Opportunity exploitation — the positive side of risk treatment
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  “IMS-Smart is indeed a product of the 21st Century”, as an ISO/IEC 27001/ISO 9001 assessor said at the conclusion of an initial audit in 2008
 

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:

  • Creative sprites (the OEP equivalent of a control) act to create the opportunity.
  • Exploitation sprites respond to the occurrence of the opportunity and seek to reap the corresponding benefit(s).
  • Should exploitation prove successful, harvest sprites claim and utilise the benefit.

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.

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:

  • Beneficial environment
  • Contract won
  • Favourable customer perceptions
  • Improved quality of life
  • Increased revenue
  • Market influences customers in our favour
  • New products
  • Product improvements

Some of these often feature as the primary consequences of a RTP, whereas others feature as consequential benefits. It is therefore possible to produce sequences of OEPs where the benefit of won becomes the triggering opportunity of another.

Opportunities

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:

  • Market presence
  • Enquiry
  • Product delivery

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.

Reward

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:

 
Scale value
Frequency or likelihood Value
5
Several times a day or more Tremendously advantageous to the organisation, leading to major increases in profitability, market share, share price and efficiency
4
Once every 2-3 days Advantageous to the smooth operations of the organisation, with significant increase of profitability, market share, share price or efficiency
3
Once a month Noteworthy increase of profitability, market share, share price or reduction of costs
2
Once a year Small increase of profitability, market share, share price or reduction of costs
1
Once a decade or more Negligible increase of profitability, market share, share price or reduction of costs

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.

OEP layout

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):

  • Identifies the assets and their strengths that may be employed in exploiting the opportunity;
  • Identifies the benefits that may be gained should the opportunity be successfully exploited;
  • Identifies the facilitators that may play a role in exploiting the opportunity;
  • Identifies the risks may that the organisation may be exposed to when attempting to exploit the opportunity, with reference to an appropriate RTP;
  • Estimates the FoL of the opportunity-circumstance and the value of the resultant benefit in the absence of any sprites;
  • Excludes opportunity-circumstances for which there are unacceptable risks, or for which the rewards are too small, and are therefore to be deliberately avoided;
  • Excludes opportunity-circumstances which will automatically yield an acceptable reward without deployment of any sprite;
  • Identifies the applicable sprites that we consider necessary to increase the reward towards and in excess of the target level;
  • Determines the effect that these applicable sprites have on modifying the FoL of the benefit and/or the value of the benefit (which is, of course, the potential reward).

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:

As soon as we have a new product, we need to advertise it as fast and as wide as possible, not only to draw attention to it but to get it into the minds of our customers and ideally be first in the market (making sure, of course, that we are the first and that the category is not already claimed). This means being particularly careful about what we call our products, and knowing where they are on the ladder.

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.