An Appetite for Risk

When you wake in the morning and the blizzard is howling outside and the temperature is 40 degrees below zero do you venture outside and start hauling your sledge? When you encounter the crevasse fields do you get out the ropes and tie everyone together so that if one person falls in the others can help pull him out again? In both of these scenarios, which I have encountered many times, the answer is always different. It’s about qualifying and managing the risk.

In business taking and managing risk is part of what we must do every day to create profits and shareholder value. There's no such thing as a safe risk. None of it is safe. Rather, it is about reviewing the various scenarios, going into areas others are less likely to go and making decisions.

Decisions should be made by the leader responsible for the task. Prudence, experience, judgement, intuition and situational awareness of leaders directly involved in the planning and execution of the task are the critical elements in making effective risk management decisions

But the sudden and cataclysmic corporate meltdowns of recent years suggest that many companies neither manage risk well nor fully understand the risks they are taking. “Who dares Wins” is the SAS motto however, as with the SAS, the risk needs to be qualified and managed. We are not talking here of betting the company or taking unsubstantiated risks.

What's a stupid risk and what's a calculated risk (i.e. a good one)?

We can all come up with daily life examples. Taking your entire pay cheque and betting it on a roulette table in Las Vegas is dumb risk. Investing your retirement savings in mutual funds in the stock market when you’re young is a smart risk.

But what is risk in business? When it comes to your business and/or career, ultimately only you can determine that. People and books can only give you advice about various directions. With risk we always get in the question of risk appetite. Clearly, a standout employee, entrepreneur, and a leader all need a healthy appetite for risk and a hearty helping of self-confidence to overcome all that.

But how much is enough? Is there a point at which confidence and risk tolerance become liabilities? And though it's common to mix the two (after all, you need confidence to take risks), do they really go hand in hand?

Here are some tips for helping you manage risk...

Accept the risk
Risk is related to gain; the greater the potential gain, the greater the risk. To evaluate risk maximise the likelihood of success.

Take no unnecessary risk
Accept only risks necessary to achieve goals.

Anticipate and plan for the risk
Risks are more easily controlled when they are identified early in the planning process.

Appropriate decision-making
Decisions should be made by those responsible for the task. There judgement, intuition and experience with the task is critical.

Trust in Yourself and Others

I have noticed a significant difference between the levels of self-trust in the world of exploration and in the world of business. In the world of adventure, leaders have a strong and unshakeable belief in their ability to complete a challenging assignment. It’s not arrogance, but a quiet self-confidence.

In my work with business leaders, I have been surprised just how many senior managers and leaders find it difficult to trust themselves and their ability to deliver. Encouraging people to trust you requires positive action. It is not something an organisation can mandate a person to do. Commit yourself to being trustworthy and make sure your actions reflect this.

You may have been surprised in the past by how difficult it is to earn people’s respect and trust. Maybe you were shocked, and even insulted, that your expertise and track record didn’t speak for themselves. To fix this dilemma you need to demonstrate your character - the intention to do the right thing. This is of particular importance to subordinates, who tend to analyse every statement and non-verbal gesture for signs of the new boss’s motives. Such scrutiny can be unnerving.

Trust is difficult to describe or define. We know when it’s there and when it’s not. We trust people who are predictable – not in the dull, plodding sense – but because we will receive a consistent response. Trust provides the motivation and energy that makes it possible for high performance teams to work. Here are some tips on how to generate trust

• Be Consistent - Be consistent in what you do as a business adventurer. Carry out your own task effectively both internally and to the wider environment.
• Be Committed - Demonstrate your commitment through repeated observable actions.
• Be Compassionate - Empathise with your teams by understanding how they feel and view the world.

Tent-Time

Team cohesion is essential in high performance teams, it is the glue that binds individuals as one and it provides the resilience and confidence to overcome setbacks.

During my adventures, team cohesion is achieved at the end of each day through 'tent-time'. Once we are comfortable in our tent, I encourage my teams to openly share their thoughts and views on the day's progress, highlight any positive achievements and review our future milestones.

It is also an opportunity for anyone to raise any issues of concern or grievances! It is critical to deal with any grievances head on, seek resolution and then move on. Tent-time also provided some time to share experiences, learn a useful tip someone had uncovered during the day and to laugh at the day's tribulations.

Ultimately tent-time is about asking the question 'how can we improve?' - the single most important question any team can ask themselves.

How often do you set aside some 'tent-time' to ask yourself or your team how can we improve?

What is leadership?

There is no universally accepted definition of leadership; not least as it is not at all easy to define. But what is clear is that leadership is an essential element of management. There are many definitions of management, but put simply, it is the direction, coordination and control of assets. The exercise of management includes the process by which a manager makes decisions, impresses will on team members, and transmits intentions.

Management can be seen as consisting of three core elements; authority, responsibility and accountability.
Authority involves the legal right to enforce disciplinary measures. A manager may delegate authority, but not ultimate responsibility. This is liability and an obligation to answer to senior management/board members for the use of delegated responsibility, authority and resources. This includes the duty to act. The manager who delegates responsibility should grant sufficient authority to enable the individual to fulfil the role; while the individual remains accountable for his actions.

If we now look at the roles of managers we can identify three essential components namely decision-making, control and leadership.
For the effective manager the art of effective and timely decision-making is a key role, particularly with regard to major decisions that impact on organisational strategy. Minor decision-making should be delegated as far along the chain as possible, in line with the requisite experience, capability and capacity of the more junior manager.

Managers must also have continuing oversight, direction and coordination of their resources, although the detailed activity is often not undertaken directly and is a province of their team. Most activities within this area of responsibility should be delegated; however the reality is that many managers spend more time than they should undertaking control functions.

Leadership is the art of motivating and directing individuals into action to accomplish outputs. Leadership is ultimately based on interpersonal relations. It is natural and a learned ability, a skill, and a set of personal characteristics that influence people to take desired actions.

In simpler terms, you lead people; you manage things.

Leading for Ultimate Performance

Leadership excellence is the second most powerful human force in the world, the most powerful being love. Leadership excellence has shaped the world since the earliest days of mankind. Leadership is arguably the greatest single business performance and success factor; it impacts every area of an organisation. What is interesting about leadership is that it means different things to different people.

Some Current Thoughts on Leadership

Leadership is widely considered to be directly linked to business performance and a recent Chartered Institute for Personnel and Development survey explored this further:

- 91% believe there is a link between leadership training and organisational performance.
- 85% of the organisations were involved in some form of leadership development.

However,

- 8% believed that their leadership development activities were very effective.
- 31% felt their leadership activities were not very effective.

Surprised ?

Research suggests that whilst the majority agree there is a direct link between training and performance, yet many have had an experience that has not satisfied their expectations and many still believe there is a shortage of highly effective leaders.

To Lead of Follow

Having spent over two decades in positions of formal leadership as an Officer in the Royal Marines, and as a Polar Explorer and management consultant I am aware of the importance and value of leadership to any team, and any organisation. It is critical to success. However, it is the implementation and how an individual delivers leadership that is important. In terms of peak performance teams, leadership becomes and even more critical element of team dynamics and can make the difference between an average team and one that really does deliver extraordinary results time and time again.

I call this style of leadership within a peak performance context – Leadershift©. In order to embrace the philosophy of Leadershift it is important to have a brief overview of some of the fundamentals of management. This understanding will put Leadershift© into context and enable you to embrace the art much more effectively.

What is Management?
There are many definitions of management, but put simply. It is the direction, coordination and control of business assets. It has a legal status codified in Companies Act (and other legislation) with the exercise of management including the process by which a manager makes decisions and impresses his will on, and transmits his intentions to his staff.

The Elements of Management

1. Authority
Authority involves the legal right to enforce disciplinary action. Although a manager may delegate specific authority, he retains overall responsibility.

2. Responsibility
Responsibility involves liability and obligation to answer to senior management/board members for the proper use of delegated responsibility, authority and resources; it includes the duty to act

3. Accountability
Therefore the manager who delegates responsibility should grant sufficient authority to enable the individual to fulfill the role, meanwhile the individual remains accountable to his immediate report for his actions.

The Roles of Management

If we look at the roles of managers we can identify three key areas of responsibility:

1. Control
Managers must have continuing oversight, direction and coordination of the organisations resources, although the detailed activity is often a subordinate aspect and a province of junior staff. Most activities within this area of responsibility should be delegated; however the reality is that many managers spend more time than they should undertaking Control functions.

2. Decision-Making
For the effective manager the art of effective and timely decision-making is a key role, particularly with regard to major decisions that impact on organisational strategy. Minor decision-making should be delegated to the lowest level possible in line with requisite experience, capability and capacity of the junior manager.

3. LeadershipManagement is also about leadership and the art of motivating and directing personnel into action to accomplish outputs is a fundamental requirement of any successful manager.

Leadership takes many forms and much has been written about the subject, but it still remains one of the least understood and misused skill within the manager’s toolbox.