Risk aversion is a controversial topic in the boardroom. One collective decision is responsible for millions, even billions, to be gained or lost. Anyone that wants a slice of the apfelstrudel will be aware of considerable risks. All too aware.
Before we explore a very simple approach to how an organization can design a flexible strategy that can be molded between and during continuous execution, we need to address the uncanny relationship between risk and change.
Risk and change come together. They don't live without one another. We can prepare for change, but we can’t make an accurate prediction of what’s to come.
So, how do we prepare for change? What can we do to maximize tolerance to change and increase the likelihood of a better outcome?
These are the questions we answer in this final article of the ten-article series on active change management. Here’s a summary of the topics we’ve discussed so far:
Pre-Requisites Of Change Tolerance & Flexible Planning
First, we need a well-thought-out vision that’s deconstructed into actionable, flexible goals that are communicated way beyond the boardroom’s confines.
Then, we assess the tools we have to prepare for change.
Assumptions Are Valuable As Long As They’re Not Set In Stone
Assumption is the first tool, though assumption should by no means be applied as a psychic ultimatum. No assumption is certain, and no assumption may accurately predict every aspect of what’s to come.
For an assumption to be useful, it must be backed by a deep understanding of the strategy’s desired outcome and an ability of daring analysis. Attachment to an assumption is also a deal-breaker since theories quickly change through experience.
Daring and unconventional theories are the fundamental basis for creating potential problem scenarios and solutions. The further they are out of the box, the more risk-tolerant the strategy becomes. Once there are several scenarios, the thinkers, ideally, a larger collaborative group, are able to assess the probability of each scenario to take place, with a rough plan of action for each instance.
Such analytic finesse is the key ingredient to fluid strategy design. The closer the flexibility of goals to the speed at which the relevant environment changes, the higher the likelihood of a desirable outcome. However, we should remember that we need to create room to practice the ideas that seem the strongest.
This brings us to the next pre-requisite.
How To Create A Space For ‘Daring Analysts’ In An Organization
Analysis is the flow of thinking. It’s when an individual is able to deconstruct and construct information on repeat. The better the analyst, the faster the deconstruction-construction cycles.
However, even the best, fastest analysts can prove useless if they’re confined within a limited set of outcomes. Some companies are lucky enough to have the occasional courageous thinker come forth and point out a specific problem. Such problems are often consequential to the restrictions that upper management places on key teams.
To ensure that an organization maximizes the capacity for flexible planning, all brain power needs to be put to work. It makes no sense for ten leaders who barely partake in everyday operations to create a plan that’s passed down for immediate action.
This is the ultimate recipe for disaster as a result of ignorant management.
Organizations must step back and allocate more attention to planning. Then, that time is best put to use by communicating that plan to every person within the organization in some form or another.
Naturally, front-line thinkers won’t be absolute decision-makers, but their contribution is vital. As we said, every assumption may contain something useful that increases risk tolerance.
Why Apply The New Strategy In Practice Before Broad Deployment?
I’m no footballer, though I’ve observed football enough to know the importance of trial and error in strategy design.
Let’s put ourselves in a great football manager’s shoes. It’s our first day at a new club, we know two players out of the twenty-five squad members.
Communicate with players to get to know their strengths and weaknesses, as well as what they themselves are aware of;
Use the knowledge we have of the individual players and team to spend a given amount of time observing various formations in play;
Keep observing and applying all new knowledge to create new formations and new combinations to create a first-team that works best as a collective;
Each time a new team is provisioned, communicate with players to ensure all managerial blind spots are covered.
Notice that the first and last steps are both focused on communicating with members of the team? This is the ‘magic’ behind bottom-up management and control. The individual or small group of individuals in control may surrender a degree of control. This allows new information to sift through and place the existing plan under scrutiny.
Organizations with ample resources may prefer to launch developing strategies across smaller teams, though not all have this luxury. Others may have one shot at deploying an effective lifeline that turns the company around from apocalyptic losses to a profitable operation, and that’s where on-the-go strategic design and management may save resources.
Active change management is not a new concept. It’s a simple one that’s applied in unnecessarily complicated human structures, that are, by nature, simple.