Strategy Dynamics Briefing 70: Basing decisions on direct effects

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Briefings 68 and 69 showed the dangers of decision-rules based on simple ratios or on overall performance outcomes. For the consumer brand’s marketing-spend decision from recent Briefings, for example, either “Spend x% of revenue on marketing”, or “If profits fall, spend less/more on marketing”.

So what do we need instead? Well, the basic problem is that neither of these approaches focuses on the direct consequences of the decision – winning customers! So a decision on marketing spend should surely respond ...

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