Risk vs. strategy

Organizations say they want strategies. I create strategies for the digital side of their businesses, whatever that business may be. Unfortunately, when you scratch the surface you find that a lot of organizations don’t actually want a strategy. Executing a strategy means doing things differently, embracing change and taking risks. Businesses aren’t very good at any of those things. Businesses are conservative. Businesses are risk-averse. They avoid risk because it’s unknown, and could lead to failure, however modest that failure might be. Most businesses and the component pieces that make them run (employees and managers) are rewarded for success and punished for failure, just like in any other system. So it shouldn’t come as a surprise that they avoid failure at all costs. Not only are they incentivized to avoid failure, failure is personal. In practically every business culture, failure is seen as a reflection of the shortcomings of the individual(s) responsible, and it becomes a blow to the ego. Small wonder it’s avoided so strongly.

Unfortunately, failure is necessary, especially if an organization wants to do things differently. There is no such thing as a safe strategy. If there were, everyone would be using safe strategies, there would be no competitive advantage to having one vs. another, and the strategic playing field would be completely level.

Safe strategies don’t exist; there’s risk in every one of them. Every strategy is a playbook for doing things differently and changing an organization, even if that’s in infinitesimal ways.

That doesn’t stop organizations from wanting a strategy that essentially entails doing things the same way they currently do. It’s not a particularly realistic expectation, but it maps to what we know about how individuals handle change, which is similar to how they handle grief: denial – bargaining – rejection – acceptance. Organizations will try to deny that change is necessary, or that it has to be part of their strategic approach. Often they will try to commodify or water down the necessary change (bargaining). At some point they may reject the idea of doing things differently altogether as an unnecessary risk.

But the bright ones – that ones that survive – understand what’s at stake, eventually embrace change, and the corresponding change-based strategy. The strategy they embrace probably doesn’t look like the one they started the process with, but it will be a strategy that relies on doing things differently.

Where does your organization lie on the change spectrum?

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