Posts Tagged ‘risk’

Think Before You Act

Posted: October 29, 2017 in Geopolitics, Readiness & Strategy
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Copyright: Borislav Marinic | 123RF Stock Photo

By Richard Martin

The ongoing saga in Catalonia is an excellent illustration of how crucial it is to consider a range of scenarios before implementing a decision that could be heavy with consequences. And the scenarios shouldn’t all be rosy and positive for us. Consideration must be given to the worst-case possibility as well, so we know what we may be up against before acting. This entails a detailed consideration of competiting and opposing positions, as well as those of other stakeholders and bystanders. It also means preparing contingency plans for the most probable and dangerous possibilities so we aren’t caught flatfooted if they come to fruition.

A well-known radio commentator (and former politician) here in Montreal said this week that he had the impression that the Catalonian prime minister and regional authorities hadn’t really thought through the potential consequences of the independance referendum held a few weeks ago. I agree with him; both sides appear guilty of amateurish improvisation. It seems as though both the instigators of Catalonian independance and their opponents inside and outside Catalonia have given little or no thought to the inherent risks in their decisions and actions, as well as the range of possible responses of the Spanish government, population, businesses, and other countries. I also little or no evidence of forethought in securing international recognition for the referendum and subsequent moves. It’s as if it was all being driven by pure emotion, with not a lot of rational consideration of options.

Such conflicts usually build and fester over time until they reach a feverous level. And it takes two to tango. Threat generates counterthreat; action entails counteraction. Not all outcomes can be foreseen ahead of time, but a great many can be characterized to some extent and compared to see which are most probable and consequential. This is the essence of risk management.

Whether we’re talking about a political entity, a business, a non-profit organization or an individual person, prudent forethought should be given to the range of scenarios and options available or possible before deciding and acting. No forecasting or planning process is perfect, but the benefits of a disciplined and rigorous assessment of the situation and its various branches and outcomes will always pay dividends in better decision-making, management, and leadership. And this includes looking at the situation from your opponent’s or competitor’s standpoint. If I were to take this action, what would my opponent do?

It’s how we try to play sports and games, and it’s the essence of strategy, military, diplomatic, political, and commercial.

Copyright 2017 Alcera Consulting Inc.

Are We Entering a Post-NAFTA World?

Posted: October 16, 2017 in Readiness & Strategy
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Strategic Readiness Bulletin Number 3 – 16 October 2017

Are We Entering a Post-NAFTA World? (Download as PDF)

By Richard Martin, founder and president, Alcera Consulting Inc.

Richard Martin issues Strategic Readiness Bulletins on an as needed basis to clients, key decision-makers, and other influencers, to highlight recent or evolving risks, threats, and opportunities for companies and organizations resulting from chaotic change as well as international and national situations of a political, economic, technological, or social nature.

The Strategic Readiness Issue

© Michał Barański | 123RF Stock Photo

With the current NAFTA negotiations underway it’s hard to tell yet whether they will be a net positive or a net negative for companies doing business across the Canada-US and Mexico-US borders.

My aim isn’t to assess the probabilities either way at this stage, but rather to highlight the need for prudent risk management and contingency planning to address various post-NAFTA—or “new” NAFTA—trade arrangements between Canada and its most important trading partner, specifically the US.

The diagram on the right below summarizes the strategies for risk and threat management. When we work to lower or eliminate the probability of occurrence of a risk/threat, then we’re in the realm of PREVENTION. However, if prevention fails, we still must have measures and plans in place to contain its most damaging consequences. This is where MITIGATION comes into play.

© Alcera Consulting Inc.

Businesses with NAFTA exposure must be aware of the risks and threats arising from potential changes to the trade agreement. This is prudent and may even lead to the identification of unique opportunities whether Canada-US trade relations continue much as before or change in a significant way.

Who Can Be Affected?

  • Manufacturers and other businesses that depend on imports and exports
  • Transportation and logistics companies with cross-border operations
  • Federal, provincial, and local government agencies and departments
  • Ports and border-crossing facilities
  • Tourist and travel related businesses
  • Sectors that are highly sensitive to changes in tariffs or trade restrictions

Assessing Your Situation

If you haven’t already done so, it’s time to consider the probabilities and potential impacts of the risks and threats your company faces if there is a change in the trading regime under NAFTA, or even just between Canada and US. This isn’t alarmist, it’s common sense and prudent leadership.

I can help you, but you can get a head start by considering the following questions.

  • What is your current dependence on imports and/or exports to the US (in terms of total revenue, volume, profits)?
  • What business lines or activities are in areas of HIGH POLITICAL SENSITIVITY (soft wood lumber, auto manufacturing, aerospace, etc.)?
  • Can you “immunize” to a certain extent against disruptive changes by diversifying your clientele or supplier relationships?
  • How sensitive are your prices and costs to small changes in trade restrictions and decisions?
  • Have you developed contingency plans for supply, transport, or logistics?

About Richard Martin

Feel free to contact me to discuss this and related strategic issues.

Richard Martin is an expert in identifying, assessing, and preparing for strategic risks, threats, … AND opportunities, so companies and organizations can exploit change, instead of passively reacting or succumbing to it.

Richard.Martin@alcera.ca

www.alcera.ca

www.exploitingchange.com

http://www.facebook.com/exploitingchange

(514) 453-3993

Previous Strategic Readiness Bulletins

The North Korean Nuclear Threat

Is Canada Facing an Incipient Refugee Crisis?

Things Can Happen for No Reason at All

Posted: September 10, 2017 in Readiness & Strategy
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by Richard Martin

Copyright: Tomas Griger

After the magnitude 8.3 earthquake in Mexico last week, an acquaintance of mine was fretting about how these natural disasters couldn’t be a simple coincidence.

Of course, that acquaintance was referring to the apparently large number of violent systems in the South Atlantic this hurricane season in combination with an earthquake. I’m not sure what these phenomena have to do with each other. How are weather and geology supposed to be connected? Perhaps in the very long term, on the scale of eons. But over days or hours? Not likely.

Humans have a propensity to see causality and correlations where there is just coincidence. Most things happen for no reason at all. It’s easy to see patterns where there are none, especially in nature. If you see linkages where there are none, you can drive yourself crazy with anxiety and paranoia. Things happen. Sometimes they bunch up in time and place. Other times they are more or less spread out.

The trick to being prepared isn’t so much to predict specific causes or events, it’s to prepare for generic outcomes and effects. If you’re in a hurricane or seismic zone, you can’t predict when or where events will occur, but you know that they will occur with a certain frequency and power. For instance, every decade or two, there is a major hurricane in your zone. Every year there is at least a major tropical storm. Geological risks are much harder to characterize, but if you are in high-risk seismic region, then you have to prepare for the worst case.

Of course, preparedness and resiliency are largely a function of wealth. Storms, earthquakes and other natural events are a lot costlier in wealthy regions, but relatively less destructive of life and limb. In poor regions, the relationship is inverted; there are many more deaths and the destruction, although extensive, costs much less. However, the time to rebuild and recover are a direct function of wealth. The greater the capital resources, the faster and easier it is to absorb the costs of reconstruction and resiliency.

These factors also play into the perceptions of coincidence, causality and correlation. We must keep things in perspective when assessing probabilities and impacts. Human destruction is greater in poor countries and increases toward the past. Material destruction was less in the past and is continually increasing. This isn’t because of some connection between events. Rather, it comes from the increased investments in infrastructure, housing, and transportation networks. What was the damage along the Gulf Coast or in Florida prior to people building houses right on the water?

My name is Richard Martin and I’m an expert on applying readiness principles to position companies and leaders to grow and thrive by shaping and exploiting change and opportunity, instead of just passively succumbing to uncertainty and risk.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

Context Always Helps

Posted: May 21, 2017 in History
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by Richard Martin

North Korea is launching rockets and testing nuclear bombs. The Trump administration wants to renegotiate NAFTA. Populist parties are being elected or getting closer to power every week. Terrorists are on a rampage. Countries that had democratized in recent decades are increasingly assuming the trappings of autocracy. Nations and ethnic groups around the world are closing themselves to trade and integration, while economic and political migrants cross the Mediterranean into Europe and thence, to North America and Australia. Environmental degradation is rampant as global temperatures rise and ice melts.

Given all this, it’s easy to fall prey to the idea that the world is in a worse state than ever. There is supposedly an ancient Chinese proverb that says, “May you live in interesting times.” Sure, but isn’t this all a bit much? Aren’t we in grave danger? One of my daughters is stressed out by all the chaos and cacophony!

Well, a little context and comparison helps. As the French proverb goes, “Quand on se regarde on se désole; quand on se compare on se console.” (When we look at ourselves we get discouraged, but when we compare ourselves we are encouraged.) Consider the following:

  • There have never been so few deaths from warfare. By comparison, it is estimated that over 80 million people, possibly up to 100 million, died during the long “Thirty Years War” of 1914-1945.
  • Communist revolutions (and counter-revolutions) and regimes caused the deaths of 60-100 million from civil war, brutal government, imprisonment, “reeducation,” famine, and general underdevelopment.
  • We worry and prepare for a global pandemic. I’m all for planning and preparation against that threat. But let’s not forget that the Spanish Flu of 1918-20 killed between 50 and 100 million, at least 3 % of the world’s population at that time. The Black Death in the 14th century wiped out between one third and half of the Eurasian population. The discovery and conquest of the Americas by European explorers and powers destroyed 90-95 % of aboriginal populations. The Ebola epidemic in Africa was a tragedy and killed several tens of thousands in central and west Africa. But it only lasted a short period of time, treatments were quickly found due to an unprecedented push to find vaccines and palliative measures, and the international community donated millions to fight the threat. It’s still present, but global monitoring, prevention, and mitigation are keeping it in check.
  • Life expectancy around the world (with a few notable exceptions, such as post-Soviet Russia) has been on the rise steadily since the 1950s, and is at its highest level ever. Both my grandmothers bore a dozen children, but only half reached adulthood. Cancer and heart disease are among the leading causes of illness and death now in the West. Alzheimer’s disease and other forms of dementia are growing by leaps and bounds. This is alarming, but these are all actually diseases of aging, and their increase is due to long life expectancies we now take for granted. After all, we have to die of something.
  • The poorest people in developed countries now have routine access to health care, reasonably good public education from pre-kindergarten to grade 12, clean drinking water, air conditioning, public transit (though not necessarily convenient), relative public safety, and non-intrusive government bureaucracy (with some notable exceptions).
  • There are fewer relative and absolute numbers of people living in absolute poverty in the world now than 10, 20, and 30 years ago. Population numbers keep rising, but growth is flattening as various countries cross the demographic transition to smaller families.

I could go on and on with this listing. All I’m arguing is that, yes, there are some nasty things going on around the world. But in at least some areas, things have never been better.

I don’t want to come across as an unbridled optimist, saying that “All is for the best in the best of all possible worlds.” (Attributed to Leibniz to explain God’s seeming non-involvement in the world.) On the other hand, we shouldn’t gripe and worry without reason. We have the resources and know how to prevent many catastrophes and fix many problems. That’s the essence of readiness, and it is fuelled by unparalleled prosperity, science, and peacefulness. Let’s hope these continue.

New Testimonial

“Richard has been instrumental in getting me to draw on my hard-won experience and ideas to turn them into marketable intellectual property and products. His disciplined, systematic approach has already led to several significant accomplishments for me. Whether you’re just starting out as an entrepreneur, or working to get to the next level, Richard can boost your productivity and organizational effectiveness. Be forewarned, though. There is no magic formula, just systematic thinking, disciplined execution, and… Richard Martin.”

Caroline Salette, Owner and President, RE/MAX Royal Jordan Inc. and Salette Group Inc. 

Richard Martin’s Business Readiness Process:

  1. Ensure vigilance through situational awareness.
  2. Do preliminary assessment of tasks and time.
  3. Activate organization or team.
  4. Conduct reconnaissance.
  5. Do detailed situational estimate.
  6. Conduct wargame and decide on optimal course(s) of action.
  7. Perform risk management and contingency planning.
  8. Communicate plan and issue direction.
  9. Build organizational robustness.
  10. Ensure operational continuity.
  11. Lead and control execution.
  12. Assess performance.

Contact me to apply the whole thing–or just a piece, as needed–to improve your strategy, your readiness… and your results!

Did you know that an infantry battalion only needs about 3 to 4 hours of prep and planning time to be battle ready? What are you waiting for to get the same benefits for your outfit?

Why Sunday and What Does “Stand To” Mean?

Sunday? I want you to get my insights and advice first and fast, so you can prepare and up your readiness and results before others even know what’s happening!

And Stand To? It’s the order used in the military to get forces to man the parapets and be in a heightened state of situational awareness and, yes, readiness, so they can face any threat or undertake any mission.

My name is Richard Martin and I’m an expert on applying readiness principles to position companies and leaders to grow and thrive by shaping and exploiting change and opportunity, instead of just passively succumbing to uncertainty and risk.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

Readiness = Vigilance + Preparedness + Robustness

Posted: April 23, 2017 in Readiness & Strategy
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by Richard Martin

I’m currently updating a course on crisis and emergency leadership for a government client. It’s a great opportunity to revisit the responsibilities of leaders BEFORE a crisis strikes.

Research shows that most crises have internal causes (see the United Airlines incident, and now the one that has just occurred on an American Airlines flight); they are therefore predictable and can be prevented and mitigated through proper vigilance, preparation, and robustness.

Here are 10 techniques and principles you can apply as an organizational leader to prevent or better prepare for a crisis, before one strikes.

  1. Mobilize your team by anticipating and identifying potential crises before they strike.
  2. Implement rational risk management and prevention/mitigation measures.
  3. Establish priorities for prevention and preparation on an ongoing basis.
  4. Create robust contingency plans to deal with the most likely and most dangerous situations you can envisage.
  5. Implement sound policies and procedures for the most likely crisis situations and events.
  6. Prepare yourself and your team through diligent practice and training.
  7. Employ trusted advisors and associates and ensure they are well qualified and working as a team.
  8. Build as flexible and resilient an organization as possible within the constraints of time and resources.
  9. Work on becoming more self-aware as a leader and seek to acquire the competencies to lead in a crisis.
  10. Develop the support structures and welfare systems you will need to maintain morale, unity and cohesion if a crisis should occur.

And with that, go forth and lead!

New Testimonial

“Richard has been instrumental in drawing on my hard-won experience and ideas to turn them into marketable intellectual property and products. His disciplined, systematic approach has already led to several significant accomplishments for me. Whether you’re just starting out as an entrepreneur, or working to get the next level, Richard can boost your productivity and organizational effectiveness. Be forewarned, though. There is no magic formula, just systematic thinking, disciplined execution, and… Richard Martin.”

Caroline Salette, Owner and President, RE/MAX Royal Jordan Inc. and Salette Group Inc.

Richard Martin’s Business Readiness Process:

  1. Ensure vigilance through situational awareness.
  2. Do preliminary assessment of tasks and time.
  3. Activate organization or team.
  4. Conduct reconnaissance.
  5. Do detailed situational estimate.
  6. Conduct wargame and decide on optimal course(s) of action.
  7. Perform risk management and contingency planning.
  8. Communicate plan and issue direction.
  9. Build organizational robustness.
  10. Ensure operational continuity.
  11. Lead and control execution.
  12. Assess performance.

Contact me to apply the whole thing–or just a piece, as needed–to improve your strategy, your readiness… and your results!

Did you know that an infantry battalion only needs about 3 to 4 hours of prep and planning time to be battle ready? What are you waiting for to get the same benefits for your outfit?

Why Sunday and What Does “Stand To” Mean?

Sunday? I want you to get my insights and advice first and fast, so you can prepare and up your readiness and results before others even know what’s happening!

And Stand To? It’s the order used in the military to get forces to man the parapets and be in a heightened state of situational awareness and, yes, readiness, so they can face any threat or undertake any mission.

My name is Richard Martin and I’m an expert on applying readiness principles to position companies and leaders to grow and thrive by shaping and exploiting change and opportunity, instead of just passively succumbing to uncertainty and risk.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

The Great Winter Storm of March 2017 – An Example of Poor Readiness

Posted: March 19, 2017 in Readiness & Strategy
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by Richard Martin
Well, we’ve just had our latest winter storm of the decade (or what it century?) in Eastern Canada. Among other events, Montreal’s roads were a scene of chaos and waiting, and waiting, and waiting….
The Quebec Department of Transportation (Ministère du transport du Québec, MTQ) has been heavily blamed for the chaos and poor response on the roads, especially on Highway 13, one of the two main North-South arteries through Montreal. To illustrate, hundreds of cars were stranded on the 13 from late Tuesday afternoon rush hour through to mid-day on Wednesday. Some people had to spend the night in their car. We’re lucky no one died or was seriously injured there. It was a distinct possibility given the harshness of the conditions, the fact that most people were ill equipped (i.e. not ready) for just such a situation, and that there were deaths and serious injuries in other areas.
But the worst reproaches have been directed at the MTQ. It has since come out that the ministry’s emergency plans and procedures appear to be overly complex, requiring numerous steps in the decision process for road closure and emergency response (actually, 94 steps, but that’s the entire decision flowchart). But that’s probably a red herring. Such decision processes always look complex out of context. The real proof of validity and effectiveness for any emergency/contingency plan isn’t what it looks like on paper, but its performance and execution once it’s put into action. It’s clear that the MTQ and probably many other government and municipal agencies were out of their depth and overwhelmed by the scale of the disruption.
Instead, I think the real problem was that of poor preparation and training, unclear activation processes, lack of well-defined readiness levels, as well as a lack of practice. Did the ministry ever conduct exercises? I’m not talking about a “tabletop” exercise with a few departmental reps. I’m talking about full-scale field exercises? Many of these problems would have come out beforehand if they had been exercised adequately. Also, what disaster and/or storm scenarios were envisaged? If appears that there was little understanding of the prior coordination and planning that are required to ensure interdepartmental and intergovernmental cooperation. Wildlife agents in the Québec Forestry and Wildlife Ministry are equipped and trained to conduct search and rescue operations in heavy weather and extreme survival conditions, but no one called upon that department to provide support. This is a clear indication that prior arrangements we’re lacking, either in terms of planning or in actually requesting and coordinating a joint response.
This is ALWAYS my biggest beef with any organization I work with on risk management and emergency/business continuity readiness: the lack of practice. It’s one thing to tread with care when you’re a for-profit business and any disruption to ongoing operations for the purposes of exercising can have serious impacts on production and client services. But when we’re talking about a public-service organization with a clear public safety mandate, you simply MUST exercise thoroughly and regularly. If it’s good enough for the military, firefighters, and airport operations and security organizations, then it should be good enough for municipal and governmental departments at all levels and in all domains, especially if lives depend on it.
Richard Martin’s Business Readiness Process:
  1. Ensure vigilance through situational awareness.
  2. Do preliminary assessment of tasks and time.
  3. Activate organization or team.
  4. Conduct reconnaissance.
  5. Do detailed situational estimate.
  6. Conduct wargame and decide on optimal course(s) of action.
  7. Perform risk management and contingency planning.
  8. Communicate plan and issue direction.
  9. Build organizational robustness.
  10. Ensure operational continuity.
  11. Lead and control execution.
  12. Assess performance.

Contact me to apply the whole thing–or just a piece, as needed–to improve your strategy, your readiness… and your results!

Did you know that an infantry battalion only needs about 3 to 4 hours of prep and planning time to be battle ready? What are you waiting for to get the same benefits for your outfit?
Why Sunday and What Does “Stand To” Mean?
Sunday? I want you to get my insights and advice first and fast, so you can prepare and up your readiness and results before others even know what’s happening!
And Stand To? It’s the order used in the military to get forces to man the parapets and be in a heightened state of situational awareness and, yes, readiness, so they can face any threat or undertake any mission.


My name is Richard Martin and I’m an expert on applying readiness principles to position companies and leaders to grow and thrive by shaping and exploiting change and opportunity, instead of just passively succumbing to uncertainty and risk.


© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

Are Your Plans “Priced for Perfection”?

Posted: March 12, 2017 in Readiness & Strategy
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by Richard Martin
There’s an oft-repeated dictum in investment: Avoid investments that are priced for perfection. You should avoid stocks and other investments the price of which reflects all the actual and potential “good news” about its value. In other words, if you overpay, there is very little room for error in your investment, and you risk losing more than gaining, sometimes a lot more.
I like to apply this principle more generally to decision-making, strategy, operations and tactics. So it has obvious value in terms of readiness. If everything has to be “perfect” for your plans to come to fruition, then you’ve left precious little room for error and risk in your assessment of the likelihood of success. How can you apply this principle?
  • Be conservative when assessing the potential upside of your plans and actions.
  • Be prudent in identifying potential obstacles, resistance, and risks into your plans.
  • Make contingency plans to deal with the highest risks and most dangerous threats.
  • Prepare contingency plans to exploit unexpected success and breakthroughs so you can “make hay while the sun shines,” if that transpires.
  • Build up reserves of people, money, and other resources.
  • Have alternate and back up plans for supply, distribution, and operations.
  • Give primary and alternate tasks, roles and responsibilities.
  • Explain the overall intention to your team and subordinate leaders so they can adjust on the fly and apply their initiative in achieving your aims when execution goes off the rails.
  • Make prudent assumptions deliberately and seek to falsify or confirm them with information, intelligence and reconnaissance.
  • Assume first information is usually wrong, or at least in need of corroboration.
  • Seek alternate points of view and assessments.
  • Give yourself and your people time to think and react.
All of this can be summed up with the following three questions:
  1. What if I’m right about this?
  2. What if I’m wrong about this?
  3. What then?
Call that applied self-scepticism.
Richard Martin’s Business Readiness Process:
  1. Ensure vigilance through situational awareness.
  2. Do preliminary assessment of tasks and time.
  3. Activate organization or team.
  4. Conduct reconnaissance.
  5. Do detailed situational estimate.
  6. Conduct wargame and decide on optimal course(s) of action.
  7. Perform risk management and contingency planning.
  8. Communicate plan and issue direction.
  9. Build organizational robustness.
  10. Ensure operational continuity.
  11. Lead and control execution.
  12. Assess performance.

Contact me to apply the whole thing–or just a piece, as needed–to improve your strategy, your readiness… and your results!

Did you know that an infantry battalion only needs about 3 to 4 hours of prep and planning time to be battle ready? What are you waiting for to get the same benefits for your outfit?
Why Sunday and What Does “Stand To” Mean?
Sunday? I want you to get my insights and advice first and fast, so you can prepare and up your readiness and results before others even know what’s happening!
And Stand To? It’s the order used in the military to get forces to man the parapets and be in a heightened state of situational awareness and, yes, readiness, so they can face any threat or undertake any mission.


My name is Richard Martin and I’m an expert on applying readiness principles to position companies and leaders to grow and thrive by shaping and exploiting change and opportunity, instead of just passively succumbing to uncertainty and risk.


© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

Beware the Prognosticators

Posted: January 2, 2017 in Powerful Ideas
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It’s that time again, when all the predictions and forecasts of gloom and doom—or better times ahead—come at us. In the interest of jumping on that gravy train, I make only one prediction for 2017:

There will be predictions, and most of them will be wrong.

A few will be somewhat right, usually something self-evident and not particularly informative: “The stock market will fluctuate.” Well, thanks for that…

Some will be a bit off the mark, but most will be completely wrong; a few will be wildly off the mark. This will lead many media commentators to lament in June that such and such never could have been predicted.

There are fields where there are reasonably accurate predictions, but they tend to be in the sciences. This is because predictions in physics, chemistry, meteorology, etc. are based on empirically-based, quantitative models, and they are put through a process of peer review to ascertain their effectiveness.

The question, then, is what predictions outside of pure sciences can be trusted. Not many, but there are still some precious metals in the pile of slag. You must make your own assessments as these forecasts come out and judge how much credence to lend them. Here are my six simple rules for evaluating the credibility of predictions and the prognosticators making them.

Rule 1—Consider the source (Expertise Rule). Do they have genuine expertise in the subject matter? Are they disinterested parties or participants in the predicted process? In other words, do they have a stake in the outcome? Psychology and common sense dictate that interested parties are seldom as objective as they claim.

Rule 2—Identify the theory or model underlying the prediction (Model Rule). Do they generate predictions based on an explicit explanatory model? Or, do they just seem to wing it, based on intuition and past results?

Rule 3—Determine how the model was developed and tested (Cherry-Picking Rule). Was the explanatory model created through purely statistical legerdemain? In other words, did they analyze a bucket load of data and then look for patterns, or did they instead develop a theoretical model and then see how the data conformed to their predictions. The first approach is called cherry picking; it’s like shooting at the wall and then drawing a target around the closest bunch of bullet-holes. The second approach is the only truly valid one.

Rule 4—Look at the data (Secret Knowledge Rule). Do they provide their inputs and data, or otherwise reveal what and how empirical information was used in formulating their predictions? If they don’t, then how can their models be validated and tested?

Rule 5—Consider the timeframe (Horizon Rule). Some predictions turn out reasonably accurate as to amplitude or outcome. They just never specify WHEN they will come to fruition. I predict that the Dow will hit 25,000… eventually. Makes a big difference.

Rule 6—Compare past predictions to actual results (Performance Rule). This one is self-evident, but the usual case is that past predictions are quickly forgotten in the rush to generate and consume new ones.

You’ll notice that none of these rules gives you an exact answer. That’s because there rarely IS an exact answer, except in tightly constrained situations. Business, finance, economics, politics, sports, and military strategy are all highly complex and somewhat chaotic. Beware the prognosticators who claim inerrant accuracy and foresight.

We may not know precisely what will happen in the future, but we can be better prepared.

That’s why we all need the readiness principles and prudential approaches that I write, educate, and consult on.

Here are some of my other thoughts on these matters:

What Goes Up: The S-Curve and its Many Applications

Trend or Bandwagon?

Beware the Prognosticators

Let’s Have Some Perspective

Stop Predicting, Start Experimenting

Surprised by the Normal

Remember Richard’s Business Readiness Process in 2017!
  1. Ensure vigilance through situational awareness.
  2. Do preliminary assessment of tasks and time.
  3. Activate organization or team.
  4. Conduct reconnaissance.
  5. Do detailed situational estimate.
  6. Conduct wargame and decide on optimal course(s) of action.
  7. Perform risk management and contingency planning.
  8. Communicate plan and issue direction.
  9. Build organizational robustness.
  10. Ensure operational continuity.
  11. Lead and control execution.
  12. Assess performance.

Call me if you would like a 90-minute Business Readiness Briefing in early 2017!

My name is Richard Martin and I’m an expert on applying readiness principles to position companies and leaders to grow and thrive by shaping and exploiting change and opportunity, instead of just passively succumbing to uncertainty and risk.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

There Is Always Risk!

Posted: November 7, 2016 in Readiness & Strategy
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risk-vs-reward

Step 7: Perform Risk Management and Contingency Plannin

Why analyze and manage risk? 

  • It exists whether we recognize it or not.
  • We are better to identify risks consciously and determine how best to accept and/or manage them.
  • That way, we can decide how much risk we wish to take on and the nature of these risks.
  • We should only take on risks willingly in exchange for potential rewards: risk ≈ reward.

What is risk?

  • Risk is the potential for loss due to uncertainty. All risks are quantifiable as the product of probability of occurrence and potential harmful consequences (R=PxC). There are generic risks, such as natural or manmade disasters, and there are inherent risks, which are specific to each course of action. Both types must be identified, evaluated, and actively managed.
  • There are two focal points of risk management: prevention and mitigation.

Risk Prevention

Prevention seeks to reduce the probability of harmful events before they occur. Accepting risks without concomitant rewards is reckless and irresponsible. Such risks can actually be considered as hazards and should be eliminated through careful planning.

Risk Mitigation

  • The second focus of risk management is mitigation, which comes into play if prevention fails and a harmful event actually occurs. Mitigation entails responding in a timely and effective manner to the event so as to minimize its evolution and impact, taking action to contain its harmful side-effects, and implementing recovery and continuity measures.

Contingency Planning

  • One part of risk mitigation involves contingency planning, so as to deal with harmful events and threats. However, contingency planning can also be used to prepare for exploitation of opportunities arising from chance or the effectiveness of our own plans and actions. In sum, contingency planning is about readiness for both positive and negative outcomes.

total-risk-strategy

Recap of Business Readiness Process

  1. Ensure vigilance through situational awareness.
  2. Do preliminary assessment of tasks and time.
  3. Activate organization or team.
  4. Conduct reconnaissance.
  5. Do detailed situational estimate.
  6. Conduct wargame and decide on optimal course(s) of action.
  7. Perform risk management and contingency planning.
  8. Communicate plan and issue direction.
  9. Build organizational robustness.
  10. Ensure operational continuity.
  11. Lead and control execution.
  12. Assess performance.

 

Time spent in reconnaissance is rarely wasted

Posted: October 17, 2016 in Readiness & Strategy
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Step 4: Conduct Reconnaissance

This diagram depicts the elements of military reconnaissance and, by analogy, those of business reconnaissance. The most important thing to understand is that reconnaissance must be mission driven.

The aim of reconnaissance is to generate mission and goal focused intelligence. In other words, you don’t just go off willy nilly trying to figure out what is happening and what the conditions you’re likely to face are.

You must start with you mission, which tells you the effect you want to create. You then develop a general idea of the courses of action you have open, as well as likely responses by your competitors, opponents, clients, suppliers, distributors, and other potential influencing actors. This gives you the proper framework for assessing the environment and finding competitive gaps that can be exploited for success. You can also potentially shape your competitive battle space when you know what it consists of.

The second diagram (below) shows how this relates to our eventual planning and decision-making. We’re not just out there looking around. We’re trying to seize opportunities, notice things others haven’t noticed, and, what’s often forgotten or avoided, protecting ourselves from the downside.

 

Business Readiness Process (BRP)
1.     Ensure vigilance through situational awareness.
2.     Do preliminary assessment of tasks and time.
3.     Activate organization or team.
4.   Conduct reconnaissance.
5.     Do detailed situational estimate.
6.     Conduct wargame and decide on optimal course(s) of action.
7.     Perform risk management and contingency planning.
8.     Communicate plan and issue direction.
9.     Build organizational robustness.
10.   Ensure operational continuity.
11.   Lead and control execution.
12.   Assess performance.

 

Did you know that an infantry battalion only needs about 3 to 4 hours of prep and planning time to be battle ready? What are you waiting for to get the same benefits for your outfit?

Feel free to contact me at any time to discuss your objectives and needs.

And remember… STAND TO!!!

My name is Richard Martin and I’m an expert on applying readiness principles to position companies and leaders to grow and thrive by shaping and exploiting change and opportunity, instead of just passively succumbing to uncertainty and risk.

© 2016 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

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