Exxon was a top notch company – with towering financial strength, global reach and breadth, world class technical prowess, and a culture of ethics, safety, quality, and teamwork. But like many large organizations, the company often didn’t get the public’s perspective, and didn’t do well with PR. (In the wake of the Valdez spill there were many extraordinary accomplishments in engineering – though all too often right alongside of spectacular public relations blunders). I don’t know the BP organization well, but I’d expect to see some similarities – financial strength, technical excellence, good people. However unlike the Valdez, the Horizon wellhead is a mile below the waterline – and literally at the cutting edge of technology. Stopping the flow, cleaning up the mess, and mitigating the impact to environment and business for our friends in Louisiana, Mississippi, Alabama, Florida, Texas, and (God forbid) even farther out is going to take a lot of hard work, good fortune, and answered prayers.
This situation has got me to thinking this week about risk. Risk assessment and analysis was always a part of the business at Exxon. “Downside sensitivities” were run as a matter of course. Nothing was done without first considering the safety and risk impact of the proposed action. As a result we all became what one client still calls “safety-psychos.” To this day (I left the company in 1998) I still 1) treat all power tools with respect, 2) never go anywhere without my seatbelt on, and 3) start every meeting or presentation with a quick mention of building egress. Indeed, I’m still a safety-psycho!
In contrast, the priority and visibility of risk assessment and risk planning seems lacking in many AEE firms. And I’m not thinking only of safety or environmental impact, though these are clearly important in many architecture, engineering, and environmental firms.
What about other business risks – including those of markets, clients, and staff? Can’t you still ‘feel’ the unexpected magnitude and intensity of the ’08 economic collapse? How about having 30-40% or more of your business with one or two clients? And what about losing key staff – to disability, illness, family issues, moving away, changing firms, or changing careers (look for more of this as the economy rebounds). And there are other risks to ponder as well: 1) rapid technological change (internet everywhere, social media, knowledge sharing, collaborative and integrated project delivery), 2) economic globalization, 3) inbound (customer driven) marketing and business development, and 4) a rapidly evolving and mutating workforce – diverse, dispersed, individualized, and custom.
Frankly, if as a business leader your head is not spinning right off its axis most of the time, you’re probably not paying close enough attention. But watching isn’t enough. Successful leaders must also do. The steps boil down to four: 1) watch and identify, 2) assess and analyze, 3) plan and prioritize, and 4) act and address – to mitigate and manage the important risks.
In this there is both good and bad news. The bad is that in most situations involving risk, mistake, or failure there will be losers. In a ‘fair’ world the losers would always ‘deserve it,’ but the world is of course not fair (at least as we understand it now). Bad things happen to good people (and firms), as does the reverse. There are no guarantees, no absolutes, no magic elixir.
On the other hand, where there are failures and losers (in business and in life) there are also winners. And while there are no guarantees, there are some pretty good correlations – for instance between thinking, planning, and doing proactively, and the positive outcomes associated with good risk management. Progressive leaders get this, and execute to position their firms for what (inevitably) comes – monsters stirred up from oceans deep, from the far side of the globe, or from the adjacent cubicle.
So, what are the risks facing your firm, and what are you doing about them? Let me hear from you.
It’s your turn.
