The DNA of traditional management consultancies renders them good at optimising their clients’ businesses for efficiency. But it also creates problems when they are required to help those same clients innovate.
Naturally this does not stop them having a good go. We have mentioned before that a core part of the strategy being adopted by many consultancies is to acquire digital businesses – and how difficult achieving integration of the respective service offerings can be. But the desire of traditional consultancies to satisfy 21st century business needs shows up in other ways as well. Thought leadership is one such example. And the published materials bear examination for the belief systems that they often reveal.
Exhibit one: a paper by Deloitte and MIT entitled ‘Strategy, Not Technology, Drives Digital Transformation’.
Amongst the tautologies that masquerade as insights in this report is a striking assertion: “Amongst digitally mature businesses,” the authors state, “taking risks becomes a cultural norm.” The report then offers up a range of examples (for example, Google Glass and Cisco’s bet on the internet of everything) as the type of dare-devil acts to which other businesses should aspire. (And, no doubt, which Deloitte itself can inspire, for a fee.)
So what belief system does this assertion reveal? Start with the notion that achieving breakthrough performance requires a significant appetite for risk. At one level, this might not appear controversial – you might argue that some degree of failure needs to be anticipated and managed by anyone wanting to put a dent in the universe.
Equally, the belief doesn’t stand up to scrutiny for two related reasons: risk is relative, and risk is subjective. What feels risky to you might not feel particularly risky to me. What’s more, our respective interpretation of the consequences of action or inaction might be wholly different. To take this line of thought to its logical conclusion, someone might even regard the failure of a project, initiative or a business itself as not in the slightest bit risky.
What if Google regarded the invention of Glass not as a ‘risk’, but as a necessary experiment to continue to expand its knowledge base and product portfolio in a way that enabled it to continue fulfilling its business mission? What if the benefits of that knowledge vastly outweighed the costs of failure? What if the greatest perceived risk to its business was to fail to try new things, and to learn from them?
The question of risk goes to the heart of contemporary business management. If we stake innovation success on our collective appetite to take big risks, we frame the challenges that organisations face in a way that is fundamentally unconducive to constructive action for the vast majority. Taking wilful leaps into the unknown runs counter to most executives’ perceptions of sound commercial practice. But stake maturity on a cultural willingness to continue taking well-reasoned courses of action that feed into an upwards spiral of continual learning, and even the most unorthodox tactics might get support.
Other narratives can reinforce the sense that success is for the mythical, risk-taking few. Exhibit two: the ubiquitous use of the word ‘unicorns’. The framing of breakthrough scale-up success in this way implies that it is magical – as opposed to, say, a combination of good management, chance, and trading in a category that is already attractive to investors. The term positions the behaviours involved in scaling as unfamiliar and mystical, and makes victory feel like a fairy-tale. In doing so, it subtly undermines the efforts of other businesses who have it in them to achieve amazing things on their own terms.
The point is this: we live our lives in language. The words we use, and the meanings we vest in those words, have huge impact on the way we view the world.
It is too easy to apply broad terms like ‘risky’ to courses of action without interrogating what we really mean by them. In that spirit, here are three useful questions that anyone appraising the risks their organisation is facing might want to ask:
1. When we say something is ‘risky’, what factors are we using to calculate the nature and the level of risk?
2. Are we all in agreement that these factors are the correct ones – are they effective filters to appraise the potential downsides of this course of action?
3. How are the risks that we are taking helping us to build a learning organisation?
The next time you hear the word ‘risk’ used, hit pause and ask why. You might be surprised by how little of consequence is actually at stake – or what the actual consequences are.
Originally published on Forbes.com