Risky Business: Super Charging Strategic Plans with New Risk Management Tools


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There is a big gap between where you want your company to go, and the likelihood that you’ll get there. Strategic plans provide vision and set priorities - both of which are necessary, but not sufficient to ensure achieving business success. Jeanne will discuss how you can supercharge your planning process by applying best practices in risk management. Many times, risk is managed and mitigated after the strategic plan is written – but there is a better way.

In this session you will learn how to:
• Create higher value strategic plans
• Apply risk management techniques to the planning process to help executives make better decisions faster
• Increase the probability that your strategic plan will be execute

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Risky Business: Super Charging Strategic Plans with New Risk Management Tools

  1. 1. Risky Business: Supercharge Your Strategic Plan with New Risk Management Tools Association for Strategic Planning December 13, 2012 Jeanne Bradford, Author “Innovate Products Faster” JBRADFORD@TCGEN.COM @jeannebradford11/14/12 Association for Strategic Planning 1
  2. 2. Better Strategic Plans Through Risk Management Objective: • Learn new tools that can support you in developing strategic plans that organizations can successfully implement. • Hands-on learning • Leave here today with one or more areas where you can apply these tools Why are these tools beneficial? • They are proven to be effective • Straight forward, but powerful • Does not require IT systems • Flexible to support different types of projects • Allows deep thinking in a short amount of time Tools we’ll apply today • Risk Mind Map: comprehensive overview of risks • Risk Management Matrix: managing and preventing risks • Attitude Influence Matrix: eliminating political risks11/14/12 Association for Strategic Planning 2
  3. 3. The Strategic Framework Strategy-Management-Execution Organization-Process To successfully achieve the goals of your business, organizations but optimize all 5 areas – and it starts with Strategy11/14/12 Association for Strategic Planning 3
  4. 4. The Strategy-to-Product Cycle Strategy-Management-Execution • Most important cycle after Order-to-Cash • An organization that cannot effectively optimize this cycle will never effectively compete Identifying, prioritizing and managing risks will shorten the Strategy-to-Product cycle11/14/12 Association for Strategic Planning 4
  5. 5. Strategy vs. Strategic Plan Strategy: providing the vision and actionable plans in support of corporate/organizational goals. Strategic Plan: tangible plan that includes: 1) a roadmap, 2) a delivery process, and 3) operational goals & key metrics11/14/12 Association for Strategic Planning 5
  6. 6. Why Do Strategic Plans Fail? Buy-in Leadership FocusUnderstanding Flexibility Accountability Resources Over the Wall Execution All of these are key drivers of risk – How do you mitigate to ensure failure is *not* an option?11/14/12 Association for Strategic Planning 6
  7. 7. How These Tools Fit Together• Risk Mind Map – Brainstorming: comprehensive view of risk – Cross functional: internal & external to the initiative – Can be aggregated across initiatives to determine corporate risk• Risk Management Matrix – Quantifies & prioritizes risk – Identifies likelihood of risk and threshold for mitigation – Focuses on the highest risks• Attitude Influence Matrix – Helps you identify supporter & detractors – Provides approach to mitigate risks11/14/12 Association for Strategic Planning 7
  8. 8. Risk Mind Map Comprehensive Overview of Major Risks• What Is the Tool? • The graphical diagram records a creative approach to risk assessment and management. • The tool is used for creative problem-solving, requirements generation, and product idea generation. • A map pre-populated with major risk categories can also be used to brainstorm risks for the initiative.• Which Business Problems Does the Tool Solve? • Facilitates the rapid identification and prioritization of risks by allowing teams to contribute to a comprehensive risk profile. • Allows the management team to anticipate risks sooner and prepare prevention plans. • Creates buy-in through out the organization for the strategic plan.• Benefits • The Risk Mind Map provides an efficient method to view the whole spectrum of risks at a glance. • It facilitates cross functional contribution.11/14/12 Association for Strategic Planning 8
  9. 9. Risk Mind Map Example Description of the tool • Bubble in the center is the main theme or project name. • Outer boxes are various classes of risks. • Lists next to boxes indicate specific risks, prioritized from 1 (high) to 4 (low). • Risks without numbers are the lowest priority.11/14/12 Association for Strategic Planning 9
  10. 10. Risk Mind Map Work SessionObjective: Construct a Risk Mind Map for your projectWork Session Steps: • Identify the initiative or risk theme • Assemble the cross-functional team to contribute – include functions outside the strategic planning team! Initiative • Brainstorm the risk categories, if starting from a template, perform an omissions check and add any category you feel is missing • Category by category go a level deeper, and generate specific risks within each category • Step back after the group senses completion, and ask, what are we missing? • Some of the most important risks are identified at this stage • Prioritize by evaluating the combination of the magnitude and the likelihood of each specific risk event (use your rough judgment) • Assign a score of 1 to 4 to prioritize each risk – 1 being the highest risk, that could result in catastrophic failure, and 4 being the lowest risk causing a significant inconvenience11/14/12 Association for Strategic Planning 10
  11. 11. Risk Management Matrix Anticipating and Mitigating Risk• What Is the Tool? • The matrix is a way to quantify and anticipate risks. • The tool lists various risks, their overall impact, and an action plan if risk values are exceeded. • Creation of the table should take place during the first 10-15% of a initiative’s duration.• Which Business Problems Does the Tool Solve? • Innovation brings with it additional risks which can still be managed by the team on its own. • Helps reduce the Strategy-to-Product cycle because it can help the team anticipate & mitigate risks.• Benefits • You can identify risks before they occur • There is a reduction of risk impact due to early detection • You will have quantitative metrics that help clarify when to act on a risk item • Accelerated actions will happen because of the clear thresholds and the agreement to follow the process 11/14/12 Association for Strategic Planning 11
  12. 12. Anticipating and Mitigating Risk Risk Management Matrix Current ActionStatus Risk Impact Likelihood Metric Threshold Value Date Plan Narrative 1-10 1-10 Text Defining Value with Units Value with Units Date by which Narrative Metric you must below targetHow to apply the tool• Risks are listed on left side – derived from Risk Mind Map, and in order of decreasing Impact• Impact column with score of 1 (inconvenience) to 10 (catastrophic failure)• Likelihood column with score of 1 (zero possibility) to 10 (certainty)• Metric column is the measurable quantity associated with the risk• Threshold column indicates the value that if exceeded triggers action• Date column indicates time by which the risk can be retired, or the date the target must be achieved• Action Plan column gives a summary description of the high-level objectives of an action plan – if the trigger threshold is exceeded11/14/12 Association for Strategic Planning 12
  13. 13. Risk Management Matrix Work SessionObjective: Construct a Risk Management Matrix for your projectWork Session Steps: • Re-assemble the cross-functional team that created the Mind Map (if possible). • Transfer the risk items from the Mind Map to the matrix, starting from 1 (high) to 4 (low). • Do an omissions check. Are there any missing risks? • Assign impact, likelihood, metric, threshold and current values for each. • Reprioritize by order of impact/likelihood. You may wish to weight the impact higher thank likelihood (rank=(2*Impact + likelihood)/3). However, use your judgment. • Define the date by which performance must equal or exceed threshold value. • Describe the highlights of an action plan for each risk. 11/14/12 Association for Strategic Planning 13
  14. 14. Attitude Influence Diagram • What is the tool? • A tool to help identify who in the organization might block your project and help highlight what to do about it • A scatter plot diagram that shows the relative influence and attitudes of the key staff members who will be involved • A subjective assessment, but very powerful tool to quickly identify those who might block your project • Applied early in the process, this tool will provide you with the opportunity to proactively manage detractors to ensure their concerns are addressed. In many cases, applying this tool will turn your detractors into supporters • Which Business Problems Does the Tool Solve? • Resistance and politics can slow teams down • This graphical technique pinpoints people and their position so that you can use your time wisely • Benefits • Provides a new methodology for accelerating decisions • Identifies supporters and detractors that will impact your probability of success • Helps you avoid mistakes in the implementation process • Creates a framework for managing proactive discussions and positive influence11/14/12 Association for Strategic Planning 14
  15. 15. Eliminate Organizational ObstaclesHow to apply the tool Challenging• Identify key individuals (typically outside the Individuals team) that may impact success• Plot each individual based on their relative influence (hierarchy, knowledge, experience), and attitude (support) The horizontal axis shows how positive or negative an individual is about the project• The vertical axis shows the level of influence and individual has• The size of the bubble is a subjective indication of the difficulty in influencing the individual• Develop action plan for each person in the upper left quadrant• Determine the best way to move them to the “right” 11/14/12 Association for Strategic Planning 15
  16. 16. Attitude Influence Matrix Work Session Objective: Draft of Attitude Influence Diagram Work Session Steps: • Use paper to create a Attitude Influence Diagram • Decide on the project/initiative • Identify 5-6 key players that could impact your project (supporters & detractors) • Plot each person as a point on diagram • Use pairwise comparison to clarify positions on the diagram • Convert the points to a circle, with the most resistant persons with larger circles • Create at least 1 action plan for moving a detractor to a supporter This tool can also be downloaded at: http://www.tcgen.com/book/tools/11/14/12 Association for Strategic Planning 16
  17. 17. How To Deal with Challenging Individuals• Successful change at the individual level requires drive and taps your soft skills (empathy, relationship management, communication and persuasion).• Start first by understanding the point of view of the person that is preventing you from being successful – What forces are driving them?• The best approach is to always try to work it out with the challenging person directly, in a one on one, face to face conversation – Lay out your interests (not position – be flexible) – Discover their interests – Then try to bridge the two, inventing options for mutual gain.• Work with them open mindedly and with a win-win attitude and be flexible.• See the book “Getting To Yes” by Fisher and Ury. – It is one of the best $13 investments you will ever make.11/14/12 Association for Strategic Planning 17
  18. 18. First Things First Building Rapport• Talk with the challenging person directly – often clarifying your ask will help.• Have the team member with the highest clout, or closest relationship seek out the obstacle and understand their point of view.• Do the first step, wait a few days, and if no movement, escalate – start by confirming your agreement and securing a specific time table for resolution.• If that does not resolve the challenge, then consider further escalation or alternatives.• If you must….. Escalate through the management chain. – This is usually the first step taken, but it should be your last resort. 11/14/12 Association for Strategic Planning 18
  19. 19. Thank you! Questions? Jeanne Bradford jbradford@tcgen.com www.tcgen.com11/14/12 Association for Strategic Planning 19