As a team, you need to sit down and discuss what conclusions or hybrid conclusions you can suggest for your sponsor. Keep in mind that a hybrid conclusion is often the best type of conclusion. However, you must also choose which conclusion or hybrid conclusion you will recommend. When you can assign a monetary or value measurement to the conclusions and hybrids, an Efficient Frontier analysis can highlight hybrids and which option is the value-maximizing option.

Efficient Frontier Analysis 

Efficient frontier analysis is a tool used by analysts to determine what course of action will generate the maximum return for the least amount of risk. In simpler terms, it is a way of determining what course of action will give the biggest bang for your buck. An example of an efficient frontier is shown below:

Source: investopedia.com

Your sponsor will have some sort of risk tolerance limit – this might be a budget constraint, a time limit, or some other limit on a resource. They will only want to invest so much of their personal or company time and money into your proposal. With those constraints in mind, your job is to go through each of your proposed conclusions and figure out where they land on your efficient frontier chart. 

How to Create an Efficient Frontier 

1. Start by creating a chart with "return" or "value" on the y-axis and "risk" or "capital" on the x-axis
2. Consider each of your conclusions with your team and plot out the realistic results of their actions. Make a realistic estimate of how much money/return each conclusion would generate. 
3. Consider how much each of your conclusions would cost. Be generous in your estimates of cost – you will likely overstate return and understate risk if you are not careful and realistic. 
4. Chart each conclusion out on your graph as a dot or coordinate pair. Keep doing this until you have charted all of your conclusions. 

How to Interpret Your Efficient Frontier Analysis

You should have a few different options in front of you at this point. Your job is to now evaluate all of your options based on your sponsor's constraints. Eliminate any conclusions that are obviously outside your sponsor's constraints; you would eliminate, for example, an option that required a $1 million investment if your sponsor only had $30,000 to spend. If an option falls just outside the constraints, you may decide you want to present it as a stretch case to your sponsor. Make sure the return is high enough to justify such a decision. 

Hybrid conclusions are created by taking some of the elements of one recommendation and combining them with some or all of the elements of a second recommendation. This hybrid recommendation may have lower risk or higher returns than the original recommendations (or both lower risk and higher return).

The best conclusions generate high returns for minimal risk. These conclusions will end up charting in the upper-left quartile of your chart. If none of your conclusions generate very much return for the risk, you might need to consider new conclusions or combining conclusions. Continue this exercise until you have a solid conclusion.