Your R&D team has come up with an awesome prototype for a widget that has more bells and whistles than the iPhone—and can also do your grocery shopping and pick up the kids at school. Won’t everyone want one? Of course they will! But developing the widget will cost a great deal of money, marketing and distribution will be challenging, and of course you’ve got some pretty stiff competition. It’s a great widget, but should you move forward with full scale development and production?
You just heard from one of your account reps that there’s a terrific opportunity for your company to respond to a Request for Proposal from a major client. The project is huge, the budget is equally impressive—and the work is right up your alley. Of course, you’d need to do some significant research in order to present a credible proposal, and if you won you’d need to ramp up staff and resources. Naturally, you want to respond to the RFP, and you want to put your best foot forward! Or do you?
These sorts of situations are what make management interesting—and they’re also the reason why you make the big bucks. While your creative staff, sales force, and account reps have focused goals, you have to look at the big picture. Of course R&D wants to move forward with their pet project, and naturally your marketing and sales force want to land a big account. But you need to determine, with their involvement, whether this particular project is really in the best interests of the business in the short and long term.
In other words, while it would be awesome to just go with your gut (and many managers do!), you’ll need to review your resources, crunch some numbers, think through the process, and make a go/no-go decision.
Saying “yes” just because the project sounds exciting, because it will please a colleague, or because the opportunity seems too good to pass up can lead to disaster—instead follow a considered process.
When Do You Need a Go/No-Go Analysis?
Not every question requires a go/no-go analysis. Should you hire someone to replace the critically important office manager who is moving across the country to be closer to his family? Obviously, the answer is yes; you need someone in that position as soon as possible. Is it a good idea to go ahead with a project that’s underfunded and outside of your business expertise? Of course not! You don’t need a full-scale analysis to know when something is obviously a go or a no-go.
So when do you need a go/no-go analysis? Here are some of the criteria that make analysis worthwhile:
- You don’t have all the information you need to make an intelligent decision, and an analysis will help as a process of researching and collecting that information.
- The project involves multiple departments and/or collaboration with outside organizations, and you need to think through the impact this project may have on relationships, resources, and other factors.
- There are many different ways to approach this project, and it’s difficult to decide whether to go ahead until you’ve thought through some of the options.
- There are strong feelings about this project (pro, con, or both), and you want to be sure you’ve carefully (and transparently) analyzed the opportunity before making a decision.
- There are significant risks and opportunities associated with this project (e.g., you might make or lose a great deal of money or important relationships), and you want to be sure you’ve gone through a thorough process of analysis before moving forward or staying put.
In other words, as you’ve probably realized by now, go/no-go analysis can help you to make smart decisions—but there’s more to it. A formal, inclusive, go/no-go analysis can promote buy-in from other members of your team and your business, and can ensure that you are making your decision based on input from all stakeholders.
In the long run, your goal as a manager is not only to make smart decisions, but also to maintain a strong, cohesive team. If you’re evaluating a project that someone (or some group) within your organization has championed, you’ll need that group’s support to maintain morale should the evaluation reveal serious problems.
As author Bernie Siben notes in an article on go/no-go evaluation in the journal Civil and Instructional Engineer, “A proper Go/No Go evaluation, especially if required of and enforced by the firm's most senior staff, can help the decision-maker say "no" when "no" is the correct answer. The process can also help to ensure that no opportunity that might be viable is missed due to a collection of incorrect assumptions or a lack of consideration.”
The Nuts and Bolts of Go/No Go Decision-Making
The basic process for conducting a go/no-go evaluation includes the following basic steps:
Step 1: Put Together Information
What are the parameters of the project or proposal you are considering? The more information you have, the better your decision will be. At the very least, you need to understand the costs involved, the project timeframe, the resources required, and the outcomes expected.
Step 2: Gather Stakeholders
In a go/no-go situation, it’s important to gather not only those people with the knowledge required to think through potential risks and benefits, but also those people who stand to gain or lose based on your decision. In other words, yes, you should involve someone with the financial savvy to think through potential financial risks and opportunities—but you should also involve the person (or people) who originated the idea, even if they are not number crunchers.
Step 3: Determine the Factors to Be Considered
Every project is unique, and the factors you consider must match the project under consideration. Bottom line financial risks and benefits are always important, but it may also be important to consider intangible outcomes such as stronger or weaker relationships with others in your field, new opportunities that could arise through the process of completing the project, and so forth.
Step 4: Brainstorming
Using tools such as a decision-making matrix or a decision tree, your group can think through the risks and opportunities associated with the project.
Step 5: Analysis
Once your brainstorming is completed, it’s likely that you will have little trouble in analyzing the outcome. Often, it's clear that a project really is, or is not, the best choice at the present time.
Step 6: Decision Making
While the buck most likely will stop with you, the manager, it makes good sense to work toward developing consensus on a go/no-go decision. Often, a no-go decision can be couched in “not yet,” “not this time,” or “not under these circumstances” terms which allow stakeholders to leave the table feeling that their ideas have been heard and respected.
Brainstorming With the Decision-Making Matrix
There are many tools available for brainstorming and thinking through a problem, but for a go/no-go decision the decision-making matrix is an ideal choice. The matrix is a terrific tool for looking at positive, neutral, and negative aspects of the factors you’ve chosen to consider; the decision tree can help you to think through the outcomes of yes or no decisions.
The matrix is a table which lists your criteria from top to bottom, and provides spaces for positive, negative, and neutral analysis along the top. As a group, you fill in the blanks to the best of your ability. If necessary, you may need to do additional research before completing the matrix.
For example, imagine your team has been presented with the opportunity to respond to a request for proposal for a large consulting project. There’s lots of excitement about the proposal, but it’s a big undertaking and you want to be sure the effort matches the opportunity. You’ve assembled your team of stakeholders, and decided to consider the following factors:
- Do we have the resources and time to put out the proposal?
- Is the project in our area of expertise?
- Is the project profitable enough for us, based on its budget and fees?
- Would the project present a possibility to expand our expertise or market?
- Is the cost to develop our proposal reasonable, relative to our odds of winning the project?
- How well do we know the client’s needs and preferences?
- Is our competition better prepared or better connected than we are, relative to this project and/or client?
- Do we have the internal or outsource resources to pull this project off effectively?
- Does this project really fit our corporate strategy and goals?
- How would our present clients react if we took on this project?
- What are our odds of winning the project?
- Is the project’s funding certain?
To create your matrix, you start by listing these questions from top to bottom along the left side of the table. Next, you create column headings—Go, No-Go, Options Score. Talk through each of the questions in turn with the group, filling in the table as you go with summaries of your brainstorming process.
For example, when answering the question “Do we have the internal or outsource resources to pull this project off effectively? Your group might determine that, on the positive side, you have many of the skills needed, but on the negative side you are missing key areas of expertise. Your options, therefore, involve sourcing and pricing additional personnel to fill out a project team. Your score (often presented as 1-5) might be a 3: you have about half the expertise you need to successfully compete for this project.
Once you and your group have gone through the process of filling out the matrix, add up your scores to see whether you are in the Go or No-Go range. It may become obvious, once you review your score, whether to move forward or stay put. It may also the be a case that you’ll have discovered a number of options that will allow you to prepare more fully for this or a similar opportunity in the future.
Go/No-Go Decision Making in the Real World
What are the possible outcomes of going with your gut on an important go/no-go decision? It’s certainly possible that, if you have enough experience and knowledge (and luck!) you’ll make a great gut decision with terrific outcomes. But lacking extraordinary insight (or luck), the downsides are fairly daunting. Those downsides include:
- Wasting valuable time, money, and resources on a proposal or project that had no realistic chance of success.
- Saying “no” to a really
exciting opportunity, thus losing out on income and prestige while also
losing the support and respect of co-workers.
- Undermining your firm’s ability to keep up with the needs of existing clients, thus risking ongoing and valued relationships.
- Setting up your company for a public failure, thus undermining your company’s credibility (not to mention your own).
Depending upon your business, you even have the potential to unnecessarily put human beings at risk with a bad “no” or “no-go” decision. For example, going ahead on a transportation, safety, or health project for which you were not fully prepared could have dire consequences.
Because of the importance of go/no-go decision making, many companies (particularly in the fields of engineering and health) build go/no-go decision making into various aspects of their daily business. Not surprisingly, another industry that makes extensive use of go/no-go analysis is mining. In the mining field, a great deal of money must be spent on locating and assessing potential mines, and, of course, there are huge capital expenses and safety/health concerns connected with the actual mining process. Should the company go ahead with a mining project, given so many potential risks?
In 2011, the Rio Tinto mining company of Australia used a complex and detailed matrix to analyze the relative merits of opening up a new iron mine. In their case, the factors included such issues as the type and quantity of ore available, the proximity of bodies of water to the mine, the hazards involved with the actual mining procedure, and more. The paper they produced was titled “Risk of Catastrophic Consequence.” As you might imagine, mining companies tend to be conservative when scoring relative risk, and thus the level of hazard and risk related to undertaking a new mining project is often scored very high.
What Go/No-Go Means to You
While you may not be in a life-and-death decision making situation, your go/no go decision may well have a large impact on the wellbeing of your firm. That being the case, it’s worth your while to take time to analyze the pros and cons of moving forward with a complex or demanding project.
It’s true that you may hear grumbles about your unwillingness to “just do it,” and you may need to cope with criticism. In the long run, however, you know you’ve made the best decision possible with the information available. If something should go wrong, you have the very important knowledge that you covered your bases—the decision was not capricious, nor was it made in isolation from your team.