I’ve been writing a lot about risk over the last year or two. My trusty little old Oxford dictionary defines risk as ‘hazard, chance of bad consequences, loss etc; exposure to mischance’ – but also as ‘venture on, take the chances of’.
The online Business Dictionary defines its general meaning as ‘probability or threat of a damage, injury, liability, loss, or other negative occurrence, caused by external or internal vulnerabilities, and which may be neutralized through pre-meditated action’ and its workplace meaning as ‘product of the impact of the severity (consequence) and impact of the likelihood (probability) of a hazardous event or phenomenon’.
Interestingly, most of the definitions of risk are financial – something I’m sure was never a consideration in the risky business of human evolution.
Answers.com offered ‘the possibility of suffering harm or loss; danger’, ‘a factor, thing, element, or course involving uncertain danger; a hazard” and ‘exposure to possible harm, loss, or injury’ and ‘to put up as a stake in a game or speculation’ and ‘a venture depending on chance’.
Suggested Thesaurus equivalents at Answers.com include hazard, danger, peril, menace or jeopardy; bet, gamble, stake, venture, wager, chance and speculate; or venture and adventure.
We can see that the negative connotations of risk can blur into some that sound rather more exciting and positive!
Our own perceptions of and attitudes to risk influence the balance that businesses need to strike between timidity and inaction resulting in stagnation, all the way along to irresponsible gambling resulting in failure.
Somewhere in the middle is a path that combines common sense and creativity that is realistic yet strikes the sweet balance somewhere between prudence and innovation.
Risk is a fact of life – and it has upsides as well as downsides. We are always subconsciously weighing the odds all the time in all spheres of our life. Some risks can pay off hugely while others are obviously foolhardy – and few people will exactly agree on which is which.
We need to know what we’re up against, here: our inner kluge. Gary Marcus, professor of psychology at New York University, says the human mind is a kluge - an engineering term for ‘a solution that is clumsy or inelegant yet surprisingly effective’. Our brains are clumsy things, he says - but they handle the tasks life throws at them pretty well. Yet while capable of great things, the haphazard and opportunistic construction of the brain means most of us have a terrible memory and generally poor will power - and often behave irrationally.
How does this manifest? Marcus claims we are much more the ‘rationalizing’ than the ‘rational’ animal: we constantly sabotage our long term goals by poor short term decisions (think getting fit, rich or thin!) then justify them with a rash of retrospective rationalizations. And, he says, we’re much more likely to remember to buy toilet paper when we are in the bathroom than when we’re in the supermarket.
How can we outwit our inner kluge? Scenario-based contingency plans related to risks that threaten our goals are a great help in everyday life, says Marcus: ‘If I see chips, I’ll avoid them, says the dieter’. We can routinely use them in business and environmental management as well: ‘If I see a problem with an environmental control, I’ll fix it or call someone’.
This relates to what David Apgar calls our ‘risk intelligence’ or risk IQ. Apgar insists that risk intelligence is learnable: he says that our ability – as an individual and a company – to understand and learn about risk, compared with that of others, can make or break a project. Nearly everyone can work out how to manage an identified risk – but people or organizations that are better at identifying risks have ‘better raw material in the form of information for managing’ them and this can lead to real competitive advantages. He insists that it is possible for us to compare our abilities and use the information to learn how to make better risk decisions and project choices.
Choosing to become a learning organization via the approaches to risk management outlined by Gary Marcus and David Apgar will allow each of us to develop particular strengths: some of us will become great at assessing risk, others at managing it, and others about communicating what we learn so as to improve our business performance.
Remember – wherever there is a risk, there is always an opportunity to work smarter, do better, meet a challenge, learn something new, build an unbeatable team and have more fun!
Thursday, August 25, 2011
Wednesday, August 17, 2011
Company culture: the iceberg effect
Company culture is like PR – it’s something you have whether you plan it or not.
And for many organizations, it’s unspoken and implicit. I’ve seen this in my work on manufacturing and construction sites and on farms. For example, on one site, people will walk past a faulty environmental control while staff on another will call the environmental team or simply fix it themselves. How much harder will it be for an individual to break with the group dynamic in the former case and fix or point out the fault in time to prevent a polluting spill?
Ed Schein shows organizational culture as an iceberg – artifacts like buildings and logos are at the very tip, and the rest of the bit above the waterline is made up of the organization’s espoused values – the things people say in their environmental policies, for example, or on their website and in promotional materials.
But the 80% below the waterline is like the unconscious mind – here lurk the organization’s basic underlying assumptions or values that may only be guessed at by observing people’s everyday actions – the things that send an unspoken signal, “This is how things are done round here.”
So the likelihood of environmental incidents reflects the environmental culture of the organization, because it influences what individual employees actually do.
I’ve become increasingly aware of and truly astounded by the influence of such apparently subtle things like culture and leadership - and have observed companies turn themselves around by simply deciding they have to improve the way they work.
Creating a positive culture is an essential aspect of effective management in any workplace. In the same way, a strong environmental culture means the values and priorities placed on all aspects of the environment are observed by everyone at every level of the organization, aligning everyone's actions towards a common goal. Conversely, if the day-to-day behavior of directors, managers, supervisors and staff does not support good practice, the environmental culture will be weak even where the company has good structural and procedural controls.
Based on his observations of the medical profession, surgeon Atul Gawande says many of the big improvements come not from big technical breakthroughs but from changes to the way things are done. He says doing better requires the ability to recognize ‘better’ when you find it, and for this you need to ‘count things’ – in other words, paperwork is important.
Good documentation allows us to track relations between symptoms and diagnosis, treatment and outcome, says Gawande (and yes, we can do this for the environment), without relying on memory, anecdote and prejudice.
I'm grateful to my friend and colleague Dr Lesley Stone for enlightening me about Ed Schein's iceberg model as part of the training she and our late colleague Greg Brown gave me and others on the Target Zero team. We all worked together for three years on a major waste avoidance/resource efficiency project and continued this work in different forms for many years. Lesley is now the Sustainability Adviser for Auckland University.
And for many organizations, it’s unspoken and implicit. I’ve seen this in my work on manufacturing and construction sites and on farms. For example, on one site, people will walk past a faulty environmental control while staff on another will call the environmental team or simply fix it themselves. How much harder will it be for an individual to break with the group dynamic in the former case and fix or point out the fault in time to prevent a polluting spill?
Ed Schein shows organizational culture as an iceberg – artifacts like buildings and logos are at the very tip, and the rest of the bit above the waterline is made up of the organization’s espoused values – the things people say in their environmental policies, for example, or on their website and in promotional materials.
But the 80% below the waterline is like the unconscious mind – here lurk the organization’s basic underlying assumptions or values that may only be guessed at by observing people’s everyday actions – the things that send an unspoken signal, “This is how things are done round here.”
So the likelihood of environmental incidents reflects the environmental culture of the organization, because it influences what individual employees actually do.
I’ve become increasingly aware of and truly astounded by the influence of such apparently subtle things like culture and leadership - and have observed companies turn themselves around by simply deciding they have to improve the way they work.
Creating a positive culture is an essential aspect of effective management in any workplace. In the same way, a strong environmental culture means the values and priorities placed on all aspects of the environment are observed by everyone at every level of the organization, aligning everyone's actions towards a common goal. Conversely, if the day-to-day behavior of directors, managers, supervisors and staff does not support good practice, the environmental culture will be weak even where the company has good structural and procedural controls.
Based on his observations of the medical profession, surgeon Atul Gawande says many of the big improvements come not from big technical breakthroughs but from changes to the way things are done. He says doing better requires the ability to recognize ‘better’ when you find it, and for this you need to ‘count things’ – in other words, paperwork is important.
Good documentation allows us to track relations between symptoms and diagnosis, treatment and outcome, says Gawande (and yes, we can do this for the environment), without relying on memory, anecdote and prejudice.
I'm grateful to my friend and colleague Dr Lesley Stone for enlightening me about Ed Schein's iceberg model as part of the training she and our late colleague Greg Brown gave me and others on the Target Zero team. We all worked together for three years on a major waste avoidance/resource efficiency project and continued this work in different forms for many years. Lesley is now the Sustainability Adviser for Auckland University.
Thursday, August 11, 2011
'Eco-non-money' growing within the economy
A grab-bag of ideas could be symptomatic of a wider groundswell of support for an economic system that values people and the environment. I've already blogged (e.g. 3 May 2011) about the growing disillusion with unethical practices in the financial sector - hilariously, a report released a year or more ago by the New Economics Foundation called "A bit rich: Calculating the real value to society of different professions" found that for every £1 they are paid, low-paid hospital cleaners generate over £10 in social value. By contrast, by promoting tax avoidance, very highly-paid tax accountants destroy £47 of value for every pound in value they generate. The report is very thought-provoking and impressively well-referenced.
A more recent radio item on the moneyless economy on 7 August noted that we assume goods and services must be valued in monetary terms, but highlighted a growing movement internationally that’s "questioning whether there aren’t more interesting and satisfying ways of exchanging goods and services". People interviewed spoke about the Freecycle Network™, which is made up of 5,000-odd groups with over 8.5 million members around the world. This "grassroots and entirely nonprofit movement" enables people to get and give stuff for free in their own towns in order to re-use good things and keep them out of landfills. Locally in New Zealand and globally there are any number of "green dollar" movements such as the Wairarapa Green Dollar Exchange and the Bay of Islands Community Exchange (BOICE), that facilitates the exchange of local goods and services among Bay of Islands communities using a complementary mutual credit currency, the BOIDOL (BOI$). The Bank of Real Solutions has grassroots solutions on topics as diverse as community gardens, cycling, food, health, reuse, recycling, conservation, education, elders, gardening, local currencies, pest control, sustainability training, tree planting, water weed control, wetland restoration and youth engagement.
Businesses are coming on board, with examples such as the Local Living Economy movement that aims to ensure that economic power resides locally to the greatest extent possible, sustaining vibrant, livable communities and healthy ecosystems in the process.
Whole nations may even be taking control of their economy, like Iceland, where ordinary citizens revolted against their failed banking system and even co-operatively redrafted their constitution!
Such moves are sometimes called "the alternative economy", which one group defines as "an economic structure that is separate from, and operates largely independently of, the traditional economy. It will have its own currency and means of conducting commerce, with the goal of creating a high level of self-sufficiency, as well as ample employment opportunities and a high level of material and spiritual well being for participants, while embracing sustainability principles."
It is fascinating to see these and many more related movements springing up to meet the ongoing academic debate on ecological economics, which provides the theory around environmental and social wellbeing. Let's see how soon this theory and practice can come together to heal our divided societies and wounded ecosystems.
A more recent radio item on the moneyless economy on 7 August noted that we assume goods and services must be valued in monetary terms, but highlighted a growing movement internationally that’s "questioning whether there aren’t more interesting and satisfying ways of exchanging goods and services". People interviewed spoke about the Freecycle Network™, which is made up of 5,000-odd groups with over 8.5 million members around the world. This "grassroots and entirely nonprofit movement" enables people to get and give stuff for free in their own towns in order to re-use good things and keep them out of landfills. Locally in New Zealand and globally there are any number of "green dollar" movements such as the Wairarapa Green Dollar Exchange and the Bay of Islands Community Exchange (BOICE), that facilitates the exchange of local goods and services among Bay of Islands communities using a complementary mutual credit currency, the BOIDOL (BOI$). The Bank of Real Solutions has grassroots solutions on topics as diverse as community gardens, cycling, food, health, reuse, recycling, conservation, education, elders, gardening, local currencies, pest control, sustainability training, tree planting, water weed control, wetland restoration and youth engagement.
Businesses are coming on board, with examples such as the Local Living Economy movement that aims to ensure that economic power resides locally to the greatest extent possible, sustaining vibrant, livable communities and healthy ecosystems in the process.
Whole nations may even be taking control of their economy, like Iceland, where ordinary citizens revolted against their failed banking system and even co-operatively redrafted their constitution!
Such moves are sometimes called "the alternative economy", which one group defines as "an economic structure that is separate from, and operates largely independently of, the traditional economy. It will have its own currency and means of conducting commerce, with the goal of creating a high level of self-sufficiency, as well as ample employment opportunities and a high level of material and spiritual well being for participants, while embracing sustainability principles."
It is fascinating to see these and many more related movements springing up to meet the ongoing academic debate on ecological economics, which provides the theory around environmental and social wellbeing. Let's see how soon this theory and practice can come together to heal our divided societies and wounded ecosystems.
Thursday, August 4, 2011
Making decisions in uncertain times
Why do people keep writing books about what’s going to happen in the near and far future, asks iconoclast Dan Gardner, when these ‘experts’ have an appalling track record on the accuracy of their predictions? In his recent book Future Babble, he also asks why the rest of us in droves keep buying these books! His explanation is that we cannot tolerate uncertainty, and demand to know what’s coming next - that wrong certainty feels better than uncertainty.
Yet uncertainty has characterized most of human history: why does it still feel so uncomfortable? In her book The Optimism Bias, neuroscientist Tali Sharot argues that a positive outlook probably helped us survive as a species by enabling us to feel happy in the present despite the uncertainties of the immediate (and even more so the long term) future.
Alas, this can lead us to assume that radical change is unnecessary and that ‘normal service’ will soon resume, say Andrew Campbell and Stuart Sinclair. They attribute this to the ‘human trait of being overly influenced by past experiences and judgments’, which decision making experts call ‘anchoring’. Everything we do and how we do it tends to be anchored in the past: we keep doing the same things in the same way. This mostly works fine when the present is the same as the past. When everything around us has changed, we meet Einstein's famous definition of insanity; doing the same thing over and over again and expecting different results.
Our certainty that the boom of the two decades leading in to 2008 would carry on forever seems sadly deluded now, as Harvard Business Review editorial director Justin Fox observes. I read his comments to indicate that every company will have to explore its entrepreneurial depths simply to stay in business, and had to chuckle at his acerbic comment that it’s time we got positive and embraced uncertainty instead of just whining about it.
Knowing all these things doesn’t, however, help governments or businesses work out what we should actually do next - especially in light of a growing body of research findings that decisions made when we are tired or anxious are usually bad ones.
One thing’s for sure; businesses these days we need to make some kind of decision or join the dinosaurs. And we need a mental jolt to focus our attention on the need to do so.
‘What will you do when what you do disappears?’ Professional speaker and author Ann Andrews shellshocked her audience at a recent engagement with this question. She left them with three questions to ponder: are you ‘headlighting’ the road ahead and creating your skills for it? Is the road ahead going to ‘work’ for you? And what could ‘working’ actually mean to you?
These are the questions we need to think about - along with those 2am jolts - the worries that wake us up in the night.
Perhaps a picnic in a beautiful spot of nature or a week's team retreat with lots of sleeping and walking will help us relax enough to hatch the ideas we need to come up with to keep our businesses in business.
Yet uncertainty has characterized most of human history: why does it still feel so uncomfortable? In her book The Optimism Bias, neuroscientist Tali Sharot argues that a positive outlook probably helped us survive as a species by enabling us to feel happy in the present despite the uncertainties of the immediate (and even more so the long term) future.
Alas, this can lead us to assume that radical change is unnecessary and that ‘normal service’ will soon resume, say Andrew Campbell and Stuart Sinclair. They attribute this to the ‘human trait of being overly influenced by past experiences and judgments’, which decision making experts call ‘anchoring’. Everything we do and how we do it tends to be anchored in the past: we keep doing the same things in the same way. This mostly works fine when the present is the same as the past. When everything around us has changed, we meet Einstein's famous definition of insanity; doing the same thing over and over again and expecting different results.
Our certainty that the boom of the two decades leading in to 2008 would carry on forever seems sadly deluded now, as Harvard Business Review editorial director Justin Fox observes. I read his comments to indicate that every company will have to explore its entrepreneurial depths simply to stay in business, and had to chuckle at his acerbic comment that it’s time we got positive and embraced uncertainty instead of just whining about it.
Knowing all these things doesn’t, however, help governments or businesses work out what we should actually do next - especially in light of a growing body of research findings that decisions made when we are tired or anxious are usually bad ones.
One thing’s for sure; businesses these days we need to make some kind of decision or join the dinosaurs. And we need a mental jolt to focus our attention on the need to do so.
‘What will you do when what you do disappears?’ Professional speaker and author Ann Andrews shellshocked her audience at a recent engagement with this question. She left them with three questions to ponder: are you ‘headlighting’ the road ahead and creating your skills for it? Is the road ahead going to ‘work’ for you? And what could ‘working’ actually mean to you?
These are the questions we need to think about - along with those 2am jolts - the worries that wake us up in the night.
Perhaps a picnic in a beautiful spot of nature or a week's team retreat with lots of sleeping and walking will help us relax enough to hatch the ideas we need to come up with to keep our businesses in business.
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