Black Friday and Crossing the Risk Threshold

Posted by Leonard Fuld on Nov 27, 2013 4:00:00 PM

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Even as a little kid, I remember my father anxiously looking toward Black Friday (the day after America’s Thanksgiving holiday) and onto the end of the holiday season as the time his store made a large chunk of its profits for the year. Looking at my father, I saw someone who worried about this make-it-or-break-it time each November and December. A similar kind of threshold exists for those pursuing competitive knowledge but instead of a profit line it’s a risk line, the point after which you feel you have enough information to feel comfortable with your particular strategic or tactical decision. Maybe if he had Excel back then and could easily do a year-to-year comparison that exercise might have eased the worry a bit. But he was the co-owner of a small jewelry store and had all he could do to keep his customers happy and the store operating effectively.

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Unlike Black Friday, though, this risk-comfort line is very much relative and not fixed to a particular calendar date.  For some corporate executives this line is very movable but maybe at the very far end of someone else’s comfort zone. In other words, some individuals can work with very little information to arrive at a conclusion, a decision with far less information than their counterparts.

All companies and all managements have their Black Friday risk-comfort thresholds. What makes these supposed market risks less threatening is worrying you have too little information when you may not. Indeed, the fear of what you don’t know can push the fear ahead of the reality. Certainly there are competitive threats and rivals that want your market share but very often knowing just enough information will allow you to make decisions far sooner than you otherwise expect. Trying to achieve “information perfection” by a cautious management does very little to allay the fear. Delaying that decision in hopes you will acquire more supporting evidence at times may be warranted but from my experience only exacerbates the fear and exaggerates the risk.

Here’s a final confession: No one in my family could truly lessen my father’s Black Friday anxiety. We could offer some consolation or assurances and that was all. Companies are merely extensions of the people who manage them. The big difference is that modern management does have many tools to mitigate this risk-comfort stress. Today’s management has the Internet, filled with useful insights. Many B2C or B2B firms have data mining technology (now listed under the label of Big Data) from which it can analyze a customer’s likely behavior and buying patterns. In addition, today’s corporation can use instant communication to dispatch its staff to ask questions on the ground, questions whose answers will shed light on those dark rumors. Use these tools to improve your knowledge and reduce Black Friday fears.

Topics: Consumer Goods, Brand Insights, Scenario Analysis

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