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





Broken promises

28 06 2007

“The best way to keep one’s word is not to give it.”  Napoleon Bonaparte

It’s too easy to make a promise.

We promise the customer that the product will work, solve their problem, and maybe change their lives.

We promise our coworkers that our part of the work will be delivered on time.

We promise our business partners and suppliers that we they can count on us.

We promise to follow up after the initial sales call, that we will always be there with customer service.

We promise that our priority is the customer and the customers satisfaction.

We promise to hit the sales goals and meet the budget.

All our promises are all full of good intentions, it’s what people want to hear, it’s what we want to deliver.

But, can we guarantee that we will deliver?

Never take a solemn oath.  People think you mean it.  Norman Douglas

The best way to ruin your reputation and lower your ability to lead and manage others is to promise something and not deliver.

We make a promise because it gives others confidence, it seems to make negotiations easier and it reflects our hope that all will go as planned.

“All promise outruns performance.”  Ralph Waldo Emerson

A common error of new managers and leaders is the perceived need to make promises to their organization and team.

Don’t promise it.

Promises are very powerful compromises, but extremely fragile and difficult to achieve.  Take care when offering them to others.  

In the place of promises, offer firm plans, describe actions and possible outcome, dedicate the time and resources required.

Do more than you say you will.

Perform, don’t promise.

“It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality.”  Harold Geneen