Risk, The Productivity Hammer

Sure it takes risk to make money. But it also requires productivity. Your company cannot be productive if its attention is engaged somewhere else. Too often business teams and CXO’s say that they don’t want to slow their team down to deal with functional, operational, and systemic risks. But these bring the problems which just hammer productivity —and costs and sales and innovation. With the recent fad for embracing risk, new trouble comes in the door every day.

Some situations seem obvious, although they clearly weren’t obvious to the ‘victim’, like the foreign jeweler which signed a lease in a small, eclectic, village shopping complex–only to see the landlord bring in another jeweler right next door not half a year later.

Or the posh French restaurant which opened in a new Class A building –only to see its terrace hidden beneath massive scaffolding not a quarter later, for construction dragging on month after month after month.

Or the CEO too overwhelmed by other trouble to gauge the depth and origin of the negative behaviors of the customer-facing employees.

Or the C-team which played its role so hard that its engineers and manufacturing floor workers feared it too much to report the design and manufacturing defects which not only cost sales but courted disaster (think also NASA’s O rings).

And, finally, the founder and CTO so intent on moving to the Chinese market for manufacturing and sales that they disregarded the two classic hazards there: Chinese abrogation of contracts as soon as the ink is dried and the money passes hands and the Chinese employees who copied the American product and manufacture knockoffs at their own plant on the other side of the valley for their own account.

Company leaders like to think that they have insurance and “good litigators” to solve all their trouble, but that’s really not enough if the model has been hammered and company and personal reputation have been blown apart, sometimes literally:

Pity poor Nick Buckles of G4S as he tried to explain how he could not render 10,400 Olympic guards out of more than 100,000 people screened. Was it buggy operations software that cashiered the schedule? Or did his people just fail to show up? The Guardiandid note that G4S pays “peanuts to people who can’t get other work.”

Pity too the poor Home Secretary for entrusting the Olympics to the lowest low ball bidder, then quintupling the G4S contracted labor, months after Her Majesty’s Inspectorate of Constabulary warned the Home Office that G4S would not deliver even 2,000, as reported by The Independent. More than one person did not think the Olympics security through.

It is these functional, operational, and systemic risks which business teams and CXO’s and Secretaries and Ministers do not want to deal with even though the troubles just hammer productivity —and the future.

© 2012 Sigrid Caroline Schroder. All Rights Reserved.