risky business: super charging strategic plans with new risk management tools

Association for Strategic Planning 111/14/12

Risky Business: Supercharge Your Strategic Plan with New Risk

Management Tools

Association for Strategic PlanningDecember 13, 2012

Jeanne Bradford, Author“Innovate Products Faster”

[email protected]@jeannebradford

11/14/12 Association for Strategic Planning 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 risks


The Strategic Framework

Strategy-Management-ExecutionOrganization-Process

To successfully achieve the goals of your business, organizations butoptimize all 5 areas – and it starts with Strategy


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 cycle


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 metrics


Why Do Strategic Plans Fail?

Focus

Understanding

Accountability

ExecutionOver the Wall

Leadership

Flexibility

Resources

All of these are key drivers of risk – How do you mitigate to ensure failure is *not* an option?

Buy-in


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 risks

8

Risk Mind MapComprehensive 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

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.


10

Risk Mind Map Work Session

Work Session Steps:• Identify the initiative or risk theme• Assemble the cross-functional team to contribute – include

functions outside the strategic planning team!• 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 inconvenience

Objective: Construct a Risk Mind Map for your project


Initiative

11

Risk Management MatrixAnticipating 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


12

Anticipating and Mitigating Risk

How 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

Risk Management Matrix

Status Risk Impact Likelihood Metric Threshold Current Value Date Action

PlanNarrative 1-10 1-10 Text Defining

MetricValue with Units Value with Units Date by which

you must below target

Narrative

13

Risk Management Matrix Work Session

Work 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.

Objective: Construct a Risk Management Matrix for your project


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 influence


Eliminate Organizational Obstacles


How to apply the tool• Identify key individuals (typically outside the

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”

ChallengingIndividuals


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

Objective: Draft of Attitude Influence Diagram

This tool can also be downloaded at: http://www.tcgen.com/book/tools/

Attitude Influence Matrix Work Session

Association for Strategic Planning 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


First Things FirstBuilding 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


Thank you!

Questions?

Jeanne [email protected]

www.tcgen.com

11/14/12

mailto:[email protected]

risky business: super charging strategic plans with new risk management tools

Technology