A few weeks ago we attended the FedEx Institute of Technology’s Innovation Expo to hear Philip Mudd, formally of the CIA and FBI, speak about risk, and A.G. Lafley, CEO of Procter & Gamble, discuss product development and market strategy. We will share with you their messages in our next two columns, as both had unique insight on strategy.
Mudd was recruited to Memphis this year after retiring from the CIA to apply his unique analytical skill set in evaluating risk to the financial industry for SouthernSun Asset Management. Mudd believes that evaluating risk is a key activity in both the public and private business sectors – the core premises of risk assessment apply to both. We invited Mudd to the Studio for coffee to discuss this topic in greater detail and here are the top business strategy takeaways:
Comprehensive context allows you to evaluate risk and threats to your business. You must have a comprehensive context in which to evaluate the severity of the threat. Mudd encourages analytic rigor in assessing threats to deliver management a factually correct briefing. In other words, a single threat viewed in isolation may be cause for alarm, but when evaluated against other threats and macro forces at work, it may have much lesser significance. It is important to conduct a comprehensive assessment of the company’s weaknesses and outside threats then prioritize scenarios according to probability to formulate your game plan.
Asking the right questions is paramount. In your market analysis, you must ask provoking questions in order to avoid cognitive bias that is part of human nature. Questions like: “Are we doing it right? What if we got it wrong?” should always be in the background. Mudd suggests “biting yourself, before you get bitten” by asking a series of what if questions to generate a multitude of scenarios. He encourages direct discussion with the human informant, talking to your customers, your suppliers and your competitors. You must learn how to ask productive questions, and then draw inferences to layer into your analysis.
We are not in the business of prediction but rather out to gain a decision advantage. Mudd is in favor of predictive analytics and simulation models, but since most of us are not prophets, what we are really after is rigorous analysis to give the management team solid situational context so that they have a decision advantage over competitors.
The Studio and Mudd agree that the real trick is getting a business team to move seamlessly from risk assessment to growth opportunity analysis. Business growth depends on both defensive and offensive moves. We encourage you to cultivate this mental agility in your team.
Jocelyn Atkinson and Michael Graber run the Southern Growth Studio, a strategic growth firm based in Memphis. Visit www.southerngrowthstudio.com to learn more.