs). The objective of creating the OEP is to identify the sprites that we need and how they are to work together in concert to increase reward towards and over some threshold or target level. A sprite is a measure, plan or course of action taken to exploit an opportunity and is the counterpart of a control, which is a measure taken to modify risk. There are three types of sprite:
In practice, opportunities and benefits form sequences, where the benefit resulting from one opportunity can be reconsidered as the triggering opportunity for one or more consequential benefits.
We formally define a benefit a happening that results in an increase in the value of an organisation or the quality of life. Often value is measured in terms of money, but other dimensions can be used such as reputation.
Examples of benefits are:
Some of these often feature as the primary benefits of an OEP, whereas others feature as consequential benefits. It is therefore possible to produce sequences of OEPs where the benefit of one becomes the triggering opportunity of another.
An opportunity is a happening that is a pre-requisite for the occurrence of a benefit.
As an example, study of sales and marketing literature indicates that there three related opportunity families, or sets, that form a cycle where the benefits of one form the triggering opportunities of the next. They are:
In the first case, market presence prepares the way for an organisation to sell its products by creating product awareness. Sprites include well known sales techniques such as advertising and networking, but also strategies concerning market positioning. In the second case, enquiry initiates the process of making a sale, and once won it is actually the process of product delivery that reaps the benefits of increased revenue and favourable customer perceptions. Both feedback to the market presence opportunity increasing market presence through the acceptability of the product and through increased revenue that may generate new and improved products to sell.
Provided we use appropriate scales, reward can be expressed as the product of the frequency or likelihood (FoL) of the occurrence of a benefit and the value (Val) of the benefit, i.e.
Reward = FoL * Val
It is convenient to use logarithmic scales so that the level of reward can be expressed as the sum of the individual levels of FoL and Val.
The units of FoL are reciprocal time (time-1) while the units of Val are either money, or some other tangible asset. Units may also be some other parameter such as reputation.
Note that exploitation sprites act to increase the frequency or likelihood (FoL) of the occurrence of a benefit, whereas harvest sprites act to increase the value (Val) of the benefit. Creative sprites act to increase reward, i.e., both FoL and Val.
Although calculations of reward should have no upper or lower bounds it is convenient to express reward in a graphical form on a five or seven point scale. Examples of five point scales for FoL and Val are:
Inherent, potential and target rewards
The inherent reward is the reward that exists in the absence of any sprites. Potential reward is the reward that should result once the applicable sprites are deployed. The potential reward risk is deemed to be satisfactory if it is greater than or equal to the target value that should be defined by the organisation as a matter of policy.
It is possible, either during the course of developing the OEP, or at some other time to discover that the actual reward is unsatisfactory. For example management accounts may reveal that the sprites are wanting in practice and that you are failing to meet your anticipated targets. Action must be taken, and it is prudent to decide what that action should be prior to its occurrence. It would also be appropriate to consider such an eventuality as a risk and therefore deal with such actions through a RTP.
IMS-Smart has a standard way to lay out OEPs. Each considers an opportunity set and their corresponding primary benefits (as described above) . Each opportunity set is often broken down into sets of sub-opportunities, referred to as opportunity-circumstances. Thus for market presence the opportunity-circumstances might include: (a) launch of a new product; (b) participation in conferences, conventions and exhibitions; (c) working with partners and (d) participation in the standards and regulatory making processes.
Each OEP then (in order):
Tell it like a story
The identification of sprites and opportunity exploitation is presented in the form of a "story". An example, taken from a Market Presence OEP is:
A design tool
Thus, each OEP presents the overall design of a suite of sprites, showing how the individual sprites work together to create or otherwise detect an opportunity and exploit and harvest it to its full potential. Thus, each OEP constitutes a design for increasing reward towards and above a target level.
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|Page last updated: April 28, 2021|