Rather than react to the media’s advice in this or any other circumstance, how could an improved decision have been made? More specifically, how can the risk potential be truly identified and weighted against any perceived benefits?
In business, risk is often the byproduct of reward, meaning you can’t have one without the other. Investing in new equipment, hiring new staff, pursuing new markets. These are all actions for growth, yet risk is what holds many back from making investments in these areas.
So the question that remains is how do we assess risk effectively so as not to over invest, while still capturing the potential rewards? The following five questions can be used to assess risk and determine where the most beneficial and balanced decisions exist.
1. What is the degree of risk that is associated with making the change?
a. Minimal risk (i.e. a minor annoyance).
b. Medium risk (i.e. threat to credibility or financial position).
c. High risk (i.e. detrimental impact on business viability).
2. What are the possible rewards of making the change?
a. Minimal reward (i.e. improved conditions with no financial relevance).
b. Medium reward (i.e. improved financial condition).
c. Maximum reward (i.e. a game changer for your organization).
3. Does the change align with your strategic vision of the organization (i.e. the investment will help us grow in new markets)?
4. Will the change result in other byproducts that will have a positive or negative outcome (i.e. improved working conditions for employees)?
5. What is the degree of difficulty and required investment (in time or resources) to implement the change?
Through answering these questions you will be better prepared to make improved decisions, which will in turn improve your ability to rapidly affect positive change.
Try applying these five questions to your next significant decision and compare how the resulting outcome compares with your initial analysis. I think you will find that by forcing yourself to think through these questions will help you to increase your focus on those decisions that will be the most beneficial to you or your business.
© Shawn Casemore 2012. All rights reserved.