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Everybody Loves Prudence

September 12, 2023
Article, Business, Risk
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Everybody Loves Prudence

Why Does Prudence Rule the Roost?

The business landscape is littered with companies that have adopted prudence as their north star. It’s often assumed that prudence is synonymous with wisdom, making it the go-to strategy for decision-makers. But is playing it safe genuinely wise, or is it a shortcut to mediocrity?

How Does Prudence Stifle Innovation?

A prudent approach to business actively impedes innovation. Companies overly committed to caution lose sight of the risk-reward equation, which states that higher risk comes with the potential for greater rewards. By avoiding risk, you are essentially capping your potential returns. In this way, prudence can act as a ceiling on your business aspirations.

What Opportunities Are You Missing Out On?

The risk-reward equation serves as a guidepost for what you could achieve if you step outside your comfort zone. Your competitors, unafraid of taking calculated risks, are exploiting new markets, adopting new technologies, and reaping the benefits. Every time you choose the cautious route, you’re not just maintaining stability; you’re missing out on these growth opportunities.

Is Your Talent Pool Shallowing?

Top-tier talent thrives in environments where their creativity can shine and where they can have a significant impact. An excessive focus on prudence can make your organisation less attractive to these dynamic individuals. When they sense a lack of ambition rooted in an overly cautious approach, they’re likely to look elsewhere, undermining your access to a high-calibre workforce.

What’s the Real Cost of Perceived Safety?

You might feel that prudence keeps you safe from the pitfalls that come with high-risk ventures. But what you’re not accounting for is the risk of becoming irrelevant or obsolete. The risk-reward equation suggests that the more you invest in terms of taking calculated risks, the higher your potential returns. When you opt for the illusion of safety, you actually expose yourself to a different kind of risk, one with long-term consequences: the risk of stagnation.

Is It Time to Reevaluate?

Overreliance on caution and prudence contradicts the principles of the risk-reward equation. You may think you’re avoiding pitfalls, but you’re also sealing off pathways to potentially greater successes. The question now is, are you willing to reassess your approach to risk and break free from the self-imposed limitations that come with excessive prudence?

Russian Roulette With Your Business

September 12, 2023
Article, Organisational Therapy, Quintessence, Risk
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Russian Roulette With Your Business

Ignoring the importance of risk management is like taking a loaded revolver and repeatedly spinning the cylinder and pulling the trigger. How long before you get shot in the head? Dive in to explore why many companies disregard this crucial aspect of business, and discover how organisational psychotherapy offers a lifeline.

What Are the Risks in Not Managing Your Risks?

When you’re ignoring or bypassing risk management, you’re not just courting failure; you’re setting the stage for potential disaster. This negligence affects more than just the bottom line; it has repercussions across the entire organisation, creating a ripple effect that’s hard to contain.

The Risk-Reward Curve

The risk-reward curve is a useful concept in this context. It illustrates the trade-off between the level of risk taken and the potential reward received. In a well-managed organisation, you want to be at the point where you’re taking calculated risks that offer a high potential return without putting the organisation in jeopardy.

However, if you’re not managing your risks, you’re moving perilously along that curve, often towards the higher-risk, lower-reward area. Here, the consequences of a mistake or an unexpected external event can be catastrophic. The firm may face financial ruin, legal consequences, and severe reputational damage.

The Chain Reaction of Neglected Risks

When risks are not managed, the fallout doesn’t stop with immediate financial loss. A single unmitigated risk can set off a chain reaction, affecting supplier relationships, customer loyalty, and investor confidence. Before you know it, you’re in a downward spiral that’s difficult to break out of.

The Human Cost

Let’s not forget the impact on employees. When risks are mismanaged, the immediate casualties are often the staff members who bear the emotional and psychological burden. They become disengaged, leading to decreased productivity and increased turnover. In extreme cases, the health and safety of employees could be compromised. We all remember the Bhopal tragedy.

The Opportunity Cost

Another less obvious but equally important aspect is the opportunity cost involved. When you’re constantly firefighting because you’ve neglected to manage your risks, you’re diverting resources from other opportunities. Instead of innovating, expanding, or improving, you’re stuck trying to manage crises.

To ignore risk management is not just a flawed strategy; it’s a ticking time bomb. It’s not a question of if it will explode, but when. With the lens of organisational psychotherapy, you have a tool that can not only defuse the situation but also set you on a more stable, sustainable path.

What’s At Stake?

Many firms don’t adequately address the risks they face, and it’s not just small businesses that are guilty. Established corporations, too, often find themselves in a tight spot due to poor risk management. Are they unaware, or are they ignoring the potential consequences? That’s a question worth pondering.

Why Do Companies Overlook Risk Management?

It’s hard to pinpoint a single reason. The motivations are diverse, ranging from financial constraints and complacency to a lack of expertise. This failure to assess and mitigate risks often leads to disastrous outcomes such as financial losses, reputational damage, and even the complete collapse of the organisation.

How Does Unmanaged Risk Affect Employees?

Unmanaged risk has a domino effect that reaches all corners of a company, including its workforce. Low morale, high stress, and diminished productivity are just a few symptoms of an organisation that hasn’t managed its risks well. Employees bear the brunt of poor decisions and often end up leaving the organisation, further compounding its issues.

Organisational Psychotherapy: A Solution?

Enter organisational psychotherapy. This practice examines the collective psychology of a company, aiming to unearth root causes of systemic issues, including poor risk management. By helping organisations identify their blind spots, organisational psychotherapy facilitates a more holistic approach to risk assessment and mitigation.

How Does It Work?

Organisational psychotherapy begins by creating a safe space for open dialogue. Team members at all levels of the organisation participate, sharing their thoughts and concerns freely. This conversation helps to uncover underlying issues and provides a manifest opportunity for surfacing and reflecting on shared assumptions and beliefs, including e.g. the organisation’s relationship with risk management.

What’s the ROI?

The return on investment is more than just monetary. Enhanced morale, increased productivity, and a renewed focus on proactive risk management make for a healthier work environment. While it might be difficult to put a price on these qualitative gains, they’re often indicative of long-term success and stability.

Is Organisational Psychotherapy Right for You?

Every organisation is different, and what works for one may not work for another. However, if poor risk management is a concern, then it’s worth considering. Not just as a remedy for your current issues, but as a preventive measure for the future.

In an age where uncertainty is the only certainty, isn’t it time you manage the risk of not managing your risks?

Further Reading

Jones, C. (1994). Assessment and Control of Software Risks. Yourdon Press.
Schneier, B. (2000). Secrets and Lies: Digital Security in a Networked World. John Wiley & Sons.

Unleash Your Inner Maverick: Find the Courage to Think Different

March 13, 2023
Alien tech, Business, Culture change, Deming, Risk
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Unleash Your Inner Maverick: Find the Courage to Think Different

Dare to think different,
Brave the road less traveled by,
Find success ahead.

n business, as in life, it takes a lot of courage to think different. It’s easy to fall into the trap of following the status quo, copying what others have done, and playing it safe. But true innovation and success come from challenging norms and defaults, and taking calculated risks.

Thinking different in business requires the courage to break free from conventional wisdom, challenge assumptions and beliefs, and push boundaries. It means being willing to try new things, even if they haven’t been done before, and being okay with risking the possibility of failure.

And with great risk comes great reward. Businesses that embrace innovative thinking are the ones that stand out from the crowd, attract loyal customers and employees, and ultimately succeed.

So if you want to make a name for yourself in the world of business, don’t be afraid to think different and take bold steps towards the future.

1000 Little Acts of Defiance: Disengaged Employees Are Costing You Big Time

February 1, 2023
Antimatter principle, Article, Business, Culture change, Needs, Organisational effectiveness, Risk, Toxic behaviours
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1000 Little Acts of Defiance: Disengaged Employees Are Costing You Big Time

1000 little daily acts of defiance are small, seemingly insignificant actions that individuals take to undermine the purpose and goals of an organisation. Defiance is the flip side of compliance.

1000 little daily acts of defiance can take many forms, such as purposely slowing down everyone’s work, failing to complete tasks to the best of one’s abilities, and spreading rumors and negativity. The motivations behind these acts can range from frustration with management decisions, a feeling of being undervalued or that one’s needs are being discounted or ignored, or a desire to push back against what is perceived as an oppressive work environment.

One historical example of this type of resistance can be seen in the Luddite movement of the 19th century. The Luddites were skilled textile workers who, in response to new technologies that threatened their livelihood, engaged in acts of sabotage against the factories that employed them. This act of defiance was rooted in a desire to protect their jobs and way of life, and it had a significant impact on the industry.

Similarly, saboteurs are individuals who intentionally engage in acts that disrupt the operations of your organisation. This can range from damaging equipment to leaking sensitive information. Saboteurs are often motivated by a desire to cause harm or disrupt the operations of an organisation that they believe is acting unethically or in opposition to their interests.

The impact of these 1000 little daily acts of defiance can be significant. The reduction in productivity and morale can have a direct impact on the bottom line, with a recent study finding that quietly defiant employees can cost a company an average of $3,400 per year. In addition, these actions can also create a toxic work environment, leading to increased turnover and decreased employee satisfaction.

Data further supports the impact of these acts of defiance. For example, a study by the Society for Human Resource Management found that companies with high levels of employee engagement had a 41% lower absenteeism rate than companies with low levels of engagement. This highlights the fact that when employees feel valued and engaged, they are more likely to show up for work and be productive.

In conclusion, 1000 little daily acts of defiance can have a significant impact on an organisation’s bottom line. From the Luddites to modern-day saboteurs, individuals have long sought to resist the operations of organisations that they believe are acting in opposition to their interests. While these acts may seem small and insignificant, they can have a significant impact on productivity and morale, leading to a major drag on the overall success of an organisation. Creating a supportive, engaging work environment well serves those companies needing to mitigate the occurrences of defiance and enhance their success.

Mind Games: Let’s Talk About the Dark Side – Psychopathy in the Workplace

January 31, 2023
Article, Psychology, Risk, Toxic behaviours
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Mind Games: Let’s Talk About the Dark Side – Psychopathy in the Workplace

Psychopathy is a personality disorder characterised by traits such as lack of empathy, charm, and manipulation. It has a significant impact on organisations, as individuals with psychopathic tendencies have a negative effect on their colleagues, as well as on the overall work environment.

Sidebar: Psychopathy is considered a disorder because it is associated with a range of negative outcomes, including violent behavior, impulsive and irresponsible actions, and a lack of empathy or remorse. People with psychopathy often have difficulty forming and maintaining meaningful relationships, and they may engage in antisocial or criminal behavior. Additionally, research has shown that individuals with psychopathy have neurological and cognitive differences suggesting that it is a biological as well as psychological disorder.

Studies have shown that individuals with higher levels of psychopathy tend to have lower levels of emotional awareness. This lack of empathy could stem from a low awareness of others’ emotions, which can result in a lack of concern for the feelings and well-being of others. However, it should be noted that this is only true for individuals with psychopathy who have also experienced childhood abuse or neglect. For those who have not experienced abuse or neglect, they may have high levels of emotional awareness, which could help them be more manipulative and charming.

According to data from the World Health Organisation, approximately 1% of the general population is estimated to have psychopathy. In organisations, this number is likely to be higher, as individuals with psychopathic tendencies tend to be drawn to positions of power and control, such as CEO, CFO, and senior management positions.

The impact of psychopathy in organisations can also be seen in terms of unethical behavior. Individuals with psychopathic tendencies have been shown to engage in unethical behaviors such as lying, cheating, and stealing, and are more likely to engage in illegal activities, such as embezzlement or fraud. This can have a significant financial impact on organisations, as well as harming their reputation.

The negative impact of psychopathy on the work environment can also result in lower morale and increased turnover rates. Individuals with psychopathic tendencies can be hostile and intimidating, causing fear and stress in their colleagues.

Furthermore, the manipulative nature of individuals with psychopathic tendencies can also result in a lack of trust among employees. Psychopaths are often able to deceive others and manipulate situations to their advantage.

In conclusion, the impact of psychopathy in organisations can be significant and far-reaching. Few organisations have any kind of programme to address this risk.

 

Risk And Rewards

March 21, 2022
Agile, Article, Risk
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Risk And Rewards

The Risk Reward Curve

The risk/reward ratio (often illustrated as a curve) marks the prospective reward an investor can earn for every dollar, pound or yen they risk on an investment. Many investors use risk/reward ratios to compare the anticipated returns from an investment with the amount of risk they must undertake to earn these returns.

Investing in Agile Software Development

Adopting an Agile development approach is a kind of investment decision, much like any other investment decision. NB. Not all the investment is financial/monetary in nature, and neither are all the anticipated returns.

Your Winning Rate

Investors have long understood the necessity of combining the risk-reward ratio with the “winning rate” to know whether a given investment decision or strategy will prove a winner.

Agile Adoptions Are Highly Risky And Offer Limited Rewards

Agile adoptions have a remarkably low “winning rate”. Something like 75-90% of all attempted Agile adoptions fail.

It sure beats me why so many decision-makers fail to investigate (and thereby, understand) the risks and winning rates of Agile adoptions. Especially as the rewards accruing from adopting an Agile software development approach are so limited (read: minimal, or negative).

Is your organisation contemplating adopting Agile? Has it done its homework?

– Bob

Quintessential Product Development

January 13, 2022
Article, Culture change, Doctrine, Flow, Flow•gnosis, Flowchain, Metaflow, NoSoftware, Organisational effectiveness, Prod•gnosis, Product development, Quintessence, Risk, Value
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Quintessential Product Development 

In my most recent book “Quintessence” I map out the details of what makes for highly effective software development organisations.

As fas as software development organisations are concerned, it’s a bit of a moot point – as software is generally something to be avoided, rather than sought (see also: #NoSoftware).

“The way you get programmer productivity is by eliminating lines of code you have to write. The line of code that’s the fastest to write, that never breaks, that doesn’t need maintenance, is the line you never had to write.”

~ Steve Jobs 

Foundational Concepts

There are just a few complementary concepts that mark out the quintessential product development company. These are:

  • Whole Product.
  • Systematic Product Management.
  • Whole Organisation (systems thinking).

Whole Product

The quintessential product development organisation embraces the concept of “whole product”. Which is to say, these organisations emphasise the need to have every element of a product i.e. core product elements plus a range of “intangibles” – everything that is needed for the customer to have a compelling reason to buy (Mckenna 1986).

Systematic Product Management

Quintessential product development organisations take a systematic approach to flowing new product ideas and features through a number of stages – often in parallel (Ward 1999) – to predictably arrive at a successful new product in the market:

  • Inception – spotting a gap in the market, a.k.a. some (potential customer) needs going unmet, interesting enough to do some discovery.
  • Discovery – uncovering and proving the real needs of customers, the things they value, the likely usability of possible solutions, the feasibility of meeting everyone’s needs, and the viability of a product as a means to these ends. In essence, the key risks facing the proposed product. 
  • Implementation – building a whole product solution, i.e. both core elements and “intangibles”.
  • Launch – Placing the product on sale (or otherwise making it available to customers).
  • Feedback – Seeing how the market responds.
  • Pivot or Augmentation – Acting on feedback to either reposition the solution (in response to unfavourable feedback) or to incrementally update / extend the “whole product” offering to continually strengthen the product’s value proposition and appeal.
  • Cash Cow – Reap the commercial rewards of a strong product and market share.
  • Sunsetting – Wind down the product in a way that meets the ongoing needs of all the Folks That Matter™️ (e.g. continued support, spare parts, etc.; easing customers’ transition to newer products; etc.). 

Whole Organisation

It’s common for organisations to think in terms of silos. A Product Management or Product Development silo being but one more silo in a long and ever-lengthening list. 

In the quintessential organisation, the whole organisation is geared around – amongst other things – the task of regularly and predictably getting new products and new product features/updates out the door and into the hands of customers. In the longer term, new products are the life blood of most organisations, especially in the technology industries.

We only have to look e.g. Toyota and their TPDS (Toyota Product Development System) to see both an example of how this works in practice, and the huge benefits of the whole-organisation approach.

Quintessential product development organisations embrace a range of progressive ideas such as Prod•gnosis and Flow•gnosis.

– Bob

Further Reading

Marshall, R.W. (2013). Product Aikido. [online] Think Different Available at: /wp-content/uploads/2013/04/productaikido041016.pdf [Accessed 13 Jan. 2022].

Mckenna, R. (1986). The Regis Touch: New Marketing Strategies for Uncertain Times. Reading, Mass.: Addison-Wesley Pub. Co.

Perri, M. (2019). Escaping The Build Trap: How Effective Product Management Creates Real Value. O’Reilly.

Ward, A.C. (1999). Toyota’s Principles of Set-Based Concurrent Engineering. [online] MIT Sloan Management Review. Available at: https://sloanreview.mit.edu/article/toyotas-principles-of-setbased-concurrent-engineering/. [Accessed 13 Jan. 2022].

Quickie: Software Engineering Wannabes

November 4, 2021
Engineering, Quickies, Risk
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I find it risible that many software groups refer to themselves as “engineers” and to what they do as “engineering”, when they have no idea what “engineering” actually entails. And in particular, when they make no effort to assess and control software risks (development risks and product risks, both).

See also:

Jones, C. (1994). Assessment and Control of Software Risks. Yourdon Press.

Koen, B. V. (2003). Discussion of the Method: Conducting the Engineer’s Approach to Problem Solving. Oxford University Press.

Demarco, T. & Lister, T. R. (2003). Waltzing With Bears: Managing Risk on Software Projects. Dorset House Pub.