MEASURING THE MOMENTUM
 

 

 

 

 

 

 

 

 

 

 

 

This dilemma may explain why many strategies are intuitively made rather than logically and tightly reasoned. But there are concepts that can be usefully applied in approximating opportunities and in speeding up the process of strategy development. The above procedure is designed not only to analyze information systematically but also to formulate or change strategy in an explicit fashion and implement it. Measuring the The first phase in developing product/market plans is to predict the future state Momentum of affairs, assuming that the environment and the strategy remain the same. This future state of affairs may be called momentum. If the momentum projects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a desirable future, no change in strategy is needed. More often, however, the future implied by the momentum may not be the desired future. The momentum may be predicted using modeling, forecasting, and simulation techniques. Let us describe how these techniques were applied at a bank. This bank grew by opening two to three new branches per year in its trading area. The measurement of momentum consisted of projecting income statement and balance sheet figures for new branches and merging them with the projected income statement and balance sheet of the original bank. A model was con- structed to project the bank’s future performance. The first step in construction of the model was the prediction of B ijt, that is, balances for an account of type i in area j and in time period t. Account types included checking, savings, and certificates of deposit; areas were chosen to coincide with counties in the state. County areas were desirable because most data at the state level were available by county and because current branching areas were defined by counties. Balances were projected using multiple linear regression. County per capita income and rate of population growth were found to be important variables for predicting total checking account balances, and these variables, along with the last period’s sav- ings balance, were shown to be important in describing savings account balances.