Leading To The Right Of Risk

Can The Silos Find Common Ground on Risk?

The key problem in management, not just risk management,  has been the ‘siloization’ of the entity, and not just in business. Granted that the increasing complexity and the overwhelming mass of data and change across all disciplines has forced specialization and hyper-specialization in business, law and technology, but this has had two pernicious effects: isolation of the technical professionals from the business model and territoriality of all silos which give rise to not only a death grip on their own silo’s information but an obstinate rejection of other silo’s analysis and perspective. The more marginalized a silo, the more obstinate the territoriality.

CIO’s and IT have complained for years of being isolated from the business strategies, plan and model. Increasingly counsel have complained of being isolated from daily operations and “tactical” level activity, if not strategies, plan, and model. HR and other silos have increasingly complained that HR gets thrown in over its head, perhaps for the HR ‘seal of approval’. Certainly Risk Management and BC planners are not a coherent, internally consistent element of the business model. The solution has to come from the top of the organization, as alignment of reality to “tone at the top” and be aligned from C-suite, and preferably board and C-suite down.

© 2013 S. Caroline Schroder. All Rights Reserved.

Does Your Company Need a Shrink?
If this Hypercompetitive Culture Continues, Will You?

In law and business, my clients have come to me all the time with business developments which have a powerful personal impact. Success or failure, venture struggle or corporate crisis, work is never “just business.” I have seen my clients struggle personally to understand the human environment and their interactions in it. Just as success can trigger “irrational exuberance” and greed, crisis and failure can trigger personal trauma. My clients have grappled with profound feelings of fear, shock, betrayal, and anger and struggle to understand the same on the other side of the table. At a time when competition in the workplace and in commerce has steadily lowered the bar on acceptable behavior and practices, from plundering of work product, technology and talent to sadistic hiring and firing practices as chronicled in the WSJ, FT, and NYT, there is a lot making people unhappy at work. As we can tell from the cases heard by courts, handbooks, rule books and laws don’t deter commercial and workplace ill behavior. How healthy is your company? Does your company need a shrink?

As a commercial society, we have apparently rejected moral constructs for cost-benefit and personal competitive relativism. When you take away the moral standards, all there is left is psychotheraphy and psychoanalysis if we want to try to maintain standards and protect intrinsic human value. Hostile takeovers, splintering integrations, and fallout from economic crisis take huge toll. As a consultant and a practicing lawyer and before that a graduate student, I have never ceased to be amazed and aghast at what petty or greedy people will do to each other, even for no real advantage or on absolutely no provocation. This wreaks havoc on an organization and people’s lives. The waste spreads like wildfire and takes with it productivity, invention, retention and continuity. Psychoanalysis or psychotherapy can help confirm that people are seeing what they are seeing, teach people how to anticipate and minimize the commercial psychopaths; and help them deal with both the danger and the aftermath. In a word, in business practice I see a lot of people who are lost. Or will be. Whether on the dishing end or receiving end, does your company need to see a shrink?

© 2009 S. Caroline Schroder. All Rights Reserved.

Hazy Thought, Big Risk: Getting Your People to Think

At the crux of this generation’s economic calamity is the unwillingness to think past the desired goal. Whether a function of an age of instant gratification or the popular elimination of rigors of logic in favor of marketing and hype, business teams have been weakened by mythologies of winning strategies, power of positive thinking and the hype of sales systems. Eschewing voices of prudence, dismissing identification of risk as pathologies of gloom, doom and defeat, they walk brazenly and self-blinded into traps and disaster. They shrug off advance warning citing competent counsel in the wings to “document around it” or to file suit in the event. The reality is that they are tall thin managers, siloed and specialized like counsel and all too many would rather bully and buffalo than think things through–or admit the wider thinkers who can guide the necessary analysis. What do you do? You have to understand that the confidence, the ambition, and the defiance of exogenous reality is underlain by fear. Fear of not getting the bonus, not scoring the win, certainly, but the essential fear is the fear of being told “no.” You have to talk them around the fear, through the reality of certain facts, processes and consequences so that they and you can concentrate on what is really to be done.

These managers have stalled somewhere around their 16th year. They have never learned that acknowledging risk does not equate with giving up. Their thought process is immature. They would rather flit in excitement, bully in arrogance and move forward in folly than simply sit down, assess the risks with those who work beyond the silo, and then cost-benefit balance the risks. They don’t want their enthusiasm dimmed by the laws and facts of the physical world, the relationships and behavior of the natural world, and the complications of pesky regulation, law and insurance. They really do want to be brilliant center stage in the sun and to get the closing bonus. In an age which venerates spending as representation of wealth, it is not surprising that teams would be quick to idealize the path to a lucrative goal, a state known as “having dollar figures in their eyes.” From dotcom to biotech, from weather trading to derivatives, from the eternity of the China miracle to white nights riches in Russia, through every sector and region, business has been there too long.

In all these years of hearing managers, founders, true believers and, worst, C-Team climbers fend off questions, insights, doubts and actual red flags and fog horns of disaster ahead, I have realized that the process of achieving reality thinking is laborious and very individual. The process is the more challenging the thinner the executive, the more dependent on outside expertise the executive has been allowed to be. The CXO who has come up through a narrow regime of a single specialized silo is the worst: arrogant, narrow and all too often inclined to bully rather than lead. Moreover, reaching reality with any CXO is never sufficient; one has to reach the entire team. Unless one reaches the entire team, the necessary will not get done. The CXO will be coaxed in a critical moment, schisms will appear or passive-aggressive noncompliance will ensure that the metaphorical O-rings are not re-engineered. The project will still blow up, even as it achieves the stratosphere.

To be effective in reaching the entire team, you have to figure out who is who. Some team members are rationalists and are pressured only by the need not to dim the Sales/Marketing enthusiasm (hype) with sticky floor facts. They can be faced with facts and set about to solve the problems and balance the risks and benefits. Others are blind cheerleaders who, apprised of the factors to be considered, will subdue the hype while the team works and then can reignite the enthusiasm at the same fevered pitch. Yet others are not able to compute distinctions and have to be led through the facts, risk, consequences and alternatives; once given alternatives, they are able to pick and choose on the basis of a screen for success: dollar values, physical consequences and legal penalties. The most obdurate may need to balance dollar figures with prison terms. (As in this decade’s Enron/Tyco business cocktail query: What would you do for $5 million dollars (both misconduct and prison term, presumably).) And then there is the worst case: the arrogant hitherto successful narrow bully who will need to be bludgeoned with pertinent fact, factors, truth and consequences. (Do not go alone.)

Once you do have them at the table, acknowledging risk, acknowledging fact, you can get down to further research and consideration leading with the rationalists, bolstered by the cheer leaders. It is key to offer constant avenues of new opportunity and benefits of solutions to the risks even as you plod a prudent course to minimizing risk and maximizing value. You yourself maximize value if you have breadth of knowledge beyond mere exposure so that you can do critical thinking where they cannot or they have been conditioned to “will not.” Beware of counsel or accountant who blandly reassures, cynically knowing the firm will get the litigation when the inevitable complications and even disaster befall the team. Redirect the team to understand that to say “”that never happens” is merely a substitute for thinking or a blind for ignorance. Help them choose the best path, the one not airbrushed and photoshopped but the legitimately prudent path to the greatest and most likely success not on the edge of an inconvenient abyss. And no derivatives until they are 21.

© 2009 S. Caroline Schroder. All Rights Reserved.

Across the Date Line: Work When We Work. Work How We Work.

Do your teams work for you? Whether you have teams spread across silos in one corporate park, you understand the problems of getting them to work together. But now in a globalized workforce, spread around the world in separate offices, subsidiaries and joint ventures, how do you get them to work together across the dateline? A tech team manager recently complained that in working extensively via conference call with other tech teams spread over all continents, he has had a problem getting everyone to show up on time and hit project deadlines. Everyone agrees on the target times, but some regions don’t show up. The wider collaborative team then misses the ultimate target, the project deadline, and yet the missing teams don’t feel they have failed in a commitment. How do you improve on that? That’s a complex problem.

First, deal with the time element. Try reinforcing with a delinquent team the vast differences between time zones and the difficulties this time element presents in getting everyone free during working-or waking hours-amidst other commitments. Particularly in coordinating a three-way call between the US and, say, the Mid East and Australia, one can run into some knotty problems of day and night. Find a way to visually impress on the other tech teams the time in each zone for a set of their times: 8 am, 11 am, 2pm, 4pm and 10pm. Show them what time -and day – it would be in ýour zone. Make them understand the density of the problem. Get them to think about the flow of other work and other meetings.

It may be easiest to set one agreed time and day of the week as a scheduled recurring meeting regardless of progress and need. Alternatively, you can have the teams trade around the inconvenience so that it is not always the same team coming into the call at a bad hour. Tech teams often work at odd hours, late into the night (or early into the morning) and on weekends, but so do other teams in finance, law, sales and testing. You may have real flexibility.

If international teams are missing calls and causing the collaborative group to miss project deadlines, it may seem that those teams do not want to work with other teams. You may simply need to increase visibility by video conference. Empty chairs stand out. However, the real problem may be as simple as their having a hard time understanding the common spoken language and needing to see words in writing. I have found that in collaborating even with fluent speakers of multiple languages that they fall into one category or another: either they are weak in reading or they are weak in listening. You might think of other forms of collaboration or, however cumbersome it may be, a translator. You may want to consider having not just conversation but documentation translated real time. The added expense may justify itself in time saved and mistakes prevented or corrected.

However accomplished, however senior, your people may be having a real problem understanding each other at a basic level. I have seen more deals and projects fall apart because people simply did not understand each other. At a basic level they may have agreed but at the same basic level they could not communicate about parties, structure, specs and risk. Distrust develops as miscommunication grows. Memorializing in writing overcomes as good deal of distrust.

Alternatively, the uncooperative team may feel autonomous and not required to contribute. They may feel immune to layoffs or firing because of country laws. They may feel inadequately recognized, compensated or heard. They may feel excluded. They may feel used. They may not like the mix of work assigned to them. They may disagree seriously with specs, architecture, goal or strategy. They may have some critical information and insights. In some cultures, an employee will never say no and will not argue; the work just won’t get done. They may have their own internal squabbles. They may simply be lost and be unprepared.

You have to travel and sit down with each team and take the time to take the temperature and pulse of all the members. And you might just buy all the members a compact pocket worldtime clock so that they can see time for themselves.

© Copyright 2009 S. Caroline Schroder. All rights reserved.

Aging Out: Your Employees or Even You

It has been the increasing fashion of the past decade to push highly educated workers out to retirement at younger and younger ages, hiring younger workers in preference to “older” (over 45), and promoting ever younger workforces as evidence of hiring only the best and the brightest. The bias has been justified as cost effective and technologically necessary. Common wisdom has come to eschew older workers as slow, technologically backward, recalcitrant and too expensive. Not only is the bias not justified, it violates anti-discrimination principles and the Age Discrimination Enforcement Act. It wastes talent. It damages lives. It cripples businesses. It can hurt you, personally. If you set up a system to discriminate against the older worker, eventually your turn will come. Wealth is transitory, and regardless of your success, wealth for the future can disappear with illness, bad fortune or the next bust of a market bubble. But where does the issue rest now?

First, older workers are valuable. Experienced workers simply know more, work faster, are better able to screen out the background noise and get right down to the heart of a problem. Additionally, older workers have seen much more variation in issues, opportunities and problems, have a historical and evolutionary perspective and are often able to draw on experience from different silos, methods, industry sectors and geographical location. They have greater depth. One of the problems with younger workers is that they do not know how little they know and can confidently embark on disastrous courses of action an older worker would have avoided.

Age discrimination decisions have been all over the map; it is time for clearer legislative drafting to protect workers from generational prejudice. In the final analysis, we have generations living longer healthier lives, and society is not going to function economically or socially if workers are essentially retired by age 55 and yet expect to live to 85 in an environment where pensions are a benefit of the past, retirement benefits can disappear overnight, prospects depend on individual investment acumen for which they have little time or training amid their career demands, and illness, bad luck and markets can destroy retirement savings and investments in a bad quarter.

© Copyright 2009 S. Caroline Schroder. LLC. All Rights Reserved.

Risk Du Jour

Every decade there is a new management fad, or, rather, several. In risk management there have been a few. ISO31000 is the latest. The verbiage is vague and expansive, the process remains highly subjective, and both language and practitioners refer reverentially to objectives that no one has defined or seems to actually understand in principle let alone in real world actuality. There is no structure to ensure that the system could be applied consistently for any purpose, least of all the strategic plan and the direction of the entity. The danger is a morass from the center of which no two people will identify the same material and substantive risks at any one point of time, the ultimate test of whether a system actually works.

Or as “The Doctor” might assess it:
The Doctor: “People assume that time is a strict progression of cause to effect, but actually from a non-linear, non-subjective viewpoint – it’s more like a big ball of wibbly wobbly, timey wimey–stuff….

“This is my timey-wimey detector. It goes ding when there’s stuff….”

“From “Dr. Who”, BBC TV http://www.youtube.com/watch?v=VwqSsL-sdzs

© 2013 S. Caroline Schroder. All rights reserved.