One of the greatest benefits of a capitalist economy is that it’s dynamic. A generation ago there was no Uber, Google or Facebook. But this also means that existing businesses can never rest on their laurels. To paraphrase Andrew Jackson (not Jefferson), eternal vigilance is the price of staying in business.
I was reminded of this as I was introduced to the work of the management consultant Adrian Slywotzky. He notes that there are seven types of risks a business can face:
Notice that there are different levels of risk he identifies:
At the highest level is the Industry Risk: How well is your industry doing? Is it ripe for disruption? How do you know?
Related to Industry Risk is Competitor Risk. What are your competitors doing? This isn’t to imply that you should slavishly follow your competitors, but awareness is important.
And this is related to Stagnation Risk, where you business plateaus and you can’t find ways to grow. How do you get unstuck?
Then there’s Transitional Risk. Is there a shift in the market that’s about to leave your business high and dry? When that happens, your business has to adapt.
Here you also have Customer Risk, which is the risk of losing customers to competitors, and Brand Failure Risk, which is the rest of losing your brand’s luster due to everything already mentioned.
At the lowest level is Major Project Risk. This is related to upstream challenges as well.
What’s clear is that choosing not to account for risk is perhaps the riskiest thing any business can do. It’s time to face reality with creative determination.
It’s a fact that businesses can be too close to their own business, too in love with their own products and services (or their long history in business), to see that they’re about to hit an iceberg.
Every business faces challenges from time to time. Just like you need a check-up from a doctor so a small problem doesn’t get worse, so every business needs a check-up from a skilled practitioner for the same reason.
If you’re looking for a check-up for your business, please contact Donnelly Creative at email@example.com. We’ll examine your situation and prescribe some effective remedies.