18 Apr Play the Game to Win

Statistics show us that organizations that have the discipline to really understand their market space and their customers have a significantly higher success rate than companies that focus on risk management. So – forgive the sports analogy – but here it is: the difference between focusing on customer net value vs. focusing on risk management is analogous to the difference between playing the game to win vs. playing the game not to lose.

Now this may sound like just a corny cliché, but it is central to the success of all great companies. How many people do you know in your life who are fear focused, or risk focused, who have ever done anything significant or meaningful with their lives? Sure, a few overcome the “fear factor” to do great things, but they’re the exception rather than the rule. Organizations are the same. Great companies take risks that are mitigated by their keen understanding of what their customers value, not by internally-focused means of risk management.

In researching The Innovation Playbook, I posted a question on several groups on the networking portal LinkedIn. The groups ranged from manufacturing to engineering to marketing groups and the list goes on. I asked a simple question: “Is risk management killing innovation?”

And wow—I wasn’t prepared for the level of emotional response – from all around the world – on that very topic. In one group I had over 200 responses. After spending hours poring through the responses, I divided them into two categories. Category A was Playing the Game Not to Lose, and Category B was Playing the Game to Win. The group that said that risk management was the best thing that ever happened them – the Playing the Game Not to Lose group – all had an interesting agenda.

After looking at the profiles of the various people who chimed in and ended up in Category A, I found they fit almost exclusively into two groups. The first group – did you guess it? – were purveyors of risk management systems! That is, they worked for management consultants and software vendors who help companies manage risk. Needless to say, they were big believers. There was also a smaller group in Category A who defined themselves as current project managers, typically engineers, who liked the idea of not being forced to take risk and thus felt very comfortable in that category.

Category B – Playing the Game to Win – were executives from major corporations to small startups who all said their success was based on their ability to break away from a spreadsheet or process approach, and pool customer needs and managing risk in a real world approach to understanding what their customers cared about. They then ran risk management tools through as a secondary process to make sure their ideas penciled out.