What is and is not a wise risk is quite dependent on the specific industry and markets your business competes in. However through a process of increased self-awareness, education, focused work and incentives, your senior and middle managers can be equipped to be better at spotting opportunities and consciously taking calculated risks to enable business breakthroughs. A very good piece of work on the physical and mental impact of risk taking has been published in 2012 by John Coates – “The Hour between dog and wolf – Risk-taking, gut feelings and the biology of boom and bust”. The author brings together the latest research from neuroscience and applied examples from the world of financial trading where the risk and reward is as great as it gets.
Risk averse may destroy value. A good example of a risk-averse management being confronted by the impact of their approach and behavior is provided by Cargill, the Global American Agriculture and Trading company. It is well documented in a Harvard University Business Case that in the 1990’s the top management was confronted by the owners and challenged that they were not creating the value they could do. The prevailing strategy was producing incremental growth but it could be argues was destroying value. The management was challenged to come up with a strategy that would produce significant growth and value added from the resources of the company. With this wake-up call the management responded and developed a more ambitious and by definition riskier strategy. The result was a doubling of the size of the company within the time frame determined by management and a significant increase in profits.
How we can help. We can work with you to identify the risk preference profile of specific leaders or team of leaders. Using validated psychometric instruments we can help individuals and groups gain an increased awareness of their personal preferences. This awareness is an important step in understanding own risk preferences. Secondly we need to look at the management culture and the incentive systems and processes to see how they facilitate or inhibit risk taking. Thirdly we need to facilitate the key decision makers using the findings as well as some important strategic thinking to conclude on what levels and types of risk are appropriate.
Get in touch with Gerry Buckley at firstname.lastname@example.org to explore how we can help you.