Risk and intelligence are two factors that define the success of any organization. Information is everywhere, and yet companies and organizations are still faced with data-related challenges that hinder their development. Is information-gathering all there is to running an operation?
In this episode, Leo Tilman joins Alexander McCaig to discuss risk and its relevance to finance, strategy, and more. Leo Tilman is a leading authority on strategy and risk, who predicted the financial crisis between 2007-2008. He also authored Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption, which is featured in this podcast.
To adapt to the everchanging uncertainties that organizations, governments, and even individuals face, agility is a must. This seven-letter word is often defined as the ability to assess and respond to changes, while making it distinct from flexibility or adaptability. What sets agility apart is that it calls for an individual to be purposefully decisive, while still grounded in the will to succeed in whatever endeavor an individual or group is facing.
Regardless of an entity’s position in the world, they are always within the environment that surrounds them. To understand what defines an individual’s or a group’s agility, we must first define the environment they are in. This is important because it helps provide insight into how agility can be expressed in those specific circumstances.
An environment consists of two components: first, the dominant trends that shape the world around us. These are the specifics of an environment, and illustrate how the environment is a dynamic entity that is capable of changing over time.
The second component refers to the fundamental nature of environments, described through theories. An example is Clausewitz’s theory on war and its accurate description of competitive environments.
An organization must be proactive in assessing the risks that it will face. Here comes the portfolio of risks, which is a set of risks that an organization must make to meet its objective. This involves multiple facets within the organization, like financial risks, strategic risks, and so on.
However, the executives of an organization need to come together and discuss the risks they face, as well as the environment they are in. By discussing and analyzing their circumstance, they’re able to determine what factors they have control over, and what they don’t.
Because of the vast amounts of data that companies and organizations have access to, it becomes a challenge to try and filter through all the data. Furthermore, companies soon realize that truly valuable information, like data about their clients or competitors, isn’t available all the time.
And so, being proactive about data-gathering is essential. By dedicating time and resources towards gathering valuable data, one can understand not only the situation but also the necessary risks needed to be taken. With that in mind, the portfolio of risks is then created.
Regardless of the amount of information that an organization has, and regardless of the strategies put in place, nothing can succeed without the human element. It is the flexibility of human beings that allows groups to move towards their goals.
It is the ability for human beings to adapt through the uncertainty of an environment, and process information that may change the status quo of their situation. Because of the complexity of the environment that anyone is in, it is up to the agility of human beings to formulate responses towards these changes.
For that reason, cultural assessments within an organization are important to move through the internal fog of data that organizations have access to. Because no matter how well we know our circumstances, our clients, or our competition, none of it matters until we first know ourselves.
How much is your data worth?
