Business Growth & Strategy

Can We Remove Risk From Our Strategy?

Removing Risk From StrategyWe look both ways before we cross the street.  We research the company we are dealing with before making a big purchase.  These are both examples of non-risky behavior, yet strategies sometimes do not get the same treatment in terms of risk avoidance. If you could, wouldn’t you choose to test your organization’s strategy before gambling your business and your career on the assumption that the strategy is right?

Below is a short list of tactics to help remove some of the risk from your strategy:

1. Start with the facts and base the strategy on reality, not hope.

Strategies that actually work are based in reality, not opinions, guesses or hopes. An effective planning process which includes measurement and acknowledgment of key business “truths” (including financial, cultural, competencies, and historical performance) is the best way to build such a strategy.  Those who are involved in the planning process must be open to facing these truths and critically evaluating them relative to the strategy being considered.

2. Break the strategy down into smaller component pieces.

The corporate strategy, when distilled into its pure essence of goodness, boils down into a manageable small number of goals that then expand back into a number of sub-strategies to accomplish those goals.  Managing big and complex is much more difficult than managing smaller and elegantly simple chunks of strategy. Starting early and /or ongoing makes this much easier to accomplish.

3. Test you assumptions thoroughly.

There is one more key point to make about getting in front of and controlling the strategic plan development. Assumptions form the basis of those sub-strategies referred to above, and those underlying assumptions must all be fully vetted. Fully vetting strategic assumptions also takes time. It requires allowing those involved with planning to back away from the “givens” and challenge them to ensure we are not assuming the rosiest scenarios on which to base our plan.

4. Put yourself into your competitors shoes and think about how you would counter your own strategy.

We can delude ourselves with “happy talk” and the belief that our strategy is more advanced and sophisticated than that of our competitor.  The truth is, unless we undertake the exercise of attacking our own business’s weaknesses and vulnerabilities and then shore those areas up through strategic initiatives – our competitors will be more than happy to exploit them for us.

All too often, corporate strategies are devised without thinking in our competitor’s shoes.  Competitors are smart and aggressive, especially those that are quickly coming up from behind us in terms of market share. Their eyes are fixed on us already.  What maneuvers will they make to overcome us competitively?  What proactive elements of our strategy can put additional distance between us and them?  Our strategy must consider our vulnerabilities and account for them through counter-actions.  If we are exposed in one area of our business, then why?  What must be done to shore it up?  It is distinctly possible that strategic analysis will lead us to make decisions to exit one or more areas of our business in order to better focus on more profitable or viable segments.  In other cases, strategic analysis may trigger innovation initiatives to support a strategy of expansion – capitalizing on a dominant competitive position.

5. Pay careful attention to your industry’s direction and momentum.

By studying the movement, direction and momentum of the industry or industries served by the organization, that data can feed the strategic planning process leading to better planning decisions. For instance, if the industry data suggests that competitors are enjoying a technological advantage over your firm, how should that be addressed in the strategy?  What if consolidation is occurring?  Should we be considering a merger now?

No matter where your organization falls on the continuum of planning sophistication, there likely are opportunities that if addressed would help remove risk from your strategy.

Category: Business Growth & Strategy

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About the Author: Joe Evans

Since 2006, Joe Evans has been President & CEO of Method Frameworks, one of the world's leading strategy and operational planning management consultancies. The firm provides services for a diverse field of clients, ranging …

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