Business leaders and corporate executives need to find the optimal way to achieve growth while at the same time, manage the risks. But when deciding which initiatives to pursue and how to allocate limited resources among them, organisations often don’t choose well.
All business initiatives are achieved through projects, so assessing and ranking these projects in order of importance to the business strategy give organisations the confidence to embrace risk.
The first step toward embracing risk is to realise that risks aren’t all bad – positive risks are in fact opportunities.
The second step is to identify, quantify and analyse the potential impact in order to mitigate against the negative effects and exploit the positives.
Risk management training teaches that an official budget – the base case – should be considered in the context of three scenarios: worst case, best case and most likely.
The values for each risk are quantified by the monetary impact if it occurs and the probability it will occur. Once the two values for each risk are determined, the values are multiplied together to find the impact each risk will have on the business initiative.
Risk and rate of return must be commensurate for a project to be worthwhile. High-risk projects should only be approved if they have high rates of return, so assessing the risks by correlating them to expected returns provides the justification for an organisation to pursue a high-risk project.
This analysis also provides deeper knowledge and insight with which to compare different projects’ returns. The hard choices about which projects to pursue will still need to be made and the probable returns for each project will still need to be assessed, but by weighing the risks it will be easier to make a decision on where to invest money, time and effort.
Improve the Fundamentals
Companies with the fundamental strategic skills and rigor will have the strength to continue growing even when the economic environment is changing rapidly around them.
With the speed of change in technological innovation, the growth of customer power and globalisation, a continuous training culture will help organisations maintain the fundamental skills needed for successful strategic execution.
In their report Capturing The Value of Project Management Through Organisational Agility, the PMI has found that 80% of the highest-performing organisations focus on continuous training – giving workers the skills they need to achieve exceptional performance.
Improving the way people lead and execute project-based work and increasing the alignment of projects to the intended strategy – while reducing uncertainty associated with risks – enables an organisation to execute faster and deliver higher quality results every time.
An upskilled workforce of project leaders, who can seamlessly transition from ‘big picture’ strategic thinking to attention-to-detail in work that effectively delivers against the defined strategy leads to improved teams, capability and capacity, ensures greater success, greater growth and greater revenues.
The following five key skills have the greatest impact on strategic execution:
1. Strategic alignment
Aligning execution with intended strategy is the overarching theme. Many subsequent core competencies fall under this category. Training teams to ensure that initiatives are aligned with strategy from beginning to end, by:
- Understanding and articulating overall organisational strategy and the part a given initiative plays in delivering it
- Applying and maintaining alignment of the initiative to overall strategy
- Managing expectations of those who have a stake in the project outcome
2. Project alignment
All business leaders will benefit from project management skills given business initiatives are actually a series of projects. Project management training will:
- More effectively align business initiatives with overarching corporate strategy
- Build better plans, faster and with a deep understanding of all their components
- Execute faster and more cleanly against those plans
- Anticipate potential roadblocks and risks faster
- Develop relational skills that reflect leadership ability such as negotiation and facilitation skills, persuasiveness, change management and the ability to communicate up and down and across the organisation
3. Risk management
A thorough assessment of all the risks that could interfere with your initiative’s success is of paramount importance, but even more so is actively and proactively managing identified potential risks and being prepared to address the unexpected. To proactively manage risk, here are the key areas to focus on:
- Identify market variables that could impact your initiative’s success and monitor them regularly
- Identify deliverables whose delays will have a cascading effect on the rest of the project’s internal interdependencies
- Continuously monitor for all of the above and raise a red flag at the first sign of trouble
- Develop contingency plans so that when unanticipated issues arise, no time is wasted
Mistakes that impact the execution speed and quality often happen because someone didn’t communicate effectively enough. Ensure your initiative leaders are trained to communicate expectations and responsibilities clearly and precisely so teams know they are accountable. Communication training helps leaders to:
- Articulate the big picture so their teams make decisions in alignment with business strategy
- Foster an atmosphere of over communication, to ensure that no one is afraid to speak up of ask questions
- Clearly defines who is accountable for assignments and deadline
- Establish regular and ‘interrupt-driven’ communications
5. Change management
With every initiative undertaken, something is going to change. Whether making a large or small transition, resetting a strategy or acquiring a company, the impact needs to be assessed and addressed quickly and forthrightly. Change management training helps your team:
- Develop an overarching approach for making change happen in your organisation
- Articulate a compelling vision for each change
- Engage stakeholders in support of the change
- Develop a communication plan for change initiatives
- Manage employees’ emotional reactions to change
Improving a teams’ fundamentals will reduce risk, allowing for better understanding of the risks faced and how to mitigate them.
The more actively a strategy execution approach is pursued, the better the organisation will execute their initiatives and see lasting growth.
For further on how businesses can find the optimal path to achieve growth while managing risk, read our whitepaper: Maximise Growth and Minimise Risk by Managing Business Strategy Like an Investment Portfolio.