I talk about RISK a lot in speeches and Strategic Planning Workshops/Retreats…it is always a topic that warrants discussion. But one topic that always comes up when we talk about risk is how to minimize it…how to mitigate it. More often than not, most think the goal of Risk Management is to get risk down the lowest level possible. Allow me to introduce a different way of thinking about Risk Management.
There are absolutely areas where “risk mitigation” is the best strategy…such as security risk. You want this to be as low as possible. But what about your business overall…do you want to take away all the risks? I don’t think you should…here’s why.
Risk is not just about the bad things that can happen…it’s about OPPORTUNITIES as well. Risk represents the chance to score on some opportunities others aren’t willing to explore or take. It represents the challenge to think differently and perhaps move far ahead of your competitors…who are also trying to mitigate their risks.
Risk Management should be thought about with regard to the Wayne Gretzky quote…“A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” If you always skate to where the puck is you will be safe…you know what you see and where you are going…but so does everyone else. There is no differentiation when you skate to where the puck is…it’s where your competition hangs out. You are essentially saying you are willing to play the “commodity game” and be like everyone else only possibly cheaper…not a strategy to take advantage of opportunities.
Here’s the key question every CEO or Business Owner needs to ask, “Are you willing to take on some additional RISK to take advantage of the OPPORTUNITIES that exist where the puck is going to be?”
TODAY, THE BIGGEST RISK A COMPANY CAN TAKE IS TO PLAY IT SAFE…stay in their lane and don’t do anything unusual. This is almost certain death for a business in the new Internet Revolution. It is proving to be a sure path to extinction.
Blue Ocean strategies weren’t created to stay in the pack and not venture out away from your competition. These strategies encourage you to reinvent a space you are in and create an entirely different model that will allow you to take advantages of opportunities your competitors don’t see or aren’t exploring…become DIFFERENTIATED. This is a choice.
But the concept of creating a differentiated strategy doesn’t have to be related to a product or service…meaning you don’t have to find new products or services to offer your customers. There’s another way (possibly easier and at a lower cost) that can be even more lucrative and allow you to stay with your existing business. Creating a totally awesome, incredible, and remarkable CUSTOMER EXPERIENCE can allow you to achieve the same (if not more) benefits of differentiation similar to a Blue Ocean strategy. Your advantage…at least today…is that there are only about 1% of the companies out there that actually go all in and execute this strategy. It’s a “greenfield” of opportunity for those that venture out beyond the normal competitive, commoditized markets.
This is where RISK MANAGEMENT becomes more about CHOICES than MITIGATION. Just trying to get rid of risk may not be (most likely is not) the answer…it may actually hurt your business more than help it. Making calculated choices about pursuing opportunities to leap in front of your competitors represents lower risk than staying the course. Choosing to take on an opportunity, like creating a WOW customer experience, can seem risky because it is different…but can pay incredible dividends back to you when you are completely differentiated in the eyes of your customers.
Making choices that allow you to skate to where the puck is going to be is lower risk today than trying to figure out ways to always know where the puck is and fight it out with your competitors…usually on price, delivery, and terms. This is a losers game today…it is almost impossible to within the commodity game today because there are new entrants coming into everyone’s market that can do what you do faster, cheaper, and at a lower cost. This trend isn’t going away anytime soon. To me, this represents a much higher level of risk that choosing to pursue an opportunity to differentiate.
Creating a Customer Experience that trumps all your competitors isn’t risky…it just takes commitment, time, and consistent effort to bring it to fruition. Which is the reason why your competitors won’t venture into the “unknown”…they are happier knowing where the puck is and slugging it out with each other there. Staying where you are is higher risk than making the choice to venture out into an area that has demonstrated the ability to deliver bigger rewards. CUSTOMER OBSESSION is one of those “calculated risks” that will virtually guarantee not just survival in the future but the opportunity to eclipse your competition.
It’s your choice…manage your risk through seeking high value/low risk opportunities and skating where the puck will be or playing it safe and mitigating all your risks…fighting over every dollar with your competitors by playing where the puck is today. I believe this is a much riskier situation than seeking the opportunity to stand alone in your industry…but it’s a matter of choice and execution, not mitigation.
