Jan Richards

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Process design and management

How to create an “edge of cliff” scenario analysis to prevent big problems from occurring

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“I’m afraid of what I don’t know,” the CEO of the rapidly growing company said to me as I advised him one day.

“And I’m afraid of what I can’t see.”

He feared dire circumstances could occur and wipe out his thriving company.

This CEO was worried enough that he longed for a good early warning system he could use…if there were a way to create one.

I created an early warning system for him, one we ended up calling the “edge of cliff analysis” because it addressed his key fears for his company…and a few others he had not thought about.

It was a tool he and the company reached for, and used, for years afterwards.

To create the “edge of cliff analysis,” and to make sure it worked well for them, I worked with a wide range of people at the company to understand serious and unexpressed fears they had for their company.

It was like uncovering and understanding a high-risk puzzle, and then providing an action-oriented dashboard to guide them.

It helped them prioritize improvements that would reduce the most likely risks to the company, while providing them significant measures, and the ability to use them well, in order to help them know if problems were starting to emerge.

And then we made sure the decision-making and prioritization framework is one that people inside the company could and would use. (And they continued to reach for and use it, I heard through the grapevine, for years afterwards).

Do you, too, long for a sense of command in otherwise challenging and unpredictable circumstances?

Do you ever wish for an early warning system such as this CEO did?

If so, here are the basic steps we used to create this rapidly growing company’s early warning system:

– Start with your fears

We called this the “edge of cliff” analysis, and started with the CEO’s greatest fears.

He had lived with heavy but ambiguous worry for some time.

He hadn’t yet articulated his fears clearly, and this step alone, of articulating his worries, helped turn them into something actionable, and something positive.

– Turn them into scenarios

We considered his worst-case scenarios and the probable consequences of each for his clients and company.

We also considered best-case scenarios (they are so much more fun to think about…and we needed those, too, for a bit of relief in this work).

And then we considered what would happen if the best scenarios turned out, in real life, to be even better than we dreamt. We also considered situations where something far, far worse than the worst that he feared happened.

This stretched our sense of what the early warning system needed to accommodate, and to flag for preventative, or adaptive action.

–  Make your early warning system goal clear

Identify what you want your early warning system to do for you.

Next, consider who will use the information, and what they will hopefully do with it.

Check in with the future users of the information to see what they need in order to make the information easy for them to use to identify and take the right actions.

– Gather external information

In this client project, I had to find a proxy for customer satisfaction and frustrations, in lieu of talking directly to their customers.

I looked to see what promises the company made, or implied, to their customers through their marketing and advertising materials.

This told me what processes inside the company had to work flawlessly, under all different circumstances, no matter what was happening outside the company.

– Synthesize

Working with the leadership team, I verified and clarified which processes had to be top-notch in order for them to continue to thrive.

We mapped this to the most likely scenarios they might face, and identified which processes put them at highest risk, if they were not strengthened and improved.

– Organize and communicate

We organized and simplified the work, making it easy to understand and use.

We had no interest in creating a system that just looked good on paper. We wanted one that would be successful in real life and real business.

Next, we trained people, helping them see what valuable part they played in making the early warning system work successfully, and do what it was intended to do to keep the company safe and thriving.

The early warning system turned out to be a combination of crystal ball, fire drill, and strategic change management system all rolled into one.

If you’d like more information about how to do a scenario analysis, or how to do an “edge of cliff” analysis for your business, let me know.

 

Here’s another post you may be interested in:

You place your bets when you set strategy

The best way to manage business risk: go toward it

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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.

Five ways to increase your business resilience

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“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.

Six ways to grow your leadership strength

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Like any skill or ability, leadership strength, one of the top ten characteristics of great leaders, can increase with learning, experimentation, practice, and experience.

As you develop this, or any leadership skill, you stretch the boundaries of your leadership comfort zone and proficiency.

If you’re ready to become a stronger leader, here are six ways to start:

1. Select a leader you admire and emulate his or her strengths

Keep this person in mind as a guide to emulate, learn about, and learn from as you experiment, build and refine your strength as a leader.

2. Get feedback on your leadership

Seek information about your strengths and areas for improvement from peers and direct reports, in addition to seeking and using your manager’s feedback.

The information, if honestly provided and viewed, may be eye-opening and humbling, in complimentary as well as instructive ways.

3. Know where you’re going

Create a vision to keep your attention, intention, and actions aligned with the long-term goals for your team.

In addition to creating a compelling vision, use simple but consistent and effective follow-up practices to keep you on track.

4. Listen and observe

You may or may not like what you hear and see when you check in to see how things are going, but you need to know what’s really going on.

Regular, honest assessment is essential to know how you and your team are really doing, and to be able to respond and adjust effectively to actual conditions, rather than what you hope to find.

5. Improve the ways you get your work done

Make your work life easier, and your results more predictable through effective process management.

Simplify and improve the processes, measures, feedback and follow-up practices you and your team use.

6. Build bench strength

This gives you greater capacity and adaptability, as a team.

It also extends your leadership reach and effectiveness. You can’t be everywhere, all the time, after all.

You’re more effective as a leader if you create processes, measurements, and good practices for your team to be able to self-monitor, self-manage and self-correct, as much as possible, in addition to seeking and using feedback you provide them.

A big part of your job as a leader is to create more, and better leaders, in your company.

As Tom Peters notes, “Leaders don’t create followers, they create more leaders.”

How to immediately make your team more effective

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A problem-solving comment on Twitter one day gave me pause.

The writer said how much easier problem-solving is when people don’t “switch sides.”

“‘Taking sides’ on problem-solving teams. Interesting…and ripe for many problems,” I thought.

The primary cause for teams that are split into “sides” is, in all likelihood, the fact that they do not have a real, driving purpose and clear goals to unify them.

If they did, opposing sides would be unlikely to crop up, or it would be hard for the different “sides” to be sustained within the team.

A team’s shared and overriding purpose for existing – if strongly held by all – can be powerful  enough to drive them over, around, or through any barriers or adversarial inclinations that threaten to split them, and prevent them from reaching their goal.

It brought back recollections of another dilemma that dogs many problem-solving teams.

It’s the me vs. we conflict and it can also block team progress, completely.

Here’s just one example of the me vs. we malady:

A few years ago I was working with a client to lead a team of about 45 people through a full-company self-assessment and improvement process. The team was comprised of seven subteams, each one focused on a specific part of the assessment.

After the initial training and team launch, six of the subteams were clipping along, getting their work done well, and enjoying (yes…it is possible!) the challenging, invigorating assessment experience and process.

The seventh subteam, however, was lagging, and clearly dragging.

I listened closely in their status meetings, trying to size up what was blocking their progress, and how we could get them caught up, and working as well as the other teams.

I realized one person in the troubled team never used the word, “we” in any circumstance relating to their shared goals, or the team.

Her focus was always on “me,” “I,” and “mine.”

At a subteam meeting one day, I decided to learn more about her way of thinking to see if I could turn things around for her and her group.

“What would it take for you to use the word ‘we?’” I asked her at some point in the discussion.

She stopped suddenly, surprised, even dazed, in a way.

The question was very simple, yet the discussion it led to turned out to be extremely valuable to her, and to the team she was on.

She hadn’t realized how much her participation on the team was half-hearted, uncommitted, in name only. It was as if she were standing on the edge of a pool, dressed for competition as part of the team, but she’d never jumped in…and maybe never intended to.

Or that her me vs. we perspective was hurting her work, that of her subteam, and of the full assessment team, too.

She’d thought she’d been playing her part, fulfilling her role, by getting her name on the team roster immediately, always being on time to team meetings, and consistently warming a seat. But that was about all.

The “What would it take for you to use the word ‘we?’” question led to some other realizations and breakthroughs for her and the team.

Soon, with a bit of reworking and commitment to their shared goals and team process, the once-troubled team started to develop traction, positive action, and to produce steady, solid results.

They ultimately finished their work very effectively…as I knew they could and would, eventually.

The full assessment team’s work was very successful…beyond their expectations…and up to mine.

They had to do the work to discover that they could.

Taking sides within a team, and a me/I/mine frame of mind show that a “team” is not yet a team…until they are united and driven by a common purpose and vision, as well as clear goals and team process.

The adversary you’re up against is, after all, often not so much another group, or point of view.

The real adversary? It’s the great consequences you share if you don’t figure out how to work together well to meet your shared purpose and goals.

And in any case, the most effective solution, when there are differences of opinion, often resides somewhere between the extremes that the two “sides” advocate.

So…again…find we, not just me, I and mine. 

Review or refine and recommit to your shared purpose and goals. 

By the way, if you’re wrestling now with a we vs. me challenge, or with different sides staring each other down on a team that’s not actually a team yet, know that you’re not alone.

Internal battles and ineffective processes affect many teams in business, government, sports, education and more.

If you know someone who may benefit from this story as they struggle with their own “my team is not really a team” challenge, please share this post with them.