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No, nene, no. "No plans" means exactly "by chance". Bad plans can do considerably worse than chance. What organizations need to learn how to do (and unfortuna
by thanatropism 11y ago
No, nene, no.
"No plans" means exactly "by chance". Bad plans can do considerably worse than chance.
What organizations need to learn how to do (and unfortunately to this day Excel isn't particularly enabling) is sensitivity analysis.
One of my corporate parlor tricks is to render valuation spreadsheets (which are typically cashflows dependent on scenario parameters) into Matlab and giving each unknown parameter a distribution from three-point estimates (min/most likely/max). The difference between good plans and bad plans is the probability that your best valuation exceeds your WACC or the turnkey price to be paid or some such method.
People are often impressed that the difference between good and bad plans even exists.
- clairity 11y agocrystal ball for excel can do monte carlo simulations for what you describe but with a real probability distribution for each input. it's expensive though (as is matlab, which is what i did my master's thesis in =)
- danieltillett 11y agoI wish this was not sold by Oracle.
- thanatropism 11y agoYeah. There was a long yadda yadda yadda I didn't feel like detailing on why/how we calibrate beta distributions for three-point estimates. What's more: Octave (free as in Stallman) is slow but runs Matlab code transparently.