What could possibly go wrong?

Some thoughts on commercial risk management. How hard can it be?

WHAT ARE THE FACTORS?

I used to work with a very large bank, in Offshore Real Estate and they had excellent systems to guide assessment of commercial risk. By look-up of company, sector, location, you could find out all the risk factors for example of ABC Company Limited, Fitness Industry and London. Or XYZ Developments Ltd, Student Flats, Bristol. This was a hugely useful tool for credit risk assessment, and risk pricing. This provided an overall context prior to looking at any specific proposal.

Of course these weren’t the only factors: we also looked to the leadership, and management experience as well as what “skin in the game” they had. Track record and commitment are critical factors since all risk is about trust.

This was all before we looked at the investment risk of a specific proposal. Link 1 - The Four Risk Factors for Investment is a useful guide. Many of the factors considered in Offshore Real Estate lending are outlined in Link 2, however this is primarily focused on Real Estate and not necessarily relevant to other industries. Link 3 is a little more generic and may be valuable for other types of investment.

From the above we can see that risk assessment is hugely complex, looking at the context (industry and location), looking at the company and people (will they do this successfully) and the proposal (is this a good deal)

WHAT APPROACH TO TAKE?

From the above, and supporting link it is apparent that you might look at many, many factors. The risk therefore is analysis paralysis and being so deep in detail that you fail to take a balanced approach proportionate to the risk and reward.

My instinct would be to table a list of headings for a stakeholders meeting and get the people at the sharp end of the deal to prioritise which merit discussion and evaluation. The challenge therefore becomes to identify the key stakeholders for the entire deal life-cycle through concept, delivery and operation to exit.

DEAL LIFE-CYCLE AND STAKEHOLDER INTERESTS

As a project manager I know that great ideas can fail at the drawing board, in the implementation or in their operation. Sometimes failure at the end is due to an error at the beginning. For this reason I would commend careful consideration of all the stakeholders at all the stages.

Consideration of all stages is particularly important it you are in something of a Dragon’s Den scenario. External investment can take many forms from friends, family, banks and businesses to equity partners. Each will have an entry and exit point, and demand different rewards for different types of participation.

Some may take satisfaction that they helped you start-up, others may demand their “pound of flesh” whilst those with a longer term or participative role could have very different interests in the short, medium or long term.

CONCLUSION

In conclusion there is no right way to manage project and/or commercial risks. It really depends on what you are trying to achieve (the outcome) and how you are trying to achieve it (the process).

Good governance and methodologies can help the process, but they are no guarantee and a project perfectly executed will be a success: Perfect delivery of a sailing boat will still be a failure if the objective was to transport cars. I often cite the case of Euro-Tunnel which is without doubt a fantastic engineering achievement, but in terms of financial return to its investors it was a disaster!

So as it so after the case, the answer is “It depends…….”

If any reader has a recommended check-list or guidance I would welcome feedback.

LINKS
http://www.cpexecutive.com/newsletters/capitalmarkets-newsletter/netleasecolumn/the-four-risk-factors-for-investments-2/1004034275.html
http://www.principalcef.com/risk-factors.php
http://www.investopedia.com/exam-guide/finra-series-6/evaluation-customers/types-investment-risks.asp


THE AUTHOR

Tim Rogers is an experienced Project and Change Leader. He is founder of www.ciChange.org and curator for www.TEDxStHelier.Com . Past roles have included Programme Manager for the commercialization of Ports of Jersey, Operations Change & Sales Support for RBSI/NatWest, and Project Manager for the Incorporation of Jersey Post. He is also Commonwealth Triathlete and World Championships Rower with a passion for teaching and learning and is a Tutor/Mentor on the Chartered Management Institute courses. He is a Chartered Member of the British Computer Society, has an MBA (Management Consultancy) and is both a PRINCE2 and Change Management Practitioner.

Tim HJ Rogers
PRINCE2 - MBA (Consultancy) - APMG Change Practitioner
www.timhjrogers.com | Twitter @timhjrogers | Skype @timhjrogers | Mobile: 07797762051
Curator TEDxStHelier www.TEDxStHelier.com
Founder ciChange www.ciChange.org

Do people or systems effect change?

The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man. George Bernard Shaw, Man and Superman (1903) "Maxims for Revolutionists" Irish dramatist & socialist (1856 - 1950)

SYSTEMS OR GROUP APPROACH TO CHANGE

It’s fair to say that people effect change: but it is also reasonable to suggest that people are conditioned, constrained or motivated by the systems that surround them. People are (in part) a product of their schools, their parents, their friends, their education, their laws, values and beliefs as well as their job and other experiences.

SYSTEMS THAT EFFECT CHANGE

I am reading “Changing Organizational Culture - Cultural change work in progress” and highly recommend it (See source below). In the early chapters there is some text about Open Systems and it got me thinking: what are the systems that effect change in an organisation?

In an organisation the systems that effect change (or not) might include…
• The management systems – how people are talked to, directed, tasked, managed (score 1-5)
• The HR systems – how people are recognised, rewarded, supported (score 1-5)
• The leadership systems – how people are communicated with, motivated, engaged (score 1-5)
• The finance systems – how performance is monitored, measured and reported (score 1-5)
• There may be many others, depending on the organisation and the external context

If these systems are like interconnecting cogs then success comes from them working together, rather than in opposition or at conflicting speeds.

Another perspective suggests three mutually dependent systems…
• the technological (production)
• political (allocation of power and resources)
• cultural (normative glue)
An organization is effective to the extent that there is alignment within and across the sub-systems

What is interesting about this as a model is that no amount of “team building” or “task forces” are likely to deliver change, or overcome resistance to change if the creative talent and commitment of that band of brothers (and sisters) is constrained by the “systems”. The answer is, of course, to change the systems. However that may not be suitable, feasible or acceptable depending on the metaphor for change.

If the intent is fix and maintain, then that suggests no change to the systems
If the intent is build and development, then that suggests only tweaks at best
If the intent is liberate and re-create then there appears to be scope to challenge and change

The problem is that evolutionary, incremental or “safe” change favours the first two whereas the “liberate and re-create” approach may be perceived as high risk, revolutionary and de-stabilising.

WHAT IS THE SOLUTION?

I think it is useful to look at the 7S model and the Cultural Web, noting that systems are both “hard” and “soft”, as well as “formal” and “informal” and generally run alongside each other often in parallel.

I think successful change comes from changing the system(s), rather than the people.

I think rather than empower people to “go out there and deliver change” it might be better to identify the systems that need changing and focus efforts on those. This is because the former approach is likely to pander to personal interests and politics, whereas the latter sets the agenda and the intended outcomes, without being too restrictive of the creative process.

The reason I think this (until I change my mind!) is that any approach which suggests “go out there and deliver change” will either create paralysis (Oh gosh what should I do?) or quick wins (Here is an easy success, with my name on it!). You don’t generally get people prepared to tackle the “elephant in the room”, the big, difficult issue that we all recognise as the barrier to change, but never speak its name.

I think leadership is about tackling the difficult stuff, and creative challenge should be focussed on changing the systems rather than the people, because if the systems are right then the environment will encourage and support the right behaviours.

This has to be better than appointing an A-Team who seek to deliver change in the face of, and in spite of difficult systems. Whereas the efforts of the A-Team may be heroic, and possibly inspirational they are unlikely to be embraced by the vast majority who inevitably “go with the flow” of the systems.

LINKS

7s Model https://www.mindtools.com/pages/article/newSTR_91.htm


Cultural Webhttps://www.mindtools.com/pages/article/newSTR_90.htm


SOURCE

Changing Organizational Culture - Cultural change work in progress
Mats Alvesson and Stefan Sveningsson
First published 2008 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
ISBN 0-203-93596-9 Master e-book ISBN

THE AUTHOR

Tim Rogers is an experienced Project and Change Leader. He is founder of www.ciChange.org and curator for www.TEDxStHelier.Com . Past roles have included Operations Change & Sales Support for RBSI/NatWest, and Project Manager for the Incorporation of Jersey Post. He is also Commonwealth Triathlete and World Championships Rower with a passion for teaching and learning and is a Tutor/Mentor on the Chartered Management Institute courses. He is a Chartered Member of the British Computer Society, has an MBA (Management Consultancy) and is both a PRINCE2 and Change Management Practitioner.

Tim HJ Rogers
PRINCE2 - MBA (Consultancy) - APMG Change Practitioner
www.timhjrogers.com | Twitter @timhjrogers | Skype @timhjrogers | Mobile: 07797762051
Curator TEDxStHelier www.TEDxStHelier.com
Founder ciChange www.ciChange.org

Your staff are more important than your customers: because your staff are your customers!

IS THE CUSTOMER KING?

I’m all for customer focus, but there are some interesting things to know about customers. They can be irrational, demanding and unprofitable. If 100% of your attention is on your customers then you’ll be run ragged and perhaps miss important attention on your people, products and services.

WHY ARE STAFF MORE IMPORTANT?

In any business your staff are what gets the customer excited, interested, engaged and buying. Even as a sole trader the product does not sell itself: you have to be there! If you start your business from your laptop, or with friends around the kitchen table it all begins with the passion and vision of the people who will craft, develop and market the products and services.

“If you look after your staff, they’ll look after your customers. It’s that simple.” Sir Richard Branson

THE ROLE OF LEADERSHIP

In a recent article in Jersey’s Connect Magazine (Link 1) Luke Smith of Purpose.je challenges “Do you have a job or a business?” (Link 2) I think this is an excellent article and recommend everyone to read it.

I believe it adds weight to the argument that success is from leadership (“doing the right things”) rather than management (“doing things right”) and my logical extension is that this means creating the right environment for success rather than shouldering the impossible burden of satisfying every whim of each customer.

Success in this context is a business of people, products and services which can grow and thrive based on the principles and processes you have co-created, rather than demand increased effort from you for each additional customer.

The former approach will allow you time for holidays and retirement, or at the very least time for reflection whereas the latter may lead to burn-out and an early grave.

CO-CREATE YOUR FUTURE

Staff are better educated and informed, like never before. Tap into their expertise and whilst you may provide the canvas, let them bring the paint.

The role of leadership is to create the right environment: this does not mean wrapping up in cotton wool. Let them get the scars, cuts and bruises of experience and the satisfaction of success and they will continue to pour their talents into your products, and delight your shared customers.

Your legacy should be that the customers, products and your reputation should outlast your leadership, because it lives on in the values and behaviours of your staff.

LINKS
http://www.bailiwickexpress.com/jsy/connect/
http://epublishbyus.com/ebook/ebook?id=10042108#/94



THE AUTHOR

Tim Rogers is an experienced Project and Change Leader. He is founder of www.ciChange.org and curator for www.TEDxStHelier.Com . Past roles have included Programme Manager for the commercialization of Ports of Jersey, Operations Change & Sales Support for RBSI/NatWest, and Project Manager for the Incorporation of Jersey Post. He is also Commonwealth Triathlete and World Championships Rower with a passion for teaching and learning and is a Tutor/Mentor on the Chartered Management Institute courses. He is a Chartered Member of the British Computer Society, has an MBA (Management Consultancy) and is both a PRINCE2 and Change Management Practitioner.

Tim HJ Rogers
PRINCE2 - MBA (Consultancy) - APMG Change Practitioner
www.timhjrogers.com | Twitter @timhjrogers | Skype @timhjrogers | Mobile: 07797762051
Curator TEDxStHelier www.TEDxStHelier.com
Founder ciChange www.ciChange.org

Procrastination is like a credit card: it's a lot of fun until you get the bill.

I have a bias for action: to get things done. When I was younger I used to get really frustrated when the boss failed to do anything about the issues that I brought to his attention. With experience and increasing wisdom I now appreciate that sometimes doing nothing, is exactly the right thing to do. However, only sometimes!


A TALE OF TWO DAUGHTERS

I have two daughters, both very bright and clever and both destined for greatness by virtue of their drive, determination and hard work. However one will plan things well in advance and the other will be a whirlwind of activity at the last minute. I cannot fathom how siblings can be so different!

MY APPROACH

I generally am aware of things in the long and medium term and think about them. I start planning a few months or weeks ahead, depending on the activity, but generally make the final decision quite late. I like to keep my options open!

For big competition events like rowing or triathlon the training plan may be devised months in advance, but the actual weekly sessions vary according to weather and circumstance and the event on the day is when I make final choices bases on bike options, shoe options, clothing options etc.

My approach in projects and change is much the same. Have a good idea of the big picture, be firm but flexible about the method of getting there, and keep options open for opportunities or to accommodate last minute changes.

I seldom use precise Gantt charts because I am more interested in the outcome (product, deliverable or decision) than the process and may switch between a variety of means to get there according to circumstance (people and events). I feel being too focussed on the charts, graphs, and project periphery can distract from what you are actually trying to achieve.

However at the same time I like to focus on clear goals, milestones, performance rather than procrastinate indecisively, with no discernible output or outcome for my efforts.

ONLY FOOLS RUSH IN

It may be true that only fools rush in, but to never venture is to miss out on learning, opportunity and innovation and by starting early there is plenty of time to add or amend your approach according to circumstance (people and events).

Leaving things really late means an issue becomes a drama and a drama becomes a crisis and by then your options and opportunities have expired and what may have been a great opportunity to co-create change, and help communication, collaboration and co-ordination has now passed and you find yourself with an ultimatum.

This is not good.

WHY DO PEOPLE PROCRASTINATE

There is an old “Yes Minister” saying that success comes from avoiding answering a question until the issue is no longer relevant.

I fear procrastination is not because people don’t know the answer, but because they don’t want to take responsibility for the task, the decision, the output or the outcome. I can see that this may create a sense of stability (nothing rocks the boat) but I worry that it creates stagnation.

WHAT IS THE SOLUTION

For my daughters I hope that the ability to focus and plan does not crowd out the opportunity to be spontaneous, creative and have fun. For the other I wish that having an eye toward their goal, ambition, or dreams will persuade them to set themselves some milestones to mark the progress toward what-ever makes them happy.

THE AUTHOR

Tim Rogers is an experienced Project and Change Leader. He is founder of www.ciChange.org and curator for www.TEDxStHelier.Com . Past roles have included Programme Manager for the commercialization of Ports of Jersey, Operations Change & Sales Support for RBSI/NatWest, and Project Manager for the Incorporation of Jersey Post. He is also Commonwealth Triathlete and World Championships Rower with a passion for teaching and learning and is a Tutor/Mentor on the Chartered Management Institute courses. He is a Chartered Member of the British Computer Society, has an MBA (Management Consultancy) and is both a PRINCE2 and Change Management Practitioner.

Tim HJ Rogers
PRINCE2 - MBA (Consultancy) - APMG Change Practitioner
www.timhjrogers.com | Twitter @timhjrogers | Skype @timhjrogers | Mobile: 07797762051
Curator TEDxStHelier www.TEDxStHelier.com
Founder ciChange www.ciChange.org