Options are where your case stops being “a good story” and becomes a decision. A solid options section proves you are not just selling your favorite solution: you’ve examined real alternatives, quantified trade-offs, and shown why your recommendation wins. This chapter covers how to define the “do nothing” base case, generate and shortlist options, define evaluation criteria, and build them into a structured comparison. It closes with a checklist you can use before you show options to any senior audience.
9.1 Establishing the “Do Nothing” Base Case
The “do nothing” base case (often called the baseline) is not optional. Without it, your benefits are unanchored and your recommendation looks like a pitch rather than a choice.
What the base case is
The base case is: What happens if we take no new action beyond what is already committed? It answers, over the same time horizon as your model:
- How revenues, costs, and risks evolve if we do nothing.
- What currently approved initiatives already change the landscape.
- What external forces act on us regardless (market growth, regulation, inflation, etc.).
You are not allowed to smuggle partial solutions into the base case. If you do, you understate the value of your recommendation and confuse the decision.
Key elements of a robust base case
- Scope and horizon aligned. Same business scope and time horizon as the proposed options.
- Committed changes only. Include initiatives already funded/contracted; exclude “we plan to…” unless there is a clear approval.
- Explicit trends. Demand, price, cost inflation, churn, failure rates, or incident frequencies must be spelled out, not hand-waved.
- Risk trajectory. Show how current risk exposure changes over time—e.g., aging assets, technical debt, regulatory expectations rising.
A simple narrative plus a baseline model is enough:
- One paragraph: “If we do nothing, here’s what happens operationally and financially.”
- One chart or table (in the model / appendix) showing baseline KPIs and economics over the horizon.
Common base-case traps
- Optimistic drift. Assuming things improve on their own (e.g., margins expand, failure rates fall) without any initiative causing it.
- Hidden fixes. Quietly assuming small efficiency programs, process tweaks, or ad-hoc upgrades that are not actually funded.
- Frozen world. Holding demand, prices, or regulation constant when there is clear evidence they will move.
- Misaligned horizon. Modeling your recommendation over seven years, but only showing two years of baseline.
If you find yourself “tuning” the base case to make the recommended option look better, stop. Fix the base case, then revisit your options.
9.2 Generating and Shortlisting Options (Build/Buy/Partner/Scope)
Once the base case is clear, you generate alternatives. The goal is not infinite creativity; it is to surface the realistic levers management could pull.
Think in two dimensions:
- Approach: build, buy, partner, or discontinue.
- Scope and ambition: minimal viable, standard, or expanded.
Build / Buy / Partner / Retire as levers
- Build: Develop in-house capabilities, systems, or assets.
- Pros: control, differentiation, fit to internal processes, IP ownership.
- Cons: slower, higher execution risk, talent constraints, higher upfront cost.
- Buy: Purchase or license a product, asset, or service “off the shelf.”
- Pros: speed, vendor expertise, referenceability, lower development risk.
- Cons: less control, vendor lock-in, integration work, ongoing fees.
- Partner: Joint ventures, alliances, managed services, white-labelling.
- Pros: risk sharing, faster market access, complementary capabilities.
- Cons: complex governance, conflicting incentives, dependence on partner performance.
- Retire / Exit: A valid “option” may be to stop doing something—exit a product, market, or capability and redeploy resources elsewhere.
For many cases, your realistic options will be combinations, e.g., “build core, buy peripheral,” or “partner in one region, build in another.”
Scope and ambition
Within each approach, vary scope and ambition:
- Minimal viable scope (MVS). Do only what is necessary to address the immediate pain or achieve regulatory compliance.
- Core scope. Address the central problem/opportunity comprehensively for the primary segments or geographies.
- Expanded scope. Add advanced features, broader markets, or additional capabilities.
For example, for a digital platform:
- Option A (MVS): Digitalize only onboarding for top-tier customers.
- Option B (Core): Digitalize full lifecycle for all SME customers.
- Option C (Expanded): Extend to partners and cross-sell journeys across segments.
Your shortlist usually combines 3–4 distinct options:
- Baseline (Do Nothing).
- A minimal or “low-regret” option.
- A recommended “balanced” option.
- Possibly a more aggressive/stretch option.
Principles for shortlisting
- Feasible with current constraints. Discard options that clearly violate capital, capacity, or regulatory constraints unless you use them purely as “theoretical upper bound.”
- Distinctive. Options must be meaningfully different on cost, risk, speed, and scope—not cosmetic variations.
- Management-credible. Avoid strawman options obviously designed to make your favorite look good.
- Portfolio-aware. Consider how each option interacts with other initiatives; cross-initiative consistency matters.
If you cannot explain in one sentence how two options differ, they are probably the same option with parameter tweaks, not distinct alternatives.
9.3 Evaluation Criteria and Scoring Approach
Before you start scoring, fix the rules of the game. Agree with sponsor and finance on what matters most and how it will be assessed.
Core criteria set
Most corporate decisions boil down to five criterion clusters:
- Strategic fit
- Alignment with strategy and target segments.
- Contribution to long-term positioning, differentiation, or resilience.
- Value and economics
- NPV, IRR, payback (or public-sector equivalents), including risk-adjusted view where appropriate.
- Impact on key financial ratios or constraints (e.g., leverage, cost-to-serve).
- Feasibility and capacity
- Internal capabilities and capacity.
- Availability and maturity of vendors/partners
- Complexity of change (process, tech, people).
- Risk and resilience
- Operational, cyber, regulatory, and reputational risk.
- Dependency and vendor/partner risk.
- Impact on resilience (e.g., concentration risk, single points of failure).
- Time to impact
- Time to first value (e.g., pilot benefits).
- Time to fully benefit realization.
- Synchronization with key external dates (regulatory deadlines, market windows).
Depending on your context, you may collapse or expand these, but try to keep to 4–6 criteria to avoid dilution.
Scoring approach
You have three broad tools, which you can combine:
- Quantitative financials.
- Use hard numbers where you can: NPV, IRR, payback, breakeven volume, cost per unit, etc.
- Make sure all options are assessed on the same horizon and discount rate.
- Qualitative ratings.
- Use simple scales (e.g., 1–5 or Low/Medium/High) for strategic fit, feasibility, risk, or time to impact.
- Avoid false precision; the point is to structure discussion, not generate pretend science.
- Weighted scoring.
- When needed, assign weights to criteria (e.g., Strategy 25%, Economics 35%, Risk 20%, Feasibility 10%, Time 10%).
- Only do this if the sponsor and key stakeholders genuinely buy into the weights, and use it as a guide—not the sole decider.
In many organizations, the primary filter is economics and risk; the other criteria shape which economics are acceptable.
Practical tips
- Define criteria and, if using them, weights before populating scores.
- Document rationale for each score in a sentence (for example, “Feasibility = Medium because we lack in-house capability but vendors are mature”).
- Use visuals: an options grid summarizing key criteria helps executives see differences quickly.
- Be explicit about minimum thresholds: e.g., “Any acceptable option must have payback < 5 years and keep cyber risk within our stated appetite.”
If you sense that someone is trying to reverse-engineer weights and scores to force a favored option to win, pause and re-anchor on decision principles.
9.4 Step-by-Step Options Development Guide
Here is a practical, end-to-end sequence you can follow in any case.
Step 1 – Restate the problem and constraints
Before talking options:
- Summarize the problem/opportunity in 2–3 sentences.
- List key constraints: budget, timeframe, regulatory limits, capacity, technology standards.
This resets the room and ensures options address this problem, not last year’s.
Step 2 – Build the “option space”
On a whiteboard or virtual board, sketch the space along 2–3 dimensions:
- Horizontal axis: approach (Build ↔ Buy ↔ Partner).
- Vertical axis: scope (Minimal ↔ Core ↔ Expanded).
- Optionally, color code for time (Fast ↔ Standard ↔ Slow) or risk (Higher ↔ Lower).
Brainstorm plausible combinations with your core team and selected stakeholders. Capture them as short labels:
- “Buy SaaS – core SME scope – phased rollout.”
- “Partner with X in one region – pilot only.”
- “Build a new in-house platform – full scope – 3-year horizon.”
At this stage, do not model; just populate the landscape.
Step 3 – Filter by feasibility and strategic sanity
Quickly filter out options that:
- Clearly violate non-negotiable constraints (e.g., regulatory prohibition, banned vendors, impossible timelines).
- Are strategically off-course (e.g., would force a pivot away from chosen markets with no board mandate).
- Are duplicates (same core approach and scope with minor tuning).
What remains is your longlist.
Step 4 – Shape 3–4 “candidate options” plus baseline
From the longlist, pick:
- Baseline (Do Nothing).
- 1 “low-regret” option (often minimal viable, fast, lower risk).
- 1 “balanced” option (likely candidate for recommendation).
- 1 “stretch” or “max value” option (broader scope or faster path with higher risk/cost).
Each candidate option should have:
- A short narrative (what it is, who it serves, where/when it applies).
- Initial directional view on cost, benefits, risk, and time.
Align this candidate list with your sponsor before doing heavy analysis.
Step 5 – Define evaluation criteria and thresholds
Agree on:
- The criteria you will use (as in 9.3).
- Any hard thresholds (e.g., “must meet regulatory deadline,” “must not increase cyber risk beyond X”).
- Whether you will use a weighted scoring model or a simpler verbal assessment plus economics.
Document these in one short slide or section so you can show your working later.
Step 6 – Build the economics for each option
For each candidate option (except baseline, which uses your baseline model):
- Quantify incremental costs: implementation, ongoing run-rate, indirect impacts.
- Quantify incremental benefits: revenues, savings, risk decreases.
- Derive NPV, IRR, payback (or equivalents) over the same horizon.
- Run at least one downside scenario for each option.
Avoid fully separate models per option; instead, design a single model where option flags or driver sets can be selected to reflect each option. That eases comparison and avoids divergence.
Step 7 – Assess qualitative criteria
For each option, rate:
- Strategic fit.
- Feasibility (capability, capacity, vendor maturity).
- Risk (and residual risk after mitigations).
- Time to impact.
Capture 1–2 sentences explaining each rating. This becomes valuable when stakeholders challenge your scoring.
Step 8 – Construct the options comparison view
Prepare a single page (or pair of pages) that shows:
- Rows: Baseline + each candidate option.
- Columns: A handful of key attributes—scope summary, NPV, IRR, payback, key risks, time to impact, and qualitative scores.
You can display financials as numbers and the qualitative elements as icons or short tags (e.g., “Fit: High,” “Feasibility: Medium”).
The objective is a clean “at a glance” comparison that frames the conversation, not a dense spreadsheet.
Step 9 – Test with sponsor and challenge
Review the options grid with your sponsor and finance:
- Are any important options missing?
- Are any options clearly dominated by others (worse on most dimensions and no compelling niche)?
- Do the criteria and scores feel fair?
- Does the likely recommendation emerge logically from the grid?
If you discard an option at this stage, record why. That way, if someone later says “What about doing X?”, you can show it was considered and rejected for a reason.
Step 10 – Finalize recommended option and narrative
Finally:
- Confirm which option you will recommend, and whether any “conditional path” exists (e.g., pilot first, then choose between two scale options based on results).
- Tighten the narrative: baseline → options set → evaluation → recommended option and rationale → what happens if we choose differently.
- Align the options section with your executive summary: labels, numbers, and rationale must match.
At this point, your options section becomes an asset you can reuse across forums with different levels of detail.
9.5 Options Comparison Checklist
Before you show options to a senior audience, run through this checklist.
Base case
- The do-nothing baseline is clearly defined and modeled over the same horizon as other options.
- Baseline includes only committed changes, not speculative improvements.
- The cost of inaction is explicit and quantified where possible.
Option set
- There are 3–4 options max plus baseline; not an overwhelming menu.
- Each option is meaningfully distinct (approach, scope, timing, risk) and can be explained in one sentence.
- At least one option is a low-regret / minimal variant, and one is a balanced candidate for recommendation.
- Options respect hard constraints (capital, regulatory, time) or are clearly labeled as theoretical if they don’t.
Evaluation criteria
- Criteria are agreed and documented (strategy, economics, feasibility, risk, time).
- Criteria count is limited (4–6) to avoid dilution.
- Any thresholds (e.g., minimum IRR, maximum payback, deadline) are explicit.
- Criteria were defined before scoring options, not reverse-engineered.
Economics and risk
- All options, including baseline, share the same time horizon and discount rate.
- Costs and benefits are modeled incrementally vs. baseline, not as total business figures.
- NPV, IRR, payback (or equivalents) are calculated for each option.
- At least one downside scenario per option is considered, or a shared downside scenario that affects all.
- Top risks and residual risk per option are identified (at least in notes, even if summarized in the pack).
Qualitative scoring
- Each option has a qualitative assessment of strategic fit, feasibility, and risk.
- If using scores (1–5, etc.), each score has a one-sentence rationale documented.
- Any weighted scoring is transparent and not the sole determinant of recommendation.
Comparison view
- There is a single, clean comparison view (grid/table/slide) that a senior leader can scan in under a minute.
- Option labels and numbers are consistent across that view, the executive summary, and the model.
- Dominated options (worse on all dimensions without unique advantage) have been removed or clearly marked as such.
- The recommended option’s superiority is visible from the grid, not just asserted in words.
Narrative coherence
- The story flows: Baseline → Option space → Shortlist → Evaluation → Recommendation.
- The recommendation follows logically from the criteria and scores; it is not a surprise twist.
- Stakeholder concerns raised during development are reflected in the options and rationale (e.g., capacity limits, cyber risk).
- If relevant, portfolio or sequencing considerations (what gets delayed or dropped) are addressed.
If you can tick these boxes, your options section will do what it should: give decision-makers real choices, highlight trade-offs honestly, and make your recommendation feel like the natural outcome of a fair comparison—not a foregone conclusion in disguise.
