The science of strategy: Keeping the well wet

Let’s talk about science, or more specifically, your psyche. Yes, this blog that is generally about finance is pivoting for just a moment, but bear with me, we’ll get back to your regularly scheduled reading shortly.

Does your institution have a strategy? Of course it does. No one would run a business without one. Does your institution have a strategy for crisis? Maybe. Have you ever wondered what makes a good plan and how you arrived at the decision? Did you look outside the box or follow someone else’s lead? Analyzing the psychological foundations of business strategies is not a new concept, but probably one that’s not really thought about. Giovanni Gavetti, an associate professor of strategy at Tuck School of Business at Dartmouth College, says that it’s the opportunities that are “cognitively distant” from one’s typical experience that are most potentially rewarding, and that companies tend to gravitate toward only a few profitable opportunities, which can quickly “dry up the well.”

Lesson to be learned: Expand your resources

With that in mind, let’s get back to finance.

Lesson #1: Fraud is expensive

 ‘Liquidity crisis’ (did you guess the term?) seems to keep popping up. And rightfully so. Between inflation, fluctuating interest rates, a possible recession, and the economy overall, financial institutions have a right to be concerned about keeping up with consumer demand. What are you doing to mitigate these risks? Maybe our lesson from above already has you thinking.


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