3.1.4 Build the Opposing Case

Welcome to On Judgement. One analyst says DailyCup’s new outlet proves strong demand. Another says launch discounts explain the queues. How could both move beyond a debate of opinions? Take a first view. You can change it when you have considered the evidence.

Find the assumption whose failure would most affect the conclusion. A strong objection explains a plausible mechanism and points to relevant evidence. “I do not like the founder” is weaker than a question about repeat demand after subsidies end. Represent the opposing view in a form its supporter would recognise before responding. That makes the investment case more useful, not less confident.

A balanced judgement treats credible alternatives fairly and weighs their support and decision impact. It does not require giving an unsupported rumour as much space as a reconciled ledger. Nor does it require ending exactly halfway between two targets. Explain why one concern is decisive and another is currently less important. The conclusion can favour one option strongly when the evidence justifies it.

Bull and bear cases can both explain a crowded launch. Follow customers after discounts, measure realised prices and contribution, compare comparable cohorts and inspect retention. Ask what each explanation predicts that the other does not. A useful test is not “find another positive article”; it is an observation that could change the relative strength of competing explanations.

Criticise the argument and assumptions rather than the speaker. Acknowledge what the other side gets right and ask precise questions. Changing a view after strong evidence is legitimate; retaining it can also be legitimate if the evidence is not material. Keep a record of the disputed fact, assumption or objective so a group can resolve the right disagreement.

Let's work through Volume versus profitable demand. A fictional launch outlet records 120,000 transactions at realised price £4.50, variable cost £3 and fixed costs £180,000. A mature comparison records 100,000 transactions at £5, the same variable cost and fixed costs £150,000. Other factors are excluded for this exercise. Pause here and try the calculation or reasoning before continuing.

Launch revenue=120,000×4.50=£540,000; contribution=120,000×1.50=£180,000; profit=£0. Mature revenue=£500,000; contribution=£200,000; profit=£50,000. The higher-volume launch has lower profit under these assumptions.

This is evidence against equating queues with profitable demand. It does not establish that the launch will never mature successfully; inspect cohorts, price normalisation and cost changes.

Now try the choices in this lesson. If your answer changes, identify the reason. Identify evidence that distinguishes competing explanations. Use the case activities to put the idea into your own words, and return to the evidence when more than one conclusion is defensible.