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Incite!SalesOpportunityPortfolioAnalysisWebApplicationUser’sManual

LastUpdate:November13,2016

Incite!SalesOpportunityPortfolioAnalysis-WebApplicationUser'sManual

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TableofContentsEndUserLicenseAgreement.............................................................................................................2SoftwareEnd-UserLicenseAgreement........................................................................................................2

IntroductionandPurpose...................................................................................................................7

WhatistheIncite!SalesOpportunityPortfolioAnalysisSystem?......................................................7

WhatYouNeed...................................................................................................................................9

UsingtheDataTemplate....................................................................................................................9AccountInfo................................................................................................................................................10UnitPrice.....................................................................................................................................................13UnitsSold....................................................................................................................................................16AwardDate.................................................................................................................................................16Effort..........................................................................................................................................................17IncidentalCost............................................................................................................................................17ProbLoss.....................................................................................................................................................17

UsingtheWebApplication...............................................................................................................19

InterpretingResults..........................................................................................................................21SummaryResults........................................................................................................................................22PortfolioRiskProfile...................................................................................................................................23ValueSensitivity.........................................................................................................................................24OpportunityLosses....................................................................................................................................25AwardTrend...............................................................................................................................................27RevenueTrend...........................................................................................................................................27MarginalContributionofValue..................................................................................................................28ProbabilityofSuccessvs.Value.................................................................................................................29ValueofControl.........................................................................................................................................30

InClosing...........................................................................................................................................31

ContactInformation.........................................................................................................................31


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EndUserLicenseAgreementIMPORTANT:Pleasereadthetermsandconditionsofproductapplicationsetoutbelowcarefullypriortouse.THROUGHUSINGTHEWEBAPPLICATIONYOUAREEXPRESSINGYOURCONSENTTOTHESETERMSANDCONDITIONS.

SoftwareEnd-UserLicenseAgreement.

UnderthetermsofthisSoftwareEndUserLicenseAgreement(hereinafterreferredtoas"theAgreement") executed by Incite! Decision Technologies, LLC (hereinafter referred to as "theProvider")andbetweenandyou,aphysicalpersonor legalentity (hereinafter referred toas“You" or "the End User”), You are entitled to use the Software defined in Article 1 of thisAgreement.TheSoftwaredefined inArticle1of thisAgreement isaccessedandusedvia theProvider'swebsite,subjecttothetermsandconditionsspecifiedbelow.

THISISANAGREEMENTONEND-USERRIGHTSANDNOTANAGREEMENTFORSALE.TheProvidercontinuestoownthesourcecodepursuanttothisAgreement.

YOUAGREETHATYOURUSEOFTHESOFTWAREACKNOWLEDGESTHATYOUHAVEREADTHISAGREEMENT,UNDERSTANDITANDAGREETOBEBOUNDBY ITSTERMSANDCONDITIONS. IFYOU DO NOT AGREE TO ALL OF THE TERMS AND CONDITIONS OF THIS AGREEMENT,IMMEDIATELYCONTACTUSTOREVOKEYOURSUBSCRIPTIONANDLICENSECODE.

1.Software.AsusedinthisAgreementtheterm"Software"means:(i)thewebapplicationservedathttp://incitesales.incitedecisiontech.com/andallcomponentsandrelateddomainsthereof;(ii)allthemediawithwhichthisAgreementisprovided,includingthesourcecodeformoftheSoftware suppliedonadata carrieroraccessedvia the Internet; (iii) any relatedexplanatorywrittenmaterialsandanyotherpossibledocumentationrelatedtotheSoftware,aboveallanydescription of the Software, its specifications, any description of the Software properties oroperation, any description of the operating environment in which the Software is used,instructionsforuseorinstallationoftheSoftwareoranydescriptionofhowtousetheSoftware(hereinafterreferredtoas“Documentation”);(iv)copiesoftheSoftware,patchesforpossibleerrorsintheSoftware,additionstotheSoftware,extensionstotheSoftware,modifiedversionsoftheSoftwareandupdatesofSoftwarecomponents, ifany, licensedtoYoubytheProviderpursuanttoArticle3ofthisAgreement.TheSoftwareshallbeprovidedexclusivelyintheformofawebapplication.

2.Access.Softwaresuppliedonadatacarrier,downloadedfromtheInternet,downloadedfromtheProvider'sserversorobtainedfromothersourcesrequiresinternetaccess.YoumustaccesstheSoftwareonacorrectlyconfiguredcomputer,complyingatleastwithrequirementssetoutintheDocumentation.ThemethodofaccessisdescribedintheDocumentation.

3.SubscriptionandLicense.SubjecttotheconditionthatYouhaveagreedtothetermsofthisAgreement,youpaytheSubscriptionandLicenseFeewithinthematurityperiodandYoucomply


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withallthetermsandconditionsstipulatedherein,theProvidershallgrantYouthefollowingrights("theLicense"):

(a)Accessanduse.Youshallhavethenon-exclusive,non-transferablerighttoaccesstheSoftwareonanycomputerormobiledevicethatcanaccesstheSoftware'swebsiteathttp://incitesales.incitedecisiontech.com/.

(b)TermoftheLicense.YourrighttousetheSoftwareshallnotberestrictedtoapre-specified timeperiod.Youmayelect to terminate theSubscriptionandLicenseatanytime.

(c) Terminationof the License. If You fail to complywithanyof theprovisionsof thisAgreement, the Provider shall be entitled to withdraw from the Agreement, withoutprejudicetoanyentitlementorlegalremedyopentotheProviderinsucheventualities.In the event of cancellation of the License, Youmust immediately delete, destroy orreturnatyourowncost,theSoftwareandallbackupcopiestoESETortotheoutletfromwhichYouobtainedtheSoftware.

4.Connection to the Internet. To operate correctly the Software requires connection to theInternet.

5.Restrictionstorights.Youmaynotcopy,distribute,extractcomponentsormakederivativeworksoftheSoftware.WhenusingtheSoftwareYouarerequiredtocomplywiththefollowingrestrictions:

(a)Youmaynotuse,modify,translateorreproducetheSoftwareortransferrightstousetheSoftwareorcopiesoftheSoftwareinanymannerotherthanasprovidedforinthisAgreement.

(b)Youmaynotsell,sub-license,leaseorrentorborrowtheSoftwareorusetheSoftwarefortheprovisionofcommercialservices.

(c) You may not reverse engineer, reverse compile or disassemble the Software orotherwiseattempttodiscoverthesourcecodeoftheSoftware,excepttotheextentthatthisrestrictionisexpresslyprohibitedbylaw.

(d) You agree that Youwill only use the Software in amanner that complieswith allapplicablelawsinthejurisdictioninwhichYouusetheSoftware,including,butnotlimitedto,applicablerestrictionsconcerningcopyrightandotherintellectualpropertyrights.

6.Copyright. The Software and all rights, without limitation including proprietary rights andintellectual property rights thereto are owned by the Provider and/or its licensors. They areprotected by international treaty provisions and by all other applicable national laws of thecountryinwhichtheSoftwareisbeingused.Thestructure,organizationandcodeoftheSoftwarearethevaluabletradesecretsandconfidentialinformationoftheProviderand/oritslicensors.


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7. Reservation of rights. The Provider hereby reserves all rights to the Software, with theexceptionofrightsexpresslygrantedunderthetermsofthisAgreementtoYouastheEndUseroftheSoftware.

8.Commencementand terminationof theAgreement. ThisAgreement iseffective fromthedateYouagreetothetermsofthisAgreement.YoumayterminatethisAgreementatanytimebycancellingyoursubscriptionandlicensecodebycontacttheProvider.

9.ENDUSERDECLARATIONS.ASTHEENDUSERYOUACKNOWLEDGETHATTHESOFTWAREISPROVIDED "AS IS",WITHOUTWARRANTY OF ANY KIND, EXPRESS OR IMPLIED, AND TO THEMAXIMUMEXTENTPERMITTEDBYAPPLICABLELAW.NEITHERTHEPROVIDER,ITSLICENSORSORAFFILIATES NOR THE COPYRIGHT HOLDERS MAKE ANY REPRESENTATIONS OR WARRANTIES,EXPRESSORIMPLIED,INCLUDINGBUTNOTLIMITEDTOTHEWARRANTIESOFMERCHANTABILITYORFITNESSFORAPARTICULARPURPOSEORTHATTHESOFTWAREWILLNOT INFRINGEANYTHIRDPARTYPATENTS,COPYRIGHTS,TRADEMARKSOROTHERRIGHTS.THEREISNOWARRANTYBY THE PROVIDER OR BY ANY OTHER PARTY THAT THE FUNCTIONS CONTAINED IN THESOFTWAREWILLMEETYOURREQUIREMENTSORTHATTHEOPERATIONOFTHESOFTWAREWILLBE UNINTERRUPTED OR ERROR-FREE. YOU ASSUME ALL RESPONSIBILITY AND RISK FOR THESELECTION OF THE SOFTWARE TO ACHIEVE YOUR INTENDED RESULTS AND FOR THEINSTALLATION,USEANDRESULTSOBTAINEDFROMIT.

10.Nootherobligations.ThisAgreementcreatesnoobligationsonthepartoftheProvideranditslicensorsotherthanasspecificallysetforthherein.

11.LIMITATIONOFLIABILITY.TOTHEMAXIMUMEXTENTPERMITTEDBYAPPLICABLELAW,INNO EVENT SHALL THE PROVIDER, ITS EMPLOYEES OR LICENSORS BE LIABLE FOR ANY LOSTPROFITS, REVENUE, SALES, DATA OR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS ORSERVICES, PROPERTY DAMAGE, PERSONAL INJURY, INTERRUPTION OF BUSINESS, LOSS OFBUSINESS INFORMATION OR FOR ANY SPECIAL, DIRECT, INDIRECT, INCIDENTAL, ECONOMIC,COVER,PUNITIVE,SPECIALORCONSEQUENTIALDAMAGES,HOWEVERCAUSEDANDWHETHERARISINGUNDERCONTRACT,TORT,NEGLIGENCEOROTHERTHEORYOFLIABILITY,ARISINGOUTOFTHEUSEOFORINABILITYTOUSETHESOFTWARE,EVENIFTHEPROVIDERORITSLICENSORSOR AFFILIATES ARE ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. BECAUSE SOMECOUNTRIESANDJURISDICTIONSDONOTALLOWTHEEXCLUSIONOFLIABILITY,BUTMAYALLOWLIABILITYTOBELIMITED,INSUCHCASES,THELIABILITYOFTHEPROVIDER,ITSEMPLOYEESORLICENSORSORAFFILIATESSHALLBELIMITEDTOTHESUMTHATYOUPAIDFORTHELICENSE.

12.NothingcontainedinthisAgreementshallprejudicethestatutoryrightsofanypartydealingasaconsumerifrunningcontrarythereto.

13.Technicalsupport.TheProviderorthirdpartiescommissionedbytheProvidershallprovidetechnicalsupportattheirowndiscretion,withoutanyguaranteesordeclarations.TheEndUsershall be required tobackupall existingdataprior to theprovisionof technical support. TheProviderand/orthirdpartiescommissionedbytheProvidecannotacceptliabilityfordamageor


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lossofdata,property,softwareorhardwareorlossofprofitsduetotheprovisionoftechnicalsupport.TheProviderand/or thirdpartiescommissionedbytheProvider reservetheright todecidethatresolvingtheproblemisbeyondthescopeoftechnicalsupport.TheProviderreservestherighttorefuse,suspendorterminatetheprovisionoftechnicalsupportatitsowndiscretion.

14.TransferoftheLicense.IfnotcontrarytothetermsoftheAgreement,theEndUsershallonlybeentitledtopermanentlytransfertheLicenseandallrightsensuingfromthisAgreementtoanotherEndUserwiththeProvider'sconsent,subjecttotheconditionthat(i)theoriginalEndUserdoesnotretainaccessoftheSoftware;(ii)thetransferofrightsmustbedirect,i.e.fromtheoriginalEndUser tothenewEndUser; (iii) thenewEndUsermustassumeall therightsandobligations incumbent on the original End User under the terms of this Agreement; (iv) theoriginalEndUserhastoprovidethenewEndUserwithdocumentationenablingverificationofthegenuinenessoftheSoftwareasspecifiedunderArticle15.

15.VerificationofthegenuinenessoftheSoftware.TheEndUsermaydemonstrateentitlementtousetheSoftwareinoneofthefollowingways:(i)throughalicensecertificateissuedbytheProviderorathirdpartyappointedbytheProvider;(ii)throughawrittenlicenseagreement,ifsuchanagreementwasconcluded;(iii)throughthesubmissionofane-mailsenttotheProvidercontaininglicensingdetails(usernameandpassword)enablingUpdates.

16.DataregardingtheEndUserandprotectionofrights.AstheEndUser,YouherebyauthorizetheProvidertotransfer,processandstoredataenablingtheProvidertoidentifyYou.Youherebyagree to the Provider using its ownmeans to checkwhether You are using the Software inaccordancewith theprovisionsof thisAgreement. Youhereby issue your agreement todatabeing transferred,duringcommunicationbetween theSoftwareand theProvider's computersystemsorthoseofitsbusinesspartners,thepurposeofwhichistoensurefunctionalityofandauthorizationtousetheSoftwareandprotectionoftheProvider’srights.Followingconclusionof this Agreement, the Provider or any of its business partners shall be entitled to transfer,processandstoreessentialdata identifyingYou, forbillingpurposesandperformanceof thisAgreement.

17.Applicablelaw.ThisAgreementshallbegovernedbyandconstruedinaccordancewiththelawsoftheStateofGeorgia.TheEndUserandtheProviderherebyagreethattheprinciplesoftheconflictoflawsandtheUnitedNationsConventiononContractsfortheInternationalSaleofGoods shall not apply. You expressly agree that any disputes or claims ensuing from thisAgreementwithrespecttotheProvideroranydisputesorclaimsrelatingtouseoftheSoftwareshallbesettledbybindingarbitrationandYouexpresslyagreetousethearbitrationservicesoftheProvider’schoosing.

18. General provisions. Should any of the provisions of this Agreement be invalid orunenforceable,thisshallnotaffectthevalidityoftheotherprovisionsoftheAgreement,whichshall remain valid andenforceable in accordancewith the conditions stipulated therein. ThisAgreementmayonlybemodifiedinwrittenform,signedbyanauthorizedrepresentativeofthe


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Providerorapersonexpresslyauthorizedtoactinthiscapacityunderthetermsofapowerofattorney.

This is the entire Agreement between the Provider and You relating to the Software and itsupersedesanypriorrepresentations,discussions,undertakings,communicationsoradvertisingrelatingtotheSoftware.


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IntroductionandPurposeWelcometotheIncite!SalesOpportunityPortfolioAnalysisSystemUser’sManual.Thepurposeofthismanualservestoprovideyouandyourteamaquickreferenceguidefortheproperuseand interpretationoftheresults fromthewebapplicationandthedatatemplaterequiredtocapturetheinformationthatdrivesthewebapplicationsimulation.

WhatistheIncite!SalesOpportunityPortfolioAnalysisSystem?Salesforecastsarenotoriouslybiasedformanyreasonsthatrangefrompersonalmotivationstoerrorsinthinkingtosomeofthecognitiveillusionsthathavebeenidentifiedbyresearchinthefieldofbehavioraleconomics. Identifyingandmanagingthesebiasescanaffecthowwellyouachievesalestargets,serveclientneeds,andmaintainhealthycashflowtoplaneffectivelyandsustainthelongtermoperationofyourorganization.

Personalmotivationsofsalesagentsroutinelyfallintotwopatternsbasedontheirmaturityandexperiencelevel:Go-GettersandSandbaggers.Go-Gettersareusuallyjunior-levelsalespeoplewhobelievetheworldistheirstoconquerandwanttorisequicklythroughtheranks.Theyusetheiroverlyoptimisticforecastsassignalsfortheirenthusiasm,confidence,andproductivityatgeneratingnewleads.Sandbaggers,ontheotherhand,areusuallyseniorlevelsalespeoplewhohave finally learned thatover-optimism leads toembarrassmentwhen theBigDealdoesnotmaterializeaspredicted,sotheyresorttounder-estimatingtheirforecasts.Intheend,theylooklikeheroeswhen their sales resultsexceedexpectationsby comparison to their conservativeprojections.

Commonthinkingtrapsorerrorsthatoftenplaguesalespeopleareentitlementbiasandwishfulthinking.Entitlementbiasisrelatedtothinkingthatjustbecauseonehasbeensuccessfulinthepast,possiblywithimportantandhighprofilecontractawards,thatfuturesuccess isnotonlypossiblebutvirtuallycertain.Thisbehaviorisalsorelatedtoexpertbias,astateofmindinwhichapersonwithextensiveandoftenpubliclyrecognizedexperienceinafieldofpracticeregardstheir predictions about future outcomes as incontrovertible. Wishful thinking occurs whenpeoplebelievethattheirplanswillworkastheydesignedsimplybecausetheyplannedthem,visualizedtheoutcome,orbecausetheyhavestrongemotionalinvestmentintheoutcomethattheydesire.

Finally,someofthecommoncognitiveillusionsthatshowupinsalesforecastsareavailabilitybias and anchoring. Availability bias is the tendency to use recently observed, emotionallyimpactful,oreasilyaccessibleinformation(usuallygatheredby“cherrypicking”)tojustifyabeliefin the greatest likelihood of a given outcome or state of affairs among an alternate set ofscenarios or conditions. To make a playful inversion on the warning commonly printed onrearviewmirrors,availabilitybiasdrives theperceptionthat images in themirrorareactuallycloserthantheyreallyare.Anchoringisthetendencyofthemindtoworkfromthefirstvaluethatitconceivesasareferencepointforallothervariationaroundit.Bothavailabilitybiasand


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anchoringdriveatendencytobelievethatinitialimpressionsserveasbestguessesofthemostlikelyfutureoutcomes.

Biases in sales forecasts impose a pernicious effect on your ability to operate a businesseffectively.Withoutbias-freeestimates,it'snearlyimpossibletoknowhowtoallocatesalesandsupportresourceseffectivelytomaximizethelikelihoodofcapturingasaleandtoapplythoseresources in the most value efficient manner. Inaccurate sales forecasts prevent you fromknowingwhenincomecrunchesmightmaterializeandwhatyoucandoaboutthem.Ultimately,inaccuratesalesforecastsaffecthowwellyoucananticipatecashflow.Aseverybusinessownerknows,cashisking.

It’snotuncommontodiscoverthatallofthemotivations,attitudes,andillusionsdescribedaboveareoperatingtogether.Unfortunately,contrarytocommonbelief,theydon’tjustaverageout“inthewash”byawisdom-of-the-crowdseffect,particularlyifthereisanoverabundanceofonethinkingstyleorexperiencelevelpresentinthesalesorganization.Asonemightanticipate,theeffectonanorganizationcanrangefromdisappointingtodisastrous,thelatterespeciallysoinsituationsinwhichsalesandrevenueforecastshelptoinformrequiredinventorylevels,futurecapitalspendinglevels,andstrategicplanningefforts.Themorecloselyalignedanorganization’sperceptionoffutureincomeistowhatitultimatelyrealizes,thebettertheorganizationcanplan,adapttochangingneeds,maintainmoraleandproductivity,andsatisfycustomerrequirementsandexpectations.Forcompaniesthatexperiencelowfrequencysalesofhighvalue—professionalservice companies like engineering, architecture, consulting, or capital equipmentmanufacturers—gettingthisalignmentascloseaspossibleisimmenselyimportant.

The Incite!SalesOpportunityPortfolioAnalysisSystem servesasadecisionaiding tool tohelpyoursalesorganizationovercomemanyofthebiasesdescribedherethatprobablyfrustrateyoursalesforecasts.Itspurposeistoprovidereasonablyaccuratepredictions—controlledforbias—aboutthetimingandvalueofopportunityrevenuesavailabletoyourorganizationsothatyoucanmakeinformedmanagementdecisionsaboutthemeventhoughtheyareconstrainedunderuncertainty.Itwillhelpyouprioritizeyourattentionandallocationofresourcestocapturethosesales opportunities as efficiently as possible, and it can help your sales team continuouslyimprovetheirforecastingabilities.Notonlywillthesalesteameventuallybehappier,sowilltheCFO!

Incite!SalesOpportunityPortfolioAnalysisSystemwasdevelopedespeciallyforthosecompaniesthatexperiencelowfrequencysalesofhighvalue.Thewebapplicationisintendedtobeusedbyorganizationswitharelativelysmallsalesgroupandlimitedbudgetforadditionalancillarysalessupport, independentofoutsideconsulting.Althoughnotasdeepandcomprehensiveas the“softwareanda service”advancedmodeloffered separately, thewebapplicationprovidesathoroughsetofanalysisartifactsthatwillserveasmallgroupwell.

For largersalesorganizations, Incite!DecisionTechnologies (and its relatedaffiliates)offersasubscriptionconsultativeservicesupportedbyamoresophisticatedmodelthatprovides


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1. Amorematureexpertiseinassessingtheinputstothemodelandinterpretationoftheresults;

2. Adeeperexplorationintotheindividualsalesagentperformance;3. Afiner-grainedassessmentoftheindividualsalesopportunitycharacteristics.

Ifyouareinterestedinlearningmoreaboutouradvancedversionofthesystem,orifyouwantaproprietaryversionofthesystemthatconformsmoretoyourorganization’sspecificneeds,pleasecontactusthroughthechannelsprovidedintheContactInformationsectionattheendofthisdocument.

WhatYouNeedThe Incite!Sales Opportunity Portfolio Analysis web application is an advanced Monte Carlosimulationmodelthatrequiresitsinputstobeprovidedinaspecificformat.However,thewebapplicationdoesnotstoreanycustomerdatabetweensessionstoensurethatyourproprietarysalesdataremainsunderyourcontrol.Inordertosatisfythedatastructurerequirementsaswellassecurityconcerns,werequirethatyousubmityoursalesopportunitydatainapreformattedExceltemplate:‘InciteSales_Opportunity_Data.xltx.’Alinktothisfilewillbesenttoyouwhenyousubscribe to thewebapplication,butyoucanalwaysgetanewoneat theSupportResourcespageonthewebsite.

Inadditiontothedatatemplate,youwillalsoneedalicensecodethatwillbesenttoyouwhenyousubscribe.Thedatatemplatehasafieldforyoutoenteryouruniquecode.

Althoughnotnecessary,therearetwosmallwebutilitiesthatwillhelpyouusethedatatemplatemoreeffectively.Theyare…

• SubjectMatterExpertDistributionCalibration:http://incitesales.incitedecisiontech.com/calibrate1.shtml

• SubjectMatterExpertDiscreteProbabilityCalibration:http://incitesales.incitedecisiontech.com/calibrate2.shtml

UsingtheDataTemplateOnceyoudownloadthetemplate,youcancreatenewdatacapturefilessimplybydoubleclickingthetemplatefile.Excelwillcreateanewfilewiththe‘.xlsx’ extension,whichyoumustsavewithanewname.Youcancreateasmanydatacapture filesasyouneed;e.g.,one foreachdistinctsalesgroup.Youusethefileswiththe‘.xlsx’ extensiontocapturedataanduploadittothewebapplication.

Thedatatemplateiscomposedofeightworksheetsthatcaptureinformationfortenvariablesper sales opportunity. It’s important to understand that the template structuremust not bealtered,andinformationmustbesuppliedinintheformatrequiredorelsethesimulationmodelwillnotworkcorrectlyorprovideresultsthatareintelligible.


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Theworksheetsare:

1. Instructions–providesverybriefinstructionsfortheuseofthemodel.2. AccountInfo – captures information about sales agents, the opportunities they are

pursuing,yourlicensecode,andthenumberoftrialsthatareusedinthesimulation.3. UnitPrice–capturesinformationaboutthepriceyouwillpotentiallynegotiatewithyour

clientopportunity.4. UnitsSold–capturesinformationaboutthenumberofunitsyouwillpotentiallysellto

yourclientopportunity.5. AwardDate–capturesinformationaboutthedatebywhichyouestimateyourpotential

clientopportunitywillawardyouacontract.ThisworksheetalsorequiresyoutosupplytheTermsandPaymentsassociatedwitheachopportunity.

6. Effort–captures informationabout thenumberofhours thatarerequiredtoreacharesolutionwiththeclientopportunity.

7. IncidentalCost– captures information about additional costs thatmaybe required toreacharesolutionwiththeclientopportunity.

8. ProbLoss–capturesyourassessmentforthelikelihoodthatyouwillNOTbeawardedacontractbytheclientopportunity.

Moredetailedinformationabouteachsheetfollowshere.

AccountInfo

TheAccountInfoworksheetiswhereyouwillbegintodefineopportunitycharacteristics,yourownsalesorganization’sinformation,andsystemdetails.

Throughoutthetemplate,cellsarecoloredgray,blue,andgreen.Graycellscannotbealtered.Theycontainvaluesthateitherarepredefinedoraretheresultofanunderlyingformula.Greencellsrequirenumericalvalues.Bluecellsrequiretextualvalues.

The first thingyouwillneed todo is supply thenamesofyoursalesagentsunder theAgentcolumn and their hourly wage rate under theWage_Rate column. If the sales agents arecompensatedonanannualsalarybasis,thewagerateshouldbetheirfullyloadedsalarydivided


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bythetotalnumberofannualworkhours.Forexample,ifBobX.makesafullyloadedsalaryof$180,000peryearandyourorganizationobserves2458-hourworkdaysperyear,thewagerateshouldbechangedto$91.84inthecelltotherightofhisname.

Ineach row in theOpp_Name column, supply thenamesof the salesopportunities that arecurrentlybeingpursuedby theagents.Youcancodify thesenames foranadditional levelofsecurityifyoufeellikethatiswarranted.Whiletheopportunityisbeingpursuedoraslongasrevenuesfromanawardedprojectarebeingreceived,leaveitsOpp_Statusas“Open.”Onceanopportunityisnolongerreceivingrevenuesoracontractisnotawarded,changeitsOpp_Statuseitherto“Closed”orto“Lost,”respectively.

ThedistinctionbetweenLostorClosedisforyourhistoricalrecordsonlyandplaysnoroleintheoperationofthemodelotherthantoexcludethoseprojectssodesignatedfromanalysis.

Thedatatemplatepermitscapturingupto1000salesopportunities,althoughthemodelisnotdesigned tohandle thatmanycurrentlyopenopportunities. If you runoutof space,youcansimplystartanewemptyfilewithadifferentnametodifferentiatefromtheolderfile.Youwillbeabletodownloadanewtemplatebygoingtothewebapplicationsite,andclickingthelinktothedatatemplate.Youcanalsousethisapproachifyouwanttoanalyzeseparatesalesgroups’opportunitypursuitsasseparateportfolios.Simplyuseadifferentlynamedfileforeachgroup.

IneachrowintheAssigned_Agentcolumn,selectanamefromthedropdownlistfortheprimaryagentpursuingtheassociatedopportunity.


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Ifit’sthecasethatmultipleagentscollaborateinthepursuitofanopportunity,youcansupplyateamnameintheAgentcolumn;however,fortheassociatedWage_Rate,youwillneedtocomeupwithanappropriateweightedhourlyratethatreflectstherelativecontributionofeachteammember.

TheSimulationTrialsfieldissetto1000bydefault.ThisvalueistherepeatednumberoftrialsthatarerunintheMonteCarlosimulationofthemodel.AswewillexplainintheInterpretingResultssectionoftheuser’sguide,themodelproducesseveralresultsthatrepresentaveragesofspecificmetricsacrossallthetrialsforagivensessionwiththemodel.Ifyouusemore(orless)trials,thepredictedaveragewillvaryless(ormore)betweensessions;however,forthesamenumberofopportunities,theruntimewillincrease(ordecrease)proportionally.Forexample,suppose that for the fourteen demonstration opportunities listed above, one session of themodelusing1000trialspredictsthattheaverageportfoliovaluewillbe$10million.Thenexttimeyourunthemodelwiththeexactsameopportunitiesandvariabledefinitions,theaverageportfolio value reportedmight be $10.1 million, and yet a third sessionmight report $9.89million.Ifyouchangedthenumberoftrialsto100,therangeofreportedvaluesbetweensessionsmay getwider, although themodelwill runmuchmore quickly. Likewise, if you change thenumberoftrialsto5000,thevariabilityofthereportedaveragesshoulddecrease,butthemodelwilltakefivetimeslongertorunthanthe1000trialsettingandfiftytimeslongerthanthe100trialsetting.So,youshouldthinkoftheSimulationTrialssettingasawaytocontrolthestabilityoftheprecisionofthereportedaveragevaluesattheexpenseofruntime.Havingexplainedallthis,2000trialsprovidesfairlyreasonablestabilityinprecision,soyoushouldrarelychangethissetting. Lowering the Simulation Trials to 500 or so might provide a reasonable tradeoff inruntimeifyouhavesignificantlymorethanadozenorsoopenopportunities.Runningmorethantwo thousand trialswill probably justwaste your timebynot improving theprecisionof theforecasts tomake clearer decisions aboutmanaging your portfolio of opportunities. Keep inmind, the purpose of the model is not to make predictions with 100% certainty about theoutcomes;rather, itprovidesreasonablyaccuratepredictionsgiventhequalityofthestateof


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information you possess about opportunities so that you can make informed managementdecisionsfacinguncertainty.

TheLicenseCodefieldiswhereyoucopy/pastethelicensecodeyoureceivewhenyoupayforasubscriptiontothewebapplication.Pleasenote,althoughyouwillstillhaveaccesstotheportalifyoudonothaveavalidlicensecode,thesimulationmodelwillfailtorunwhenyouuploadyourdataifthelicensecodeisinvalid.

UnitPrice

TheUnitPriceworksheet iswhere youassess theuncertainty associatedwith thenegotiatedprice youwill eventually realizewith anopportunity, if youwin thedeal. Thenames for theopportunitiesthatarerecordedontheAccountInfoworksheetareautomaticallycopiedacrossandshouldnotbealteredhereoranyoftheremainingworksheets.

Eachopportunity requires that you supply five kinds of values: LowConstr,0.1,0.5,0.9, andHighConstr.TheworksheetsUnitsSold,AwardDate,Effort,andIncidentalCostalsorequirethatyousupplythesamekindsofvalues,sotheexplanationthatfollowsforUnitPricewillapplytotheotherworksheetsaswell.TheLowConstrrepresentsarequiredlowestpossiblevalue,andtheHighConstrrepresentsarequiredhighestpossiblevalue.Sinceyouwillnotbepayingpeopletotakeyourproductsorservices,thelowestpossiblevalueissetto$0bydefault;andsinceyouwouldprobablynot like tobe limited to theamountyoucanpriceyourproduct, thehighestpossible value is left open. However, if some pre-existing contractual, policy, or regulatoryconstraints(eitherupperorlower)areineffect,youshouldrecordthosevaluesinthesefields.Donot,though,usevaluesthatyouthinkrepresentthelowestorhighestanticipatedoutcomestoyournegotiations.Themodelisdesignedtofindthoselimitsbasedontheotherinformationyouwillprovide,namelythe0.1,0.5,and0.9.

ThelastCheckcolumnfunctionsasanerrorcheckforyourassessments.Ifthevaluesfollowtheorder preferences correctly for an opportunity, the appropriate row cell will say “Check;”otherwise,itwillsay“Error.”


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The0.1,0.5,and0.9valuesrepresentspecificpointsaboutthedegreeofbeliefyoursalesagentpossessesabouttherangeofoutcomeoftheunitpriceforagivenopportunity.The0.1valuerepresentsthenumberwheretheagentbelievesthereisa10%chancethattheoutcomecouldstillbelower(or90%chancethattheoutcomewillactuallybehigher).The0.9valuerepresentsthenumberwheretheagentbelievesthereisa90%chancethattheoutcomewillactuallybelower (or 10% chance that the outcome could still be higher). The 0.5 value represents thenumberwheretheagentbelievesthereisa50%chancethattheoutcomecouldeitherbehigherorlower(thisiscalledthemedianvalueinstatistics).Whatthisrangeofvaluesrepresentsistherangeyouragentbelievespossessesan80%chanceofcapturingtherealoutcome.Forexample,notice that the “Whiskers and Fleas” demonstration opportunity has been assessed to haveUnitPrice(0.1,0.5,0.9)= ($82,917,$86,077,$93,190).Thismeans that theagentbelieves thefollowingaboutthefinalunitprice:

• thereisan80%chancethatitwillfallbetween~$82.9Kand~$93.1K;• thereisa10%chancethatitwillbelessthan~$82.9K,anda10%chancethatitwillbe

greaterthan~$93.1K;• thereisa50%chancethatitwilleitherbelowerthanorhigherthan~86.1K.

Theagentshouldnotbeexpressingabeliefaboutthelikelihoodofthespecificoutcomethatwilloccur or a number that represents a commitment to produce. For example, the 0.1 value($82,917)isnottheirvaluewitha10%chanceofoccurring,noristhe0.5value($86,077)theirmost likely or best guess.What you should be asking the agent for is their belief about thepotentialrangeofoutcome.Giventhisunderstanding,thevaluesmustalwaysbeenteredsuchthatthe0.1islessthanorequaltothe0.5,andthe0.5islessthanorequaltothe0.9.Iftheseunderstandingsandconventionarenotobserved,themodelwillnotrun.

As youmight have guessed, this is where bias is first encountered in estimating outcomes,especially insalesorganizations inwhichsales forecastsaretreatederroneouslyastargetsorcommitments to produce. This is your opportunity to facilitate the agent to think freely andcreativelyaboutthecausesoftheoutcometheymaynothavethoughtaboutbeforetheirbiasedinclinationsmanifested.Toachievethisfacilitationinamannerthathasbeenrepeatedlyshowntoreducesubjectmatterexpertbias,followthestepsoutlinedhere:

1. Talktotheagentaboutallthereasonsthelowoutcomemightoccur.Havethemthinkaboutthescenariosthatcouldlineuptoproducethisstate.RecordtheserationalesinthecellundertheReasonsforLowcolumn.

2. Next,repeatthisstepforthehighoutcome,andrecordtherationalesinthecellundertheReasonsforHighcolumn.

3. Gobacktothelowrationales,andaskforanumberwheretheagentbelievesthereisa10%chancethattheoutcomecouldstillbelower(or90%chancethattheoutcomewillactuallybehigher).Thiswillbethe0.1value.


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4. Repeatforthehighrationales,andaskforanumberwheretheagentbelievesthereisa90%chancethattheoutcomewillactuallybe lower(or10%chancethattheoutcomecouldstillbehigher).Thiswillbethe0.9value.

5. Finally,ask theagentwheretheywouldbewilling tobetwithcointossoddsthat theoutcomecouldbehigherorlower.Thiswillbethe0.5value.

6. Ifindthatithelpsthesalesagenttogetagoodvisualofthedistributionimpliedbytheirassessments. The web utility Subject Matter Expert Distribution Calibration(http://incitesales.incitedecisiontech.com/calibrate1.shtml) provides a means tosimulateagivendistributionprovidedbytheassessmentvalues.Simplyenterthevaluesforthe0.1,0.5,and0.9intherespectiveP10,P50,andP90fieldsinthesidebaroftheutility,thenclicktheResultstabtoseethedistribution.Letthesalesagentupdatetheirvalues (click Run Distribution button for each update after the first) until they arecomfortablewiththefulldistribution.Usethefinalvaluestoenterinthedatafile.

7. Althoughstep#1recommendsstartingwiththelowvaluefirst,youshouldactuallystartwiththevalueintheoppositedirectiontheagentismotivatedtoseeoccur.Mostpeoplecherrypicktheinformationthatservestheirinterests.Byaskingtheagentabouteventsthatcoulddisconfirmtheirbeliefs,youarehelpingthemexpandtheirthinkingtoconsiderpreviously unanticipated outcomes that could either be embarrassing or extremelyfruitful.

Itisabsolutelyimperativethatyoufollowthissequenceofeventsofassessingtheoutervaluesfirstandtheinteriorvaluelast,withNOexceptions.Thereasonforthisisthatbyassessingtheoutervaluesfirst,youwillbehelpingtheagentthinkabouteventsbeyondtheirinitialinclinationtoconsider;thus,youwillbeavoidingavailabilitybias.Byassessingtheinnervaluelast,youwillbehelpingtheagentavoidanchoring.Unfortunately,thealltoocommonpracticeforproducingrangedestimatesstartswitha“bestguess”thatisthenpaddedwitha+/-X%thattheforecasterbelievesrepresentsareasonablerangeofvariationwithoutthinkingabouthowprobablethisrangemightactuallybe(itcouldbeeithergrosslyoverstatedorunderstated).Thebestguessisusuallyanchoredinabiaseddirection,andthepaddingisjustanarbitraryruleofthumb.Biasedandarbitrarythinkingarenotmentalcharacteristicsthatleadtoaccuracyinforecasting.

Remember,althoughyouareseekingaccuracywiththebestinformationyouhaveathand,youshouldnottrytoachieveafalsesenseofconfidencethroughunwarrantedprecisionbycoaxingtheagentfornarrowerrangesratherthanwiderones.Infact,thewidertherangeyouassess,the more likely you will take into account events outside the original biased inclination.Furthermore,youshouldavoidunnecessarilyover-workingtheassessmentstogetthenumbersperfect.Thegoal istosetbookendstothepotentialrangeofoutcomesgiventhequalityandlimits of your agents’ knowledge at the time of assessment. As you revisit each assessmentaccording to theupdate frequencyyoudetermine isappropriate, theassessed ranges shouldnarrowas,and if, theagent learnsmoreabout theopportunity fromtheprospectiveclient’sfeedback. But be prepared for surprises. Sometime conditions on the ground change inunexpectedways,increasingtheambiguityaboutwhatmightactuallytranspire.Insuchcases,therangeshouldbewidenedtoreflectthisincreasedlevelofuncertainty.


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UnitsSold

TheUnitsSoldworksheetiswhereyouassesstheuncertaintyassociatedwiththenumberofunitsyouwilleventuallydeliverwithanopportunity,ifyouwinthedeal.Ifyoutendtoselljust1unit,say,inthecaseofconsultingengagements,justsettheLowconstr–HighConstrvaluesto1.Ingeneral,ifyouknowyouwillsellaknownfixedamount,settheLowconstr–HighConstrvaluestothatamount;otherwise,followtheguidanceintheprevioussection.

AwardDate

TheAwardDateworksheetiswhereyouassesstheuncertaintyassociatedwiththedateyouwilleventuallybeawardedanopportunity,ifyouclosethedeal.

UnliketheprevioustwoworksheetsinwhichtheLowConstrissetbydefaultto0,theLowConstrhereshouldbesettothedatethatthefirstassessmentforanopportunityoccurs.TheHighConstrshouldbesettoadatefarenoughintothefuturethatitiseffectively“infinitely”farawaywithinthecontextofthetypeofengagementsyousell.Forexample,inthisdemonstrationsheet,theHighConstrissetto10yearsawayfromtheLowConstr.

ThetwoothervaluesyouwillneedonthisworksheetforeachopportunityaretheTermsindaysfrom the close of the deal and the timing betweenPayments if more than one payment isexpected.


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EffortTheEffortworksheetiswhereyouassesstheuncertaintyassociatedwiththenumberofperson-hoursrequiredtoachieveafinaldispositiononadeal,whetheryouwinornot.

IncidentalCost

The IncidentalCostworksheet iswhere you assess the uncertainty associatedwith any costsincurredonthewaytoachieveafinaldispositiononadeal,whetheryouwinornot.

ProbLoss

TheProbLossworksheetiswhereyouassessthedegreeofbeliefthatyouwillNOTbeawardedacontractforagivenopportunity.Itmayseemunconventionaltoassesstheprobabilityofloss,asmostpeopleassesstheprobabilityofwinning.Keepinmind,though,thatoneofthepurposesofthismodelistoavoidbiases,oneofwhichiswishfulthinking.Theunconventionalwordingisdesignedtoaddressanoverlyoptimisticmindset.Ofcourse,theprobabilityofwinningisjustthecomplementoftheprobabilityoflosing(1–probabilityofloss),andthemodelactuallyoperateson that relationship. If you perceive that the agent is excessively pessimistic about anopportunity,conducttheassessmentintermsofprobabilityofwinning.


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Unliketheotherworksheetsthatpromptyoutoassessuncertaintyacrossacontinuous(ornearlycontinuous)rangeofoutcomes,thisworksheetfocusesonabinaryevent–eitheryouwillwinthe opportunity or lose it. Therefore, instead of documenting rationales for a low or highoutcome,youwilldocumentrationalesforwhyyoumightwinorlose.Capturetheserationalesbeforeassessingtheactualprobability.

The process for assessing probabilities of binary outcomes is a little different fromassessingcontinuousoutcomes.Hereyouarenotassessingarangewithan80%chanceofcapturingthetrue outcome; rather, you are assessing the point of indifference an agent will express foracceptingthechanceofpredictingtheoutcomeversusplayingagametoreceivesomepayoff.Youbeginbysuggestingaprobabilitytowinsomeamountofmoney,say$1000,byplayingalotterywith thesuggestedprobabilityorbywinning thesameamountofmoneybycorrectlypredictingtheoutcomeoftheopportunity.Iftheagentprefersthelottery,thisindicatestheybelievethatthelotteryisabetterbet;therefore,theprobabilityofcorrectlycallingtheoutcomeislowerthanthesuggestedprobability.Adjustthesuggestedprobabilitydownandrepeatuntilthe agentdoesn’t carewhich game theyplay, either the lotteryor calling theoutcome. Thisapproachisconductedintheoppositedirectioniftheagentpreferscallingtheoutcomeoftheopportunity.Oftentimes,youwillcycleupanddowninyouradjustmentsasyouconvergeonthepointofindifference.Toavoidgettingcaughtupinmakingtoofineadistinctionbetween,say,a31% probability and a 33% probability, the template allows you to make selections ofprobabilitiesinonly5%increments.ThewebutilitySubjectMatterExpertDiscreteProbabilityCalibration(http://incitesales.incitedecisiontech.com/calibrate2.shtml)providesagreatmeanstohelpasalesagentvisualizethemeaningofprobabilityofloss(orwin).

UndernocircumstancesshouldyousettheProb_Lossto0%duringthepursuitphaseunlessyouhaveanactualcontractalreadyinplace. Therearetoomanyoccasionstocountinwhichpeopleassumethattheprobabilityoflosswas0%(orconversely,theprobabilityofwinwas100%)onlytoberudelyembarrassed.OnlyinthecaseinwhichyouhavebeenawardedthecontractandrevenuesarestillbeingpaidshouldyousetProb_Lossto0%.

Asanaside,youmightbewonderingwhyweassessrangesforuncertaineventsbutonlysinglepointvaluesforbinaryevents.Afterall,youprobablythinkyoucan’tknowtheprobabilitythat


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aneventwilloccurwithgreaterprecisionthanyoucanknowtherangeofacontinuousoutcome.Certainly,weshouldputarangeontheprobability,too,youmightthink.Thereasonswedon’tassessrangesforaprobabilityarethefollowing:

1. Probabilitiesarenot intrinsicpropertiesofnaturalevents. Instead, theyaresubjectiveexpressionsaboutourdegreeofbeliefthataneventwilloccurgivenalltheinformationwecanbringtobearonourconsideration.Ifweputarangearoundtheprobabilitythataneventwilloccurornot,wearerevealingourinternalincoherenceaboutourdegreeofbelief.Then,ifwearewillingtoplaceadegreeofbeliefaroundadegreeofbelief,shouldwenotalsobewillingtoplaceadegreeofbeliefaroundeachofourbracketingdegreesofbelief,soonandsoon?Ultimatelywefallintoaninfiniteregressthatpreventsusfromfinding a certain point of indifference between betting on two alternate lotteries ofequivalentvalue.

2. Whenweassesstherangeofacontinuousuncertainty,wecanthinkofthatrangeasaseriesoftinylittlecontiguous,non-overlapping,mutuallyexclusivebucketsofoutcome.Ifanyoneofthelittlebucketsoccurs,thatautomaticallyexcludestheotherbucketsfromsimultaneouslyoccurring.Theprobabilitiesweassessforthethreepoints(0.1,0.5,0.9)areactuallycumulativeprobabilitiesthatallthelittlebucketsuptoeachpointcanoccur.Ifwewere to perform a reverse sum of the cumulative probabilities, the differenceswouldbetheprobabilitythataparticularbucketwouldoccurornot.Anyonelittlebucketwefocusourattentiononrepresentsabinaryevent,whichisthelimitingcaseofassessingtheprobabilityofanybinaryevent.Inthecontinuousevent,wearemappingthepointofalignmentofallourpreassignedintangibledegreesofbeliefonarangeofunknownbuttangible outcomes. In the singular binary event, we are assessing the unassignedintangible degree of belief that a specific preassigned tangible outcomewill occur. Ineither case, abucket getsonly a singleprobability inorder forus tomaintainmentalcoherenceaboutmeasurementswemakeontheworld.

UsingtheWebApplicationThisiswhatyouwillseewhenyouinitiallylogintothewebsitefortheIncite!SalesOpportunityPortfolioAnalysisSystembeforerunningyouranalysis.


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Fortheanalysistorun,youwillneedtouploadthedatayoucollectedinthedatacollectionfile.Dothisbyclickingthe“Browse…”buttononthetopleft.

Yourwebbrowserwillopenupafilebrowserwindowthatwillallowyoutolocatethedesireddatacollectionfile.Oncethatiscomplete,theleftsidepanelwillnowdisplayanindicatorthatyouruploadcompletedsuccessfully:

Now you are ready to run the Monte Carlo simulation analysis based on the uncertaintyassessmentsyouprovidedinthedatacollectionfile.Simplyclickthe“RunAnalysis”button,


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thenwaitafewmomentsforaSummaryTableontherighttopopulatewithresults.Thismaytakeanywherefromafewsecondstoafewminutes,dependingonhowmanyopportunitiesyouassessedandhowmaysimulationtrialsyourun.Onceyouranalysishasrun,youcandownloadtheOpportunitySummaryTableasa‘.csv’file(‘SalesPortfolioSummary.csv’)andthe analysis charts produced on each tab as a single ‘.pdf’ file(‘SalesPortfolioCharts.pdf’).

If youwould rather have each chart as a separate image file, just grab them from thewebinterfaceanddragthemtoyourcomputer.Thefileformatwillbe‘.png’.Youcanusetheseartifactstosupportfurthercommunicationoranalysisasneeded.Ifyouwanttokeeparunningarchiveofyour results, renameeach file inameaningfulway todistinguish themfromotheranalyticoutputs.

Pleasenotethatiftheuserinterfacesitstoolongwithoutactivity,itwilllogoutofthesimulationserver.Ifthishappens,youwillneedtorunyourresultsagain.DuetotheminorvariationsthatoccurbetweenMonteCarloruns,youresultsmaybeslightlydifferentwhenyourerunthem.

InterpretingResultsAstheMonteCarlosimulationruns,thewebapplicationcalculatesallthecostsandtimingresultsonatrial-by-trialbasis.Itisnotmerelycalculatingaverageinputvaluesandthenoperatingonthoseaverages.Doingsowouldreduceoutmanyofthesubtleinsightsthatwecangainfrom


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simulation.Thesimulationapproach,bycontrast,preservesalltheeffectsofuncertaintyintheinputassessmentsandoperatesontheminaconsistentmannersothatyoucanexplorethefullrangeofeffectsonthemetricsthatcanhelpyoumanageyoursalesportfoliobest.

WhentheMonteCarlosimulationfinishesitsrunsacrossthedefinedsimulationtrials,thewebapplicationthenproducesnineanalyticalresults.

SummaryResults

Thesummarypageprovidesthefollowingresults:

1. Averagetotalpotentialrevenueofallopportunities–Theaveragevalueofthesumofalltheopportunityrevenues(acrossallsimulationtrials)giventhateachopportunityissuccessfullyawarded.

2. Averagetotalpotentialnetvalueofallopportunities–Theaveragevalueofthesumofalltheopportunityrevenueslessanycoststhatareincurredintheirpursuit(acrossallpossiblesimulationtrials)giventhateachopportunityissuccessfullyawarded.

3. Average total risked net value of all opportunities – The average net value of theportfoliowiththeprobabilityoflossappliedtoeachtrialwithineachopportunity.

4. Valueofcontroltocloseallopportunities–Thedifferencebetween#1and#3.It'stherational upper bound on how much additional cost we might incur to bring all theopportunitiestoasuccessfulawardstate.

Thesummarypagealsoprovidesasearchableandsortabletableofthevaluesdescribedinitems1-3above,butfortheindividualopportunitiesinsteadoftheportfoliolevel.


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PortfolioRiskProfile

Theportfolioriskprofilechartsdisplaythefullrangeofvalueassociatedwiththeportfolioundertwoconditions:

• Alloftheopportunitiesclose(orangecurve)• Sometoalloftheopportunitiesfailtoclose(greencurve)

Eachcurveisacumulativeprobabilitychartthatshowshowmuchvalueispossible(givenourcurrentstateofinformationandwhichoftheaboveregimeswe'reconsideringatthemoment)orlessforagivenintersectionofprobability(onthey-axis)withthecurveasitmapsdowntothevalue(x-axis).Forexample,ifwepickthe80%probabilityonthey-axis,wedrawahorizontallineovertotheappropriatecurve,andthendrawaverticallinedowntothex-axis.Whatevervalueisrepresentedbythepointonthex-axis,weacknowledgethatthereisan80%probabilitythatthe value of the portfolio is this value or less. Conversely,we could also say there is a 20%probabilitythatthevalueoftheportfolioisthisvalueorgreater.


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Thedifferencebetweentheaveragevaluesofthesetwocurves(indicatedbytheverticalslinesthrough them) indicates the valueof control for ensuring thatwe close all theopportunities(result#4ontheSummarypage). Inotherwords, it'stherationalupperboundonhowmuchadditionalcostwemightincurtobringalltheopportunitiestoasuccessfulclose.

ValueSensitivity

Thevaluesensitivitychart(tornadochart)providesameasurementforhowmuchtheuncertaintyintheforecastedpotentialvalueofasingleopportunity(notincludingtheeffectofprobabilityofloss)couldaffecttheaverageportfoliovalue.

The length of a bar in the tornado chart relative to the other bars indicates the quality ofinformationaboutanyopportunityrelativetotheotheropportunities.Forexample,ifabarforanopportunityislongerthananotherbar,thelongerbarimpliesalowerqualityofinformationrelativetotheshorterbar.Thelongerabaris,thelesscertainweareaboutitseffectonthevalueoftheportfoliothanthatofshorterbars.


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The end points of the bars tell us the sensitivity of the average portfolio value to the 80thpercentilepredictionintervalofthevalueoftheopportunitiesindependentlyfromeachother.Thetornadoisthenorderedfromthelongestbarontoptotheshortestbaronthebottom,givingusavisualprioritizationofwhichopportunitiesneedmoreinformationtoimprovetheprecisionofitsforecast.Itdoesnottelluswhichopportunitiesaremorevaluablethanothers;rather,ittellsustheopportunitiesforwhichwearelesscertainabouttheirfinaloutcome.

OpportunityLosses

Thesechartsshowushowmanyofthecurrentopportunitieswemightexpecttolosegiventhedegreeofbeliefassignedtotheirfailuretoclose.Thefirstchartonthetopgivestheprobabilitydistributionthattheexactnumberofopportunitiesinagivenbinwillfailtoclose.Thechartonthebottomgivesthecumulativeprobabilitythatthenumberofopportunitiesinagivenbinorlesswillclose.


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Basedonthetwochartsabove,weobservethatthecentraltendencyoftheportfoliowillbetoloseabout8ofthedemonstrationopportunitiesoutofthe14inpursuit,andthereisan88%chancethatthenumberofthelostopportunitieswillbe9orless.

Bothofthesechartsmightseemlikeanexerciseinpessimism.Afterall,fewofuswanttohearhowwe’regoingtolose.However,thepurposeofthesechartsisnotgiveyouconfidencethateverythingwill turnoutaccording toplan; rather, it serves toprovidean instigation tobeginthinkingabouthowtoturnthepotentiallossesintowins.It’seasytofindoutwhichopportunitiespresentthegreatestthreattothevalueoftheportfolio.TheirprobabilitiesoflossarerecordedintheProbLossworksheetofthedatafile.Ifyouassessedtheseprobabilitieswell,youshouldhaverecordedpossiblereasonsforwinningandlosingeachopportunity,andthis informationcanservetocreatemitigationplans.


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AwardTrend

Thischartshowsastackedoverlayofthelikelydatesthatanyopportunitywillclose.Peaksinthetotalverticaldistanceshowmostlikelydates.Valleysshowperiodsinwhichlikelihoodofclosureofopportunitiesisreduced.Thegoalofmanagingtheclosuredatesshouldbetomovethemallasearlyaspossible(tothe left)andtoflattenoutthepeaksandvalleystoavoidshortfalls inincome and delayed periods in income. The AwardDate worksheet should contain yourrationalestohelpyouthinkaboutwhyopportunitiesmightclosesoonerratherthanlater.Usingthisinformationwillhelpyouthinkabouthowyoucanaccelerateopportunityclosure.

RevenueTrend

Thischartshowstheaveragerevenueproratedovertimeaccordingtotheprobabilityofsuccessandthelikelydatesofclosure.Peaksinthetotalverticaldistanceshowwhenthemostrevenuewill be coming in. Valleys show periods of reduced likelihood of accruing revenue foropportunities.Thelinedoesnotshowhowmuchrevenuecanbeanticipatedonagivendate;rather,itistheprobabilityweightedtotalrevenuethatmightbeaccruedonanygivenday.


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Themessageinthischartisthatmostoftherevenuewilllikelybecominginbeforetheendofthefirstquarterof2018,andrevenuesaccruedafterthattimewillbefromthe lowervaluedopportunitieswithalongerhorizontotheirpotentialclosure.

MarginalContributionofValue

TheCFOChartdemonstratesthemarginalcontributionofaverageopportunityvalue(weightedbyprobabilityofsuccess)foreachincrementalamountofcosttocloseeachopportunity.Itshowshowefficientlythepursuitofgivenopportunitiesaddsvaluetotheorganization.

Opportunitiesonthefarlefttypicallyaddvalueatagreaterratethanthoseontheright.Inmostcases,theopportunitiesonthefarrightflattenoutintheireffectiverateofvaluecontribution.Thismeansthattheprobabilityweightedcontributionofvaluedeclineswithrespecttotheefforttoclosethem.Whenthecurveismostlyflat,theaverageoutputisapproximatelyequaltotheinput.Whenthecurvebendsdownfromflat,thecostoftheefforttocloseexceedstheaverageriskedvaluetobegained.


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Actionsforsalemanagerscanincludethefollowing:

1. Pruneopportunitiesonthecurvethatextendbeyondthesalesbudgetonthehorizontalaxis.

2. Almostimmediatelyterminateanyefforttocloseopportunitiesthatareonthecurvethatbend down from a flat position. While it's not necessarily the case that theseopportunitiesrepresentareallosstoclosethem(e.g.,youcouldstillclosetheopportunityatacostthatdoesnotexceedtheactualaccruedvalue)onanaveragebasiscomparedtothemoreproductiveuseoflimitedresources,collectionsofthesekindsofopportunitieswillnetouttoalossovertime.

3. Givesomeseriousthoughttopruningtheopportunitiesonthevalueneutralflatportionofthecurveaswell.Thecostandefforttoclosetheseopportunitiesmightbebetterspentlookingformorevaluableopportunitiesorimprovingtheprobabilityofsuccessofmorevaluableopportunities.

Oneofthekeyinsightsfromthischartistosuggestnotsomuchwhichopportunitiesyoushouldcontinuetopursue,butwhichonesyoushouldprobablyabandon.

ProbabilityofSuccessvs.Value

TheProbabilityofSuccessvs.Valuechartisascatterplotthatdisplaysourdegreeofbeliefthatanopportunitywill close relative to thevalueof theopportunity. Itprovidesuswithavisualrepresentationabout

• thepriorityofattentionweoughttogivetoclosingopportunities;• wherewemighttrade-offtheeffortofresourcestoimprovethelikelihoodofclosingmore

importantopportunitiesintheportfolio.


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Thepriorityofattentionisdeterminedbyregionsofequivalentvaluegivenbytheproductoftheprobabilityofsuccessandtheopportunityvalue.Weprioritizeonthebasisofregionsofhighequivalentvaluetolesserequivalentvalue.

Theinformationprovidedherealsosupportstradeoffdecisions.Forexample,ifanopportunitypresentsamoderatetohighprobabilityofsuccessanda lowrelativevalue,wecanprobablyaffordtogivesomethoughttoreassigningresourcestothoseopportunitiesthatpresenthigherpotentialvaluebutlowerprobabilityofsuccess.Inthischart,opportunities“HouseMusic”and“Kindle Fire Truck” show relatively low potential value (the value you receive if you actuallycapturethem),butThe“MonkeySeeMonkeyDo”opportunity,though,presentsagooddealofvalue tobegained if it couldbecaptured,more than“HouseMusic”and“KindleFireTruck”combined.Toimprovethevalueoftheportfolio,wemightthinkaboutreallocatingresourcesfromthe lowervalueopportunitiesto“MonkeySeeMonkeyDo.”Combiningthisobservationwith the location of “HouseMusic” and “Kindle Fire Truck” on the CFO chart, leads to theinferencethatthereallocationdecisionisprobablywarranted.

ValueofControl

Thevalueofcontrolshowstherationalmaximumvaluethesalesteamoughttobewillingtospendtoensurewithcertaintythattheywintheopportunity.Itdoesnotrepresentanobligationtospendadditionalresources;rather,itsuggestsabudgetthatcanhelpinspireideasabouthowbesttoimprovetheprobabilityofwinning.


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Thischartshowsthatifwemakethedecisiontopullresourcesawayfrom“HouseMusic”and“Kindle FireTruck,”wegaina lotmorevalueby focusingon “MonkeySeeMonkeyDo.”Therationalmaximum budgetwe could set to closing this opportunity—the value of control—isnearly$800K.Again,wedon’thavetospendthislevelofmoney,butifwethoughtaboutwhatwecoulddowithsuchabudgettoclosethedeal,anythingmorethannothingandlessthaneven¼thevalueofcontrolwouldbeareasonableexpense.

InClosingAfter reviewing the portfolio results and deciding on areas to explore regarding whichopportunitiestocontinuepursuingornot,tradeoffdecisionsabouthowresourcescanbeshiftedtoimprovetheprobabilityofwinninganopportunity,andwaystoacceleratethedateofaward,you should takeaduplicateof theoriginaldata fileandupdate theappropriateassessmentsassociatedwithpositiveactionsyoucantaketoaffectthem.Then,reruntheportfolioanalysistocompareandcontrastwiththeoriginalanalysis.

ContactInformationIfyouhaveconcernsorquestionsabouttheIncite!SalesOpportunityPortfolioAnalysisSystem,pleasecontactusat

RobertD.BrownIIIPresidentIncite!DecisionTechnologies+1678-947-5997rdbrown@incitedecisiontech.com


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