Strategy is critical to the survival and success of almost any organization. Having a Strategy focusing on input from Customers, Employees, Stakeholders, and core competencies is the foundation for achieving success. The "secret sauce" of any Strategy is to gain enough information from the right sources to make both educated and forward thinking decisions about your organization. This information gathering and analysis is a key ingredient to having a successful and executable Strategy.
Strategy and Risk go hand-in-hand. If an organization has not spent the time to build a concise and executable Strategy, the Risk to the organization increases. However, once an organization has created a solid Strategy for their future, Risk is easier to Manage and control. Risk is all about eliminating or mitigating the unknown and about creating "consistency." Both internal and external constituents view your organzation as "low risk" when you have consistent and repeatable processes that deliver consistent results. Anything else is considered "high risk." Take The RED Test and see how well your performing today.
We focus on both Strategy and Risk and how it is impacted by the creation of or lack of Loyalty among Customers, Employees and key Stakeholders. In our Book we talked about avoiding "Random Acts of Excellence and Chaos" as a way to create consistency. It is also one of the key magical ingredients in building Loyalty with your constituents (Customers, Employees, and other stakeholders). We have found that if an organization has less than 50% of their constituents categorized as Loyal, then we say they are at "high Risk of defection" and they also have high organizational Risk. However, if over 75% of their constituents are Loyal, they are at "low Risk of defection" and their Risk level is considered "low."
Organizational Risk is directly linked to the Strategic direction the organization has determined it needs to follow and the Loyalty level of thier constituents (customers, employees and other stakeholders). Many of these constituents provide Revenues to the organization and if they are at high risk of defection, we consider that an extremely risky scenario. Our goal is to increase Loyalty, thus reducing their level of Risk. Risk Management is all about creating Loyal constituents and reducing risk of defection so revenue and profitability aren't severely impacted.