Big Important Things – risk and opportunity identification

30 11 2007

“Big Important Things” (BITs),  are local, regional, national or international circumstances or events that cannot be controlled or prevented, that have a significant effect on current and future business practices.

One should always keep in mind the impact of the “Big Important Things” (BITs) on the supply chain, customers, the competition and your industry.

Those involved in strategy and planning must understand how BITs create enormous risks and opportunities.

One can only react to BITs, they cannot be created or eliminated by an organization.

BITs would include, but not be limited to:

  • Natural and man made disasters – hurricanes, fires, earthquakes, explosions, flooding.
  • Massive economic changes – depression, recession, inflation, currency devaluation, massive layoffs
  • War and Terrorism – security measures, logistics, international trade limitations
  • Government policies – trade barriers, laws and regulations, economic sanctions, embargoes
  • New technologies, – trends and tendencies inside and outside of the industry
  • Environmental or health issues – contamination, unsafe products, epidemics
  • Legal issues – pending or current lawsuits, documentation and reporting, legal precedents
  • Significant global changes in demand or supply – shortages, increased demand
  • Energy costs – trends and tendencies

Contingency plans should be created, worst-case and best-case scenarios developed, and efforts made to lower the risk profile or strategically position the company to take advantage of possible changes in the business environment.

How to use BITs to identify areas of risk and opportunity 

  1. Analyze each of the following elements independently;  strategic raw materials, suppliers, logistics, major customers, the competition, your company, and finally your industry (local, national and internationally).
  2. What is the probability that a BIT would affect each element (impossible, low, medium, high, inevitable) and when (short-medium-long term)?  “My supplier is the only manufacturer in North America of the widgets we need, they are located on the western Florida coast and annually are affected to some degree my hurricanes and flooding.  There is a high probability that a major hurricane will hit them in the short to medium term.”
  3. Use a “what if” line of questioning for those high risk or high impact areas.  “What if a major hurricane hit my supplier and disrupted their production?
  4. What are possible scenarios to reduce your risk, or take advantage of the opportunity.  “Do I have alternative suppliers in place, extra inventory, insurance, how can I protect my customers, who else will this affect and how?
  5. Review this process at least twice a year to take into account changes in the probability of the BITs and modify the contingency plans or strategies accordingly.

Related Links

Analyze and Plan Using 7 Simple Questions

How to Systematically Analyze Any Situation for Better Decision Making

9 Steps to Better Decisions

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The 3 Y’s – help for difficult decisions

29 06 2007

An organization’s management and leadership team is responsible for making timely decisions, supplying and applying resources when required, in order to efficiently reach known or perceived goals and objectives.

In order to make these decisions; research, information and analysis of the pertinent information is required.

Here is where management bogs down or leadership can make serious misjudgements.

  • Poor incomplete analysis or lack of the critical information required to assess the risks, obtain the required resources or understand the probable benefits.
  • Lack of understanding of the changes or resources that the decision will provoke.
  • Making the decision too early, or too late.

A quick and useful trick is to apply the “3 Y’s” to assist when faced with a difficult decision.

The “3 Y’s”

  • Why Me?
  • Why Now?
  • Why Not?

The First Why – Why Me?

  • Who is requesting that I make the decision? Why?
  • Is this in my area of responsibility? Why?
  • Is this my area of expertise, do I know what I’m doing? Why?
  • Do I have enough key information to make the decision? Why?
  • Can I obtain more information, in how much time and at what cost? Why?
  • Do I understand the analysis of the data and the conclusions? Why?

The Second Why – Why Now?

  • Does this need to be done or decided now? Why?
  • Is it in response to an emergency, part of “normal” operations or a change in strategy and objectives? Why?
  • Who depends upon this decision or is affected by it? Why?
  • Should the involved parties be informed of how the decision will affect them? Why?

The Third Why – Why Not?

  • What happens if I don’t make the decision? Why?
  • Are there other options, solutions, or alternatives? Why?
  • Do I think this is the best solution or decision available? Why?
  • Do I fully understand the short term and long term effects on resources, customers, work systems, goals and objectives that this decision will provoke? Why?
  • Who are the internal or external “experts”, what is their recommendation? Why?
  • How far am I putting the organization at risk with this decision? Why?
  • Are there metrics to measure or contingency plans in place in case this does not go as planned? Why?

By reacting and making difficult decisions without reflecting on the WHY we miss identifying the real problems and issues.

We miss solutions and strategies.

We miss opportunities to unify and support the organization.

We find ourselves responding to symptoms and not solving or responding to the core issues.

Related Links

Can’t make a decision

9 steps to better decisions





Stop worrying and start thinking

29 05 2007

 How much time is scheduled for thinking in your normal business day?

Do you have a regular time when you take the phone off the hook, avoid interruptions and think about business situations and problems or create plans?

Do you often worry about past, present and future business decisions?

This quotation from Harold B. Walker Think or Worry
might provide some motivation for you to include some time for reflection and thinking into your workday.

“Thinking works its way through problems to conclusions and decisions, worry leaves you in a state of tensely suspended animation” (H.B. Walker)

Get the subject out in the open, describe it, observe it, analyze it, understand it.

Think about it.

Create solutions or action plans to deal with the reality and stop worrying about it.

“You can think about your problems or you can worry about them and there is a vast difference between the two.” (H.B. Walker)

Related Links

Can’t make a decision

Think or Worry 

Putting change into perspective   





Can’t make a decision?

23 05 2007

 There are times our decision-making is stalled due to fear of making the wrong decision.

Next time you’re in that indecisive state of mind, answer these questions and see if it pushes any buttons to move the process forward.

  1. What is the “best case”desired outcome?  Will your decision move you toward that outcome?
  2. What is an “acceptable” outcome?
  3. What is the worst thing that could possible happen if you make the “wrong” decision?  Can you accept this?
  4. Is your decision reversible?
  5. Will a wrong decision destroy value, confidence or trust of anyone involved?
  6. Do you have enough information to make the decision?
  7. Do you have too much information?
  8. Who knows more about this subject than you….what are their recommendations?
  9. Are you the right person to be making this decision?
  10. Will avoiding making a decision now make the situation better, worse or have no effect?
  11. Does the decision provide a short term fix or will it solve the problem permanently (long term)?

Related Links

How to systematically analyze any situation for better decision making

Why don’t they?

9 steps to better decisions





How we react to unethical actions and behaviour

21 03 2007

There are a number of reasons why individuals and organizations refuse to perform in an ethical manner or raise their voice against unethical behaviour.

6 Reasons why we don’t object to unethical actions or behaviour.

1. Ignored and Ostracized. We will be eliminated from the “group”. Showing opposition to an idea that was created by someone with power or the power of persuasion can result in being ignored and left out of future decision-making.

2. Fear. Not on board with the company philosophy? You might get fired. Fear of unfavorable personal consequences.

3. Demoted. Will lose power, prestige, and income if you speak up or oppose the idea or practice.

4. Insecurity. Perhaps we are not sure if the means justify the ends. Inability to clearly see the situation as unethical or wrong.

5. Reward. We see a payoff (money, power, prestige) that overwhelms our sense of ethics. Justifying wrong in order to receive personal gain.

6. Lazy or uncommitted. Unwilling or unable to challenge the group or idea.

5 Reasons why we should speak up and question unethical actions or behaviour.

1. Be true to yourself. Stand up for your own beliefs.

2. Be a leader. Others in the group might believe the same thing, but are timid or afraid of voicing objections. Create a dialogue and open a discussion of the issues.

3. New point of view. The group might not have thought of the consequences, or not see the situation as an ethics related decision. Open their eyes.

4. Protect the organization. Your intervention might save the organization from scandal, embarrassment, legal and financial problems.

5. Clarify. If you are unsure, voice your concerns and let the group present their case in order to clarify and resolve any doubts that you might have.

Related Links

Is your company noble, moral, ethical or virtuous

Sales and marketing terrorism 

Corruption, bribes, mordidas and tips – Doing business in Mexico

Where do you draw the line





Don’t find a solution, find a way to make it better

12 03 2007

We make a large error in our business and personal lives if we believe that every problem or situation can be solved immediately or in the short term through our decisions and application of resources.

Theoretically it’s possible, but our focus on solution instead of optimizing and making changes to make it better can blindfold us toward evolutionary processes that in the long term provide better, stronger and long lasting solutions.

I’m suggesting that every situation should be initially evaluated based on two basic criteria; can it be solved now, or can it be improved now.

The situations that can be solved now or in the short term, should be. The organization should dedicate the time and resources toward the solution.

An example would be a delivery service that has 3 trucks and cannot cover the current delivery area on-time due to an increase in customers and package volume. A possible swift solution would be the purchase of another vehicle and hiring of a new driver.

A situation that cannot be solved now or ever should be approached by identifying areas where improvement should be made. The time and resources of the company should be focused upon the improvement.

An example would be government’s attempt to eliminate poverty or disease from a population. A perfect solution is not possible or practical, but by focusing on specific areas one can find great opportunities for success or enormous impact (vaccinations for children against polio).

When we look at every situation as a problem that needs to be solved right now we may be missing the best solutions and strategies required to resolve the situation over the long term. Ask yourself:

  • Can we solve the problem quickly and efficiently with simply modification of variables or a shift in technology? If the answer is yes, then set the process and resources in motion.
  • What if the problem is not able to be solved quickly or has no practical or economically viable solution? This is where the approach of resolving and modifying parts of the problem comes into play.

This evolutionary approach to problem solving is not often requested or expected in business (the quick fix is always applauded and sought after), but often the best long term strategy is optimization and gradual modification.

This evolutionary problem solving process will provide new opportunities for change and solutions to be developed in the future.The identification of areas, processes or resources that are the bottlenecks in your organization become areas of opportunity.

Modifying and improving these bottlenecks will automatically create new bottlenecks, in new areas. The focus on identifying and solving these “new” situations leads to a process of continual improvement and a better, stronger organization.

This is one of the fundamental ideas behind the Theory of Constraints (TOC).

Common sense tells us that in a complex world not all solutions are simple, quick or painless. The “quick fix” is a great idea, but not often found in everyday life.

Observation of science, technology, philosophy and business ideas and strategies show us that change occurs through the rare revolution (paradigm shifts and new discoveries) and through the more common evolution (gradual modifications leading to continual change.

What can be changed, fixed or modified today to make the organization, process, product or service incrementally better?

Related Links

Why don’t they?

Starting over

How to systematically analyze any situation for better decision making

AGI Institute – Theory of Constraints

Evolution (Disambiguation)





The point of no return

18 01 2007

The hardest part of decision making is passing the “point of no return“.

While the situation is being analyzed we’re safe.

Wacky, imaginative and wild solutions can be discussed and their impact and effect weighed and discussed. But it’s theoretical, it’s safe.

The minute we have to make the decision, take responsibility for the action and outcome, then we enter into scary territory.

The key to decision making is to get the momentum, confidence, courage and motivation in order to pass the point of no return.

I’m not saying that your decision will always be correct. But what is important is to make a decision and not spend hours, days and weeks agonized and postponing the process and decision.

Picture yourself on a diving board. High above the water. It’s scary to think that you may not perform the dive perfectly. A belly flop would be embarrassing and painful.

There are three options available.

  1. Stay where you are, agonizing over the decision to jump.
  2. Go back down the ladder, let someone else jump.
  3. Jump.  Leave the diving board, cross the point of no return, make the dive.

When we are sure of our abilities and understanding due to good research and experience, we have confidence.

When we are not afraid of making a mistake, we have courage.

When we know the decision is important and necessary in order to keep things moving and get on with other activities, then we are motivated.

Focus on the task and problem, create the solutions and make the decisions on time.

Push yourself to pass the point of no return quickly and with confidence.

Jump.

Related Links

Why do we fail

Motivation – Heroic Moments

Decision-making, how they used to do it 400 BC

How to systematically analyze any situation for better decision making