When to and when not to

I wanted a humorous quote about risk. After reading through a dozen pages, yes pages, on the web, I decided that I would not add to the clichés in your day.  The one that most rung my bell was from Warren Buffet, risk is when you do not know what you are doing.

I learned about risk early in my career, as the Administration Director for a very wealthy entrepreneur, LJ Fisher. It was a grand title, but I was in effect the gofer. I would follow up this and that, do initial due diligence and prepare initial business cases on investment potential.

I learned to ask questions. Then more questions. Even then, on introducing some draft proposal to the boss, he would almost inevitably ask a question I had not quite thought of.  

I built a routine for myself. I would draft a list of questions on the idea, take my time, sleep on it, and build the list. Slowly I got good at it. Eventually I found the boss was not able to ask the question I had not thought of.

I learned that being an entrepreneur is not about taking risks, but reducing risk and making clear exactly the risk one is taking.  If the risk is not clear and able to be judged, then get very cautious.

The process is almost exactly opposite to ‘selling’. Be very careful of ‘selling’ your idea to yourself. That is when risk can jump up and bite.

In addition to being gofer, I operated as the general manager of a start-up company chaired by the entrepreneur. He was expert at developing risk taking in a team. At every executive management meeting he asked ‘what ideas do we have this month’, the team learned to bring forward ideas, have them discussed, then two or three were selected to be worked up in more detail. The philosophy was the team typically bought forward and explored little ideas first, but as confidence grew, they eventually got around to big ideas. The cultural development was the drive to find better ideas, research it, then the confidence to back their own judgement and do it.

All the ideas related to improving business performance. It could take 4 or 5 months before an idea was finally implemented, although some ideas were implemented almost next day after discussions. It depended on the scale, cost, and what exactly was involved.

The chairman would also regularly ‘drop in’ to the factory floor and ‘chat’ with senior people and supervisors. He was looking for their thinking reflecting an ‘edge’ of performance, that the senior team were in fact carrying into the organization the flavour of innovation and thinking about how to do it better that he expected at the executive team level. He was also looking for effective thinking process, not selling oneself on the idea, having in mind key questions on the downside, focus on making risk clear and quantified.

I learned about cultural development and the influence of the senior team on developing the minds of people. All culture is about minds of people. In later life I learned there is no causality in the group, all social and cultural causality, all movement forward is determined by the acceptance in the individual mind, with the group movement merely being a sort of sum of the movement in the individual minds.

The key issue facing every business all the time is finding and implementing new ideas to support business improvement. It always has been this way, and any suggestion that at any time in history it was not like that is a serious misconception. For no other reason we should be striving to move our performance forward, just in case there is someone out there exploring how to do it better than us.

The key issue always, in every case, is ensuring the preparation of the minds of the people who are to implement the idea.  

They say in USA, the decision to change things takes about five minutes and then five years to implement whereas in Japan it takes five years to decide and five minutes to implement.  Both take five years and five minutes. However, I prefer the Japanese process since it results in less disruption which translates into lower implementation costs.

The key issue is minds, specifically having all people involved in any new idea clear on how it will impact them, what they need to do, how and when and why. In the Japanese process people sort of carry the new way of thinking in part of their mind while they continue with the old way. They get the opportunity to roll it about in mind, sort out their role, so when the idea is finally launched, they are ready. There is always the unexpected, but it is minimised.

It does not matter being first or last with an idea, the process is always the same. Research that the idea will do as projected of it, get multiple inputs not just from executive, but from people who have to do it, balance the up side with an assessment of the down side. Use the consultant offering the idea, quiet reflective discussions. Pull together the business case. Then back your internal judgment, and do it. Do not hesitate due attitude, that sends a much more dangerous message into the business than trying and failing with an idea.

Remember, stagnation is the word for performance that is not moving forward. It is the leadership role of the senior team and CEO in particular to thwart stagnation, avoid surprises and ensure the thinking in the business is abreast of opportunity. It is about creativity to find new ideas, researched to level needed, preparing of minds involved, and then doing it. Get everyone in the business with the positive, progressive, creative mind-set that it is about seeking and applying new ideas, well researched with the risk clear. Develop people so that they are confident and relaxed that this is what we do! With the background confidence, and we are good at it.