A possibility is essentially a happy story that describes how a firm might succeed. Each story lays out where the company plays in its market and how it wins there. It should have internally consistent logic, but it need not be proved at this point. As long as we can imagine that it could be valid, it makes the cut. Characterizing possibilities as

Step 6: Conduct the Tests

Talented executives can grow market share and sales, increase margins, and use capital more efficiently, but no matter how good they are, they can’t increase shareholder value if expectations get out of line with reality. The harder a CEO is pushed to increase shareholder value, the more the CEO will be tempted to make moves that actually hurt the

When each member of the group has had a chance to add conditions to the list, the facilitator should read the list aloud and ask the group, “If all these conditions were true, would you advocate for and support this choice?” If everyone says yes, it’s time to move to the next step. If any members say no, they must be asked, “What additional

If anyone persists with a critique, the leader should require him to reframe it as a condition and table it for discussion in the next step. For example, the critique “Customers will never accept differential pricing” becomes the condition “This possibility requires that customers accept differential pricing.”

I find it useful to include individuals who did not create, and therefore are not emotionally bound to, the status quo. This usually implies that promising junior executives will participate. I also find that individuals from outside the firm, preferably outside the industry, often lend the most original ideas. Finally, I believe it’s crucial to

With the possibilities-based approach, the choice-making step becomes simple, even anticlimactic. The group needs only to review the analytical test results and choose the possibility that faces the fewest serious barriers.

managers in the layer above have got to start treating the people below them as customers—understanding their lives and needs, stepping into their shoes. That

The dominant model makes business planning equivalent to strategy-making. The trouble with this is that planning is more about managing risks and becoming comfortable with them than about assuming them. A more effective model distinguishes strategy development as a process of choosing goals and risks rather than one in which you seek to control