Breaking point

For a given option, the condition whose disappearance makes the option untenable: a level of activity, a date, a client, a person, a price. Every real option is described with its own.

What it changes for the executive

A decision that does not know its breaking points cannot be monitored; it will be defended by inertia until reality decides. Naming them before deciding is what allows revising later without losing face: one was not wrong, one reached the point one had set.

Example

Entering a neighbouring market has as its breaking point the number of clients signed at twelve months; a hire conditional on the renewal of the first client has as its breaking point the date of that renewal.

The kind of decision

Investing and setting direction

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