Understanding risk is at the core of management and board effectiveness. Every day decision makers consider options and make choices based on their expert judgment and analysis of probable success.
But there is one business risk that can lurk outside leaders’ awareness. In fact, this risk comes from inside their own heads in the form of mental biases. And no one is immune.
“Mastering the New Normal” – A Continuing Series
“A company’s ability to respond to an unplanned event, good or bad, is a prime indicator of its ability to compete.”
– Bill Gates
Our New Normal world involves a global business environment, dynamic markets and evolving strategic, technological and operational risks. Though different organizations have different priorities and issues, what are the key risks keeping leaders awake at night in 2014? A survey of almost 400 C-level executives recently published in Directorship* identified these key concerns:
“Mastering the New Normal” – A Continuing Series
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
– Warren Buffett, Chairman, Berkshire Hathaway
To achieve sustainable success in the New Normal marketplace, leaders and their organizations need reputations that are prominent, robust and blue-chip quality. Anything less can impact loyalty among customers, employees and shareholders with immediate – and often enduring – adverse consequences.
“Mastering the New Normal” – A Continuing Series
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
– Sam Walton, Founder of Wal-Mart
A key challenge for leaders in mastering the New Normal involves executing brilliantly in a customer-centric world.
“Customers” exist as consumers, clients, sponsors and shareholders. Whether you provide products, services or intellectual property, you have customers whose satisfaction and loyalty are mission critical.
Here’s the New Normal reality: A focus on customer satisfaction is a doomed strategy.
“Your business plan is what you are, but Culture is who you are.”
– Gary Kelly, Chairman and CEO, Southwest Airlines
Every organization has a culture, sometimes referred to as its personality or organizational DNA. An organization’s culture grows out of the values, behaviors and norms that its top management encourages, rewards or – in some cases – simply allows to exist.
Key Point. Research has long shown that organizational culture has a significant impact on bottom-line performance.
For instance, a comparative study of high versus low-performance corporate cultures by John Kotter and James Hesket in 1992 found revenue growth of 682 percent versus 166 percent, stock price increases of 901 percent versus 74 percent, and job growth of 282 percent versus 36 percent.
Do I have your attention now?
