As the end of the year draws near, I think we’d all agree that while it wasn’t without its challenges, this year also wasn’t quite as turbulent as the previous two.
While a lot of people are juggling company parties, shopping for friends and family, and special activities for the kids, most companies are putting the final touches on the goals and the initiatives it will undertake after the New Year. After (hopefully) some well-deserved rest, the New Year represents a fresh start to dive headfirst into the initiatives your company developed as part of its planning process in the preceding months.
But as I discuss in a recent guest article in Carrier Management re-published here, the execution phase is where many well-intentioned goals meet their demise. Even though the Carrier Management article targets the insurance industry, the high-level ideas on common execution challenges are relevant to any organization.
Risk and strategy thought leaders all agree – agility is one attribute all companies must have in today’s world. Unfortunately, many companies struggle to adapt quickly under changing circumstances…
This lack of agility is often borne out of a company’s failure to consider how changes in the external environment will impact goals.
It’s common for company leaders to be inward facing, leading them to make the dangerous assumption that everything outside the company will remain stable and nothing will change. But as Managing Director of the International Monetary Fund Kristalina Georgieva explains:
In the context of strategic goals and business initiatives, I interpret Kristalina’s statement to be referring to tunnel vision.
At points during the goal planning and subsequent execution of initiatives, many executives get tunnel vision toward what they want to achieve at the expense of unforeseen events or unintended consequences.
Think about horses in a parade…
To not get distracted or spooked by all the commotion around them, the horses wear blinders to keep their focus on where it needs to be – right in front of them.
Now with the horse, there’s a rider or handler with them in the event a course correction is needed. However, when a company is wearing metaphorical blinders like the horse, they will not be able to see things coming in or blindsiding them…keeping them from achieving their goal, similar to inflation or the grey rhino concept discussed in this article.
None of us intend on calamity happening, but now that it has, the company has to wrestle with it.
When a company is blindsided by inflation, a downturn in the broader economy, a supply chain glitch on the other side of the world, or some other debacle that prevents them from moving toward their goal or executing on their plan, many leaders struggle to understand why they are not meeting goals, are behind schedule, and so on.
Instead of taking a step back, they’ll go into scramble mode to try and make stakeholders happy. This usually consists of a focus on hitting top line numbers, whether that’s revenue, items sold, number of customers or new accounts, and so on.
But as we discuss in this article on the Wells Fargo debacle a few years ago, this can create a culture that can lead to disastrous results from a variety of perspectives, including reputation.
For example, if you’re a B2B software company trying to hastily hit a top sales goal and therefore sell your system to customers who are not a good fit, there’s a good chance many of them will become disgruntled and share negative feedback to others in their circle of influence.
In the case of the insurance industry, carriers who loosen underwriting standards to meet their premiums (revenue) goals will later experience steep losses because the policies are covering risks the company isn’t equipped to handle, whether with expertise or financially.
As you can see, this reactive approach to external crises can create even bigger issues than just a missed goal.
None of us can anticipate every potential event that could derail goals and initiatives, especially the more long-term they are. Thankfully, there are proactive steps companies can take to minimize the chance of this occurring.
One of the first proactive steps all levels of the company should take is to understand two things:
- Accept that something will likely come along that will require changes to be made.
- Personnel also have other daily responsibilities, so make sure this is factored into final plans. Perhaps this means throttling back on the timeline(s) or modifying the goal(s) to accurately reflect what the company can expect to achieve.
With this taken care of, you as a risk professional can be scanning the horizon to better understand what external events could impact the company and how.
Scenario planning is one tool for helping companies remove the blinders and refine plans so they’re not just reacting to every problem that comes along but rather pursing goals with confidence.
As I discuss in another Carrier Management article, scenario planning helps decision-makers understand dependencies and consequences of goals, the impact of goals, what could go right and wrong, and what’s likely to happen so that the best decision(s) can be made. Unfortunately, many companies avoid using this tool because of its misplaced reputation of being a thousand what-ifs that lead to a lot of dead-ends.
This list of general scenario planning questions is a helpful place to start, especially if your company has never used this approach.
While I rave about scenario planning, it is by far not the only tool. Quantitative methods like Monte Carlo Simulation and retooling processes like this problem solving worksheet are also quite helpful in gaining the insights company leaders need.
Besides being the end of the year, part of my motivation for preparing this article is the concerning news about inflation and the state of the broader economy and how this may derail a company’s plans depending on its industry and host of other factors.
As an example, take an Amazon Fulfillment Center that's been built about 2 miles from my home. The massive 823,000 square foot facility was originally slated to open this fall (with the construction crews working over the weekend to get the work done quickly), but local media reports now indicate it will open sometime in 2023. Why the delay? Maybe layoffs in other parts of the company amid a general slowdown? Or is it taking longer than expected to get the needed stock? Did the company look at potential changes in external factors before making such a big financial commitment?
Therefore, I was delighted to see this issue as a top concern for executives heading into 2023.
This may seem like common sense, but I’ve heard dozens of times about situations that caught a company off guard, creating even greater havoc. They may have done a great job in identifying other types of risks to objectives, but if no one is able to see potential challenges from all sides, the in-depth strategic planning process would have been for nothing.
Don’t let the hard-earned fruits of everyone’s labor go down in flames because of something that could have been accounted for.
Has your company ever had to alter or abandon goals because of unforeseen external events?
As we prepare to turn the calendar to 2023, share your insights or any challenges you’re facing by either leaving a comment below or joining the conversation on LinkedIn.
Implementing plans and the challenges that come with it are topics that don’t receive the attention they deserve. If your company is experiencing these types of challenges but don’t know where to begin addressing them, please feel free to reach out to me directly through email or schedule a call through my online meeting calendar to discuss your specific situation and potential paths forward today.
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Helping companies achieve their vision and strategy, and succeeding in today's turbulent world, is something I'm honored to be a part of. Whether you're an occasional blog visitor or a long-term client, thank you for letting us be a part of your journey.