Making Risk Management Less Risky with Anticipation
One of the central principles of the Anticipatory Organization Model is to move beyond the idea of mere competition. By that, I mean going past the idea of measuring your organization's success and performance against others. Instead, set your own standards through transformational planning and ongoing innovation. In so doing, by being anticipatory you redefine the concept of risk management.
Risk Management Redefined
No matter its core philosophy, every organization recognizes that an element of risk is necessary for success. That's particularly true when it comes to innovation; risk is an imperative in a constantly transforming environment, and it is even more prevalent in the technology-driven world we find ourselves in today.
When a new product or service is developed and introduced, it goes without saying that there's risk involved. You most likely spend an exorbitant amount of time asking: Will the new product work as we hoped? Or, how will consumers react to this new type of service?
Although organizations of all sorts acknowledge that risk comes with the territory, that's not to say they're all that comfortable with it. To that end, many organizations look to minimize risk by avoiding it as much as possible. That's misguided for several reasons. Let's have a look into it further and figure out why.
- Two Reasons to Face Risk Head-On
First, by being risk-averse, many organizations effectively limit the sorts of significant opportunities that naturally mandate a degree of risk-taking.
Second, risk can be effectively anticipated and managed by using several elements of the Anticipatory Organization Model. This allows you to completely redefine what risk management is and move forward with great confidence and certainty.
- The Strategy: Hard Trends and Soft Trends
It's a basic truth that can't be disputed: Strategy based on uncertainty has high risk. Given the reality of this, that means that strategy based on certainty will naturally have a lower risk.
Determining what is certain and uncertain always starts with identifying both Hard Trends--facts that we know for certain will occur in the future--and Soft Trends, which are future maybes and open to influence by us as leaders.
Let's map out a scenario along those lines. Let's say you want to develop a new smart home device, much like Nest. It is evident that the Internet of Things (IoT) is an area that's already overloaded with both ideas and competitors, so on the surface it seems like a very high-risk venture.
But you can leverage Hard Trends to better manage that risk. For instance, it's a definite Hard Trend that people's lives are busier than ever before. And as they add more and more to their everyday routines, another Hard Trend that can be noted in this equation is the need to manage our living environments while we're on the go, either traveling for work or merely tied up at the grocery store.
In addition to this, there's the Soft Trend of dogs becoming a bigger part of families, or a dog being treated as a child to some who don't have children--a Soft Trend being that there's no certainty that this will continue, although it's highly likely.
Smart devices already exist that can deploy a treat to your furry friend by way of your mobile device. However, there are many individuals who work long hours and have to consistently have a neighbor or pet sitter stop in and let their dog out. What if there was a smart doggy door that locked and unlocked by way of your smart device, allowing you to communicate with your dog in order to let them out and locking the doggy door behind them once they return?
Not only does it allow further communication with your pet from afar and even train them in a new way, but it further improves the relationship between you and your pet and makes them feel even more so like you're right there with them, letting them out at the time they need to be let out rather than having to hold it and inevitably have an accident.
The Result: A New Form of Risk Management
As our example illustrates, leveraging Hard and Soft Trends to your advantage mitigates the risk that many organizations consider a deal killer when it comes to innovation. Using both kinds of trends allows you to disrupt with low risk--or at least much lower risk--uncovering opportunities that allow your organization to leap far ahead of the competition that already exists in many industries.
Ultimately, these are critical elements of your ability to accelerate innovation, manage risk at a much higher level and actively shape the future.
Eager for more insights? You can find them in my book The Anticipatory Organization, or by way of learning more by partaking in my Anticipatory Leader
Membership.
