One of the more curious aspects of strategic portfolio management is a concept called the *probability-of-success*. This metric is often used in decision making around strategic options.

Typically, options are ranked based on the following formula:

(Expected Result) = (Probability-of-Success) x (Impact)

This approach to decision making is logical, obvious, and wrong.

Problems with Probability of Success

First, you can’t compensate a low probability of success with a very high impact. For example, a lottery can make you a millionaire many times over, yet the probability of winning is so low that it’s actually fruitless to use this approach as a strategy to become wealthy. The fact that there are lottery winners is still no excuse for participating in a lottery.

Second, we tend to overestimate the probability of success of a typical strategic initiative. As a baseline, 70% of all strategic initiatives simply fail to achieve their intended goals.

How to choose instead

What to do instead when you have to choose between options to build your strategic project portfolio?

The big secret is to use *Strategic Triage*.

The rules for Strategic Triage are as follows:

- The
*baseline*of the probability-of-success for any initiative is 30%. Any deviation from this baseline must be based on solid data, such as unique experience and exceptional skill. - Never pursue anything with a
*low probability*of success: A strategy is no lottery. - Never pursue anything with a
*low impact*, Instead, think big. - Continue to
*develop options*until you have a healthy list of strategic alternatives which have a reasonable probability-of-success, combined with a significant impact.

If you take off your rose-colored glasses and honestly look at your current strategy, perhaps you should go back to the drawing board to develop many more and much better options.