October 20, 2014
Corporate risk – how big is too big?
Corporate risk is a tricky subject. Too little risk and the competitors will be steaming ahead. Too much risk and it scares the shareholders (and the accountants!) – unless of course it all plays out perfectly … in which case you’re the hero (for today at least)!
A certain amount of risk is essential for organisation to break new ground, put together more creative teams and stay ahead in their sector.
I recently worked with an Managing Director client where the foyer of his house (where he also has an office) was bigger than the total meterage of my own home. I was hired by the company to support this MD’s high performance as of one of the most valuable leaders in the organisation. He is super-bright, inspired, motivated and people at all levels of the company like to be in his company.
Normally my conversations with directors are quick-paced, colourful in exploring the possibilities, clear about what a best way forward would be and what ultimate outcomes would benefit the most people. This MD was known for forging forward with fresh ideas and smart hires. He’d had super-positive results in his past 2 companies. On a scale of 1-10 I’d say he was an 8.5 when it came to risk and he had a highly developed sense of this market sector, his clients needs, what the next generation of products & services was going to look like.
Here’s the top 3 things I think are worth knowing about risk having coached this MD and other leaders like him:
- Measurement makes risk less risky: if you know the skill set of your teams, the value of your service, and the needs of your clients; if you have a deep sense of your brand, a handle on company finances and cash flow, and a sense of what you’d be willing to lose in order to gain, then the decisions that others may perceive as risky may instead feel exciting to you.
- Discomfort can be motivating: stretching your leaders to get new systems, new schedules and new numbers out of their teams may well increase tension (and perhaps even a reaction from comfort-zone lovers), but it’s worth it if the alternative is sameness and the stretch ultimately keeps a company thriving, employing talent (who are supporting families) and increasing their client service.
- Change & expansion cultures are healthy: all future-embracing companies would be smart to actively skill up their managers and directors to systemise the present, then invest in asking ‘so what could be next’? ‘What does more look like’? ‘How can we further meet the needs of our clients and customers’?
We’ve all heard the ‘no risk no reward’ line. It makes sense more so in today’s fast-paced markets than ever.
Or I can leave you to ponder Albert Einstein’s take on risk; he said: “A ship is always safe at shore – but that’s not what it’s built for”.