Pain and Regret

Abstract The assessment of Regret and Pain of Regret is an important decision focused step in the evaluation of significant go / no go decisions. Regret is the probability that the opportunity will fail to meet its objectives; that management will regret the decision made to enter, leave prematurely, or decline an opportunity. Pain of Regret is the magnitude of hurt or injury to the organization given the occurrence of Regret. Pain can be a loss of value, competitive advantage, resources, or even shareholder confidence. As with Risk and Uncertainty, or Dependency and Correlation, Regret and the Pain of Regret is a pairing of a probability gate and a ranged element. But more importantly, Regret and Pain strike to the very core of the decision process; they relate directly to the objectives of the opportunity whether they are economic, competitive, or strategic. As such, assessment of Pain and regret is more than a calculation. While management often centers in on the expected NPV, and analysts have embraced the concept of probabilistic assessment, it is the avoidance of Pain and Regret that often carries the day. Pain and Regret assessment offers management a way to express, with clarity, the objectives expected for an opportunity in a broader context, as well as way to understand the threat to the organization from failure. While Pain and Regret assessment is typically carried out in the context of project entry, the decision to walk from a project may also carry disappointment, especially when a competitor takes over and is successful. Unconventional Resource Plays can be a decision confidence minefield. How much do you invest in your pilot phase? How sure are you of a viable project? How big a threat of loss will you take before you elect to walk from a project? How confident do you have to (want to) be in your go forward decision? How likely are you to be making the wrong decision? While it will never be possible to completely eliminate errors of commission or omission, understanding the potential Pain and Regret of a decision provides benefits well beyond possible value metric improvement, or identification of mitigation opportunities. Understanding Pain and Regret provides a more complete understanding of decisions and leads directly to confidence through clarity.