A recipe for tackling commonly wicked investment problems

Policy makers and investors are often faced with wicked problems that frequently involve challenging trade-offs. With several trends emerging such as rising interest rates, disruptions to supply chains and the imperative for positive social and environmental outcomes, the investor landscape is now more complex and multifaceted than ever before.

Decision makers need to weigh up various factors such as cost, short and long-term objectives, risk, environmental impacts, and community acceptance, to name a few. As a broker of investment decisions, we are often asked for advice on how to maximise benefits, minimise risk, and make sure the right investments are made at the right time. 

So how do we go about determining optimum investment pathways in our current landscape where uncertainty and disruption are becoming increasingly prevalent?   

One thing is clear – there are no straightforward answers to this question. Each situation comes with its own unique circumstances which require careful consideration. There are however specific methodologies and tactics we can employ to achieve a successful outcome:

The recipe for successes relies on some key ingredients:

Take a deep dive – deeply understanding the key challenges, drivers and opportunities is a critical first step. All too often people jump into solution mode before gaining a full appreciation of the scale of the problem or opportunity. This can lead to potential solutions being overlooked and result in solutions that are poorly framed, called into question, or not funded. We use approaches such as investment logic mapping and scenario testing to help draw out key insights and identify well targeted and holistic solutions.

Thrive on multidisciplinary thinking – Specialised thinking and understanding is vital for developing feasible technical solutions. Arguably, it is even more important to bring perspectives from different disciplines together to gain a complete understanding of key interdependencies and potential trade-offs. Get the brains trust together and engage an independent, specialised business case practitioner to guide everyone through the process. Our team is trained in the investment management standard and highly skilled at navigating through uncertainty and helping clients build consensus.

Seek out evidence - Gather data that will be valuable in supporting decision-making. This could include anything from observed data or trends, to surveys of community sentiment.

Think about the future - while it is important to work within the current landscape, it is equally important to consider future risks and opportunities to help ensure investment decisions are more resilient and able to adapt to changing circumstances.

Tell the investment story – language is important. Being able to effectively articulate the link between the need for investment with the solution and proposed benefits can significantly impact the funding outcome. Narratives backed by sound analysis and communicated with simple messaging will more strongly resonate with key decision makers. Be sure to clearly convey why the investment is needed, what the range of potential solutions are that have been considered and how it will be delivered to achieve a value for money outcome.

We have adopted a range of tried and trusted tools and techniques to help navigate uncertainty, build consensus across complex stakeholder groups, and identify optimal solutions on a range of projects:

Adopting a genuine inquiry-based approach can act as a catalyst for delivering wider social, economic, and environmental benefits.

Being able to test a range of potential scenarios may involve dynamic simulation modelling (testing future possibilities), exploring adaptive investment pathways, financial appraisal and sensitivity testing.

Ultimately it comes down to tackling wicked problems from a base of first principles. Complex problems require holistic, multidisciplinary analysis that considers a range of scenarios to be able to identify the optimum investment pathway and navigate through ambiguity.