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Jan Richards

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Measurement and feedback

The best way to manage business risk: go toward it

June 2, 2019 by Jan Leave a Comment

What’s the best way to manage business risk?

Go toward it.

Sounds risky, itself…walking toward the thing you fear?

It can be.

The alternative, however? Far worse.

Real business risks, ignored…well…it’s not pretty.

Remember, first, that not all risk is the cliff diving, high-flying, life-defying kind.

Circumstances that bring these types of extreme risk are, frankly, circumstances you can’t control anyway.

The national and world economy, for example is something you can’t do a lot about, individually.

Devastating acts of nature…same thing. You just have to be ready to adapt well to circumstances such as these, however things work out.

If these are the risks you worry most about, scenario analysis is a tool that could be helpful to you. I’ll tell you more about that in a post later this week.

Second, the real risks in business are often things you can do something about. 

And these risks are not far away. They’re often already inside your company.

They’re the risks that you either created (often unwittingly) or that you perpetuate by not addressing problems fully and directly.

Any of the following situations are a risk to your company. And these are all circumstances you can do something about:

– Lack of focus

– Inattention to important details (the details your customers care most about)

– Lack of clear and complete communication

– Inaction or ineffective action when a problem is discovered

– Confusing, inconsistent and ineffective ways of getting work done

– Ineffective and frustrating hiring, onboarding, training, managing and mentoring practices

The signs of potential risks and trouble can be subtle…or glaring.

And because you’re in the middle of the situation, you may not really see or grasp problems until they’ve been festering for a long time. You may have simply become used to them, and think that’s the way things are, and the way things will always be.

Start to remove risks inside your business in these ways:

1. Brainstorm

Start by considering the parts of your business that feel in control.

What gives you confidence that these things are working well?

Next, think about what feels out of control.

Which of these worry you the most, and why?

Be specific as you create both the “working well” and “worrisome” lists.

2. Pay attention

Don’t assume that all is as it seems.

What assumptions are you making that you need to check? (Often, you’re either very right, or very wrong in assumptions that you make).

What data and information do you have, or wish you had…and can get…to monitor and manage the things you’re most concerned about?

If risks prove to be real, the information you wish you had is information you’ll want to figure out how to gather and put to work.

3. Go toward the risk, and test to see if it’s real

Work to understand what’s really going on before you jump into action to prevent, mitigate or manage perceived risks.

Observe, research, inquire, test in whatever ways you can to start to see if the risks are real, or they’re worries that are unwarranted.

By the way, people may say, “Our work is different. We can’t possibly measure and manage what we do.”

I’m here to tell you, as a former operational analyst and process auditor at Apple and elsewhere, that there are ALWAYS things you can do to see how things are really working, compared to how you think they’re working, or how you wish they were.

The information you gain in this way is always clarifying. Usually, it helps make things work better for everyone involved. And that, when it happens, is good for employee morale, customer satisfaction, and, as a result, profits.

In addition, get to know people who can advise or teach you. They may quickly see potential problems that you’re blind to or are purposely avoiding. They can also help you figure out how best to address problems you might have missed.

5. Chunk the action

If changes are necessary, once you understand the risks that are present, break the change into a series of achievable actions.

You’re more likely to do the work if you “chunk” it into manageable projects and tasks.

Suddenly, big goals that were daunting or immobilizing become accessible and motivating as you make steady, observable, and felt progress, step by step.

Filed Under: Change management, Leadership, Measurement and feedback, Process design and management Tagged With: change, focus, leadership excellence, manage business risk

Five ways to increase your business resilience

January 10, 2017 by Jan Leave a Comment

“A good half of the art of living is resilience.”

Alain de Botton

A good half of the art of business is resilience, as well.

Here’s how the need for resilience may show up:

  • All information you’re monitoring looks good. Things seem to be going well, overall.
  • Oh, maybe there’s one small thing that’s a little off-course, but it shouldn’t be a big deal, not after you make a few tweaks and tucks. It’s NOTHING to worry about.
  • Time passes. Things change, even if almost imperceptibly.
  • Suddenly, and seemingly without warning, you’re facing potential disaster.

That little problem you weren’t worried about?

It was a big one.

The situation blew up. Now you’re sunk.

Or are you?

This is when resilience – if you have it – can be a business-saving skill.

For those who struggle with resilience, what causes the problem?

Primarily, fear.

And it’s human nature.

No one wants to think about what might go wrong.

But putting your head in the sand is never a winning strategy, in any business, profession, or situation.

And denial only increases stress (and the mess, if it happens) instead of getting rid of it.

If you’d like to grow or improve your resilience, start with the following five ideas.

They may even save your business during challenging times:

1. Stretch your thinking.

You’ll be more prepared to respond to any unexpected situation if you consider what might go wrong, long before something happens.

Just by considering a wide range of possibilities, and mentally rehearsing what you, and the people you work with, would do to address these situations improves your ability to respond effectively.

You can “try on the future” with scenario analysis. In the simplest possible version, here’s how you do it:

  • Consider the best possible case, the worst possible case, and the most likely situation to arise
  • Stretch your thinking even further in each direction. Take into account an EVEN worse possible outcome, and an EVEN better possible outcome.

Now, having considered a wider range of possibilities, the “most likely” scenario is now likely to be different…and probably more accurate…than it was when you imagined the future as a simple extension of the past, or present.

2. Pay attention to critical details.

Track key indicators of possible change to improve your ability to predict what might happen, before it happens.

Look at it this way: you’re improving the crystal ball you use to predict what will happen in the future by virtue of being more aware of signs of changing circumstances.

To use examples in nature, animals, who are tuned in to very subtle signs in their environment are far better than humans are at predicting and being ready for some natural disasters when they occur.

Dogs and cats, for example, can often tell when an earthquake is going to happen, and they often start to act different.

This New York Times article addresses birds’ ability to anticipate and prepare for dangerous storms: Birds Have Natural Ability to Survive Storms.

Similarly, you can discover and track early warning signs of possible change in business.

To do so, start by identifying the highest risk aspects of your business.

Then brainstorm details or related trends that you could track to give you early warning about the very changes you worry about now.

Having advance notice about what may be happening as change occurs in its sometimes subtle early stages may enable you to take actions to prevent or minimize the impact of changes ahead, if very challenging things are starting to occur, or make the most of good situations, if they are starting to take shape.

3. Strengthen the processes and systems that must work.

Improve the core processes and systems of your business, if needed.

Make sure they are strong enough that your business could rely on them, if needed, to ride out an emergency for a while, should it occur (we who live in California think of being earthquake-ready, for example).

And if that emergency never occurs…and hopefully it won’t…you will benefit from faster, easier, more cost-effective processes for getting work done.

An immediate benefit is that improvements are almost guaranteed to lower your costs and improve your profits.

4. Create an emergency plan and resources for your business.

This one is easy to wave off, but it could save your business, and it could save lives, too.

Encourage your employees and friends of the business, such as your customers, suppliers, and colleagues, to make themselves emergency-ready, too.

Here are links to pages on the FEMA website that tell you how to create business and also family preparedness plans and then implement them:

Business preparedness

Emergency preparedness

5. Practice.

Find small ways to practice resilience.

Be creative.

Treat resilience-building like a game, if you can.

Your business…and your life…could depend upon it.

The odds are that your efforts ahead of time will have beneficial effects, sooner and later, that are far beyond what you might expect…even if that rainy day never comes…and also, when an unexpectedly sunny one does.

Filed Under: Leadership, Measurement and feedback, Process design and management

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  • The best way to manage business risk: go toward it
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