Business Sustainability and Risk

Last week I was lucky enough to attend an Executive Workshop in Phoenix, Arizona, that was presented by the AHC Group, and led by the group’s founder, Dr. Bruce Piasecki.

For those who are familiar with the long-term focus of Bruce’s work, it will come as no surprise that the theme of this meeting was around various aspects of business sustainability—often referred to as corporate social responsibility (CSR). Windfarm-220x330These discussions revolved around the various ways that a business can approach the ‘three legs’ that define sustainability efforts: social, environmental, and economic (also commonly referred to as people, planet and profit).

Beyond the simple pleasure of leaving behind the subarctic temperatures of home—I must say that I really enjoyed the event, and I would like to share a few of the highlights.

The meeting itself was comprised almost entirely of speakers from the private sector—companies that are wrestling with the challenges of implementing these ideal world concepts in the unwashed reality of day-to-day business.

The topics were varied and well connected—but the session on evaluating risk really resonated with me, so I thought I would share a few of my notes.

One final thought before we get to the good stuff: this was a private event, so I’ll not be sharing any names. Apologies to those who will not receive credit for their contributions. I thought it better to err on the side of caution in this case. However, if you would like to have some first hand experience with these events, the solution is simple—sign up to attend!

Risk Management

  • Determining the Probability of an event is much more difficult than determing Severity. People have a fairly easy time finding agreement on the potential impact that a given event will have—but when asked to nail down the likelihood that it will happen, consensus is much more difficult.
  • There are some legitimate reasons to debate who your Risk/Safety group reports to—is it the CEO, CFO, Legal, or is there direct communication with the Board? It parallels the question: who is your legal counsel there to protect: the CEO or the Corporation? Two very different priority profiles can be in play.
  • Are you evaluating your Risk exposure thoughout your full value chain or is your focus internal? Are you asking your suppliers about their risk exposure and mitigation plans? Microsoft and nVidia both faced revenue challenges in the last quarter—and both pointed to reduced global sales of PC’s as the floods in Thailandresulted in severe shortages of hard drives. PC makers were unable to ship finished units. And who at these companies had figured East Asian environmental issues into their risk exposure?
  • Include an outsider in your Risk Identification activities. Many companies have been involved in ‘high risk’ activities for so long that it has become ‘normal’ to those who live it every day. They don’t see the degree of risk as they are simply too accustomed to it.
  • And, in a real eye-opener: every $1 spent on planning will save $4 – $7 in response costs.
  • Many of us are familiar with the Probability/Severity matrix, which often takes a form like this:

Risk map1-480x261

This is a very straightforward way to look at risk exposure. But the important issue that was raised: what happens when an event in the top left box takes place? An event with a very low probability of happening—but when it does, the impacts are profound.

Risk map2-480x261

Think Deepwater Horizen oil spill or the Fukushima I Nuclear Power Plant disaster. Events like this indicate the need for viewing that segment of the matrix in a different light.

Risk map3-480x255

Reputational Risk

  • There is growing corporate awareness of ‘Reputational Risk.’
    • The importance of this risk component appears to be driven by the increasingly frictionless sharing of information via the Internet and social networks.
  • It is thought that this concern with reputation will accelerate a move to the concept of the Triple Bottom Line as:
    • Shareholder returns are being increasingly impacted by negative reputation events, and;
    • We are beginning to see executive compensation packages that include KPI’s that track CSR indicators.
  • Businesses are finally coming to the realization that bad press on the Internet lives ‘forever’. A negative event or story can and will continue to surface in Google searches for months and years after the issue has been rectified. Is your company doing enough to surface the positive things that it is doing? And like it or not, social media is here, it is real, it is important, and companies had better get out in front of it—or suffer the consequences.
  • Remember that your supply chain can and will impact not only the direct operating risk, but also exposes you to great Reputational Risk (have you been tracking the Foxconn/Apple stories that were precipitated by theNew York Times investigation?)
  • This is not a static environment: what was acceptable in 2008 will not be acceptable in 2015.
    • Sharing of negative reputation is never going to become more difficult
    • Activists are becoming increasingly sophisticated and dedicated to online communications and community building

Reaction

As I listened to these discussions—particularly as the concept of reputation was revisited—I came to see that some of the same advice that we have been giving leaders to enhance their skills on the ‘micro’ level is equally pertinent on the ‘macro’ stage:

  • Employee engagement is the solution to many of their issues. How to encourage this engagement? Well, that’s a whole other series of posts—but let’s start with the concept of ‘trust’ and let it spin out from there.
  • Great leaders (and managers) must become great storytellers. The attention of our various stakeholders is so fragmented that, if you want to convey a lasting message, you must be able to grab and hold that attention. We are living in an era that is witness to the creation of a ‘YouTube Generation.’ Attention span has gone from hours to minutes, and is now measured in seconds. If you doubt this, think about the pacing of some of our classic movies, The Godfather for example:

Now, reflect that against the cuts that are made in the Best Picture of 2011, The King’s Speech (a restrained and slow moving film by current standards):

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Social Media – Early Adopters Boat Has Left; Will You be a Laggard?

Recent studies indicate that the adoption rate of online social networks is in decline.

This does not imply that the popularity of social networks is in decline.  Rather, the adoption rate is flattening as a majority of the population are already on these networks.

From the Pew Internet & American Life Project report on Older Adults and Social Media:

What can we take from this?

  • Use of social networking sites continues to climb– no surprise here
  • Adoption among young people is slowest: also no surprise– over 80% of the GenY/Millenials (ages 18-29) are already there
  • The group with the highest adoption rate is the Boomers (ages 50-64)
  • 47% of the Boomers (who are internet users) are now using social media sites

Let’s re-visit our old friend, Roger’s Innovation Curve:

Reviewing the percentages from the Pew study, a few items stand out for me:

  • Any discussion of early adopters is old news– that chasm was crossed 3-5 years ago
  • Even if you focus on the 65+ crowd, they are well into the “Early Majority” stage– one-in-four are using social networking sites
  • The GenX’ers (ages 30-49) are well on the downhill slide of “Late Majority”
  • And most surprising to me – Boomers, as a group, are on the verge of moving into “Late Majority” adoption status– Furthermore, Boomers exhibit a greater rate of adoption over the past year than the any other group

Another view of the data

From the Forrester Technographics research group:

Looking at a worldwide view of Social Media participation across user types, we find:

  • Content Contributors (Creators, Critics, and Collectors who create blogs, write reviews, catalogue links, etc.) has flattened out,– indicating that people are settling into their natural roles
  • Unfortunately, the data for Conversationalists (the quick updaters who live on facebook and twitter) is only available for this year– I suspect much of the momentum from the creative group moved to this subheading

Are you a laggard?

The question then, as you look at these charts, is where do you fall?  If you haven’t yet engaged in this world of inexpensive, rapid information flows, the question becomes – why not?  And if not – are you planning to?

It’s clear that adoption of these technologies has been rapid.  The early adopters are long gone.  Those who join now are moving squarely into the Late Majority camp.

But that’s ok.  If the activity of content creators has truly flattened out – then there is still tremendous opportunity to become a voice of authority.

Success in this space is about the quality of the information and a willingness to share and cooperate.  That proprietary “Intellectual Property” that you are trying to lock up by using a pdf?  Well, Google has made it trivial for people to extract that.

Participate, share, and trust.  These are the tools that will carry the day.


note: this post originally appeared on the Delta Blog, 5 October 2010

All you have to do is…

Social media is hard.

Unless you have money.

Heaven knows you don’t have to be remarkably intelligent, witty, or engaging to be successful.  Of course, these things help – and are likely a requirement if you intend to make any money at it – but mostly you have to be available and willing to work at it.

The back story: I buy the URL and set up this site after I was laid off from my last job.  I had time to burn and decided to jump in and play in this social media sandbox.  I didn’t expect much from it – just felt like it was a good time for me to fool around and learn about the environment.  Of course, I immediately start working a paying job and forget all about this little experiment.

Smash cut – six weeks later and I’m working with Delta Partners, a boutique Management Consulting firm that is well established here in Ottawa.  My first assignment – bring a social media strategy to our site.

Hey look at me everyone – I’m a Social Media Consultant!

But then you probably are too.  Seems most everyone who has a twitter account and knows that you capitalize the “i” in LinkedIn is.

And here it comes…

“All you have to do is…”

My colleague Peter Degosztinyi turned me on to this one, and he’s bang on.

All you have to do is: start a blog, start a twitter account, make sure your LinkedIn profile is complete and you are building your bench, be a thought leader, participate in the conversation, be a trust agent, have a corporate facebook page, build a listening post, track your KPI’s, and wait for the money to roll in.

Of course few will tell you how to execute on the tactics behind the overarching strategy or how much sleep you can expect to do without along the way.  Hey, don’t be a buzz kill – I’m evangilisin’ here.

the real experts tell us

The point to all this rambling: I attended the OCRI Zone5ive (how hard is that to type?) meeting today titled “Social Media Marketing Experts Reveal All”.  Naturally, as an expert, it was critical that I attend to reveal all of the mistakes that these misguided souls would try to sell.  Jokes aside, it was an excellent panel:

  • Michele Bedford Thistle :Enterprise Marketing Manager – Public Sector, Microsoft Canada
  • Erin Blaskie – @erinblaskie :Founder, Business Services, ETC
  • Scott Lake – @scottica :Serial Entrepreneur and Founder, Shopify and Swix

All three were far more articulate and intelligent than I could ever hope for.  They know their stuff and they were happy to share their experiences in using social media to build a successful business – for that I am grateful.

And to show my gratitude, I got to ask the last question of the day, “This is for all three of you: can you tell us how many hours per week you spend on this stuff?”  I had no fewer than six people tell me that I asked a great question.  Clearly this is an issue that people are wrestling with.

The answers:

Scott said, “I have found that the new smart phones really let me be productive when I’m away from the office.” I heard, “There are few moments in my day that I’m not thinking about, reading or creating tweets. I do it all the time.”

Michele said, “I don’t spend more than two hours per week on this.”  I heard, “I work for a gigantic corporation with cash and lots of resources.”

Erin said, “I’m on the Internet 14 hours per day.”  I heard, “I have never been on a run of 27 straight days of 3am feedings. I do it all the time.” (sidebar: this is about to change, congrats Erin!)

my spin

My takeaway after chatting with some other attendees: social media marketing is effective when it is done right.  But.  It is still marketing.  Unless you are a fully committed entrepreneur or are young with lots of creative energy and no serious commitments, you can expect to spend your marketing dollars on this activity.  It isn’t free – even if many of the tools are.  The resource commitment is real.  You want to participate in the conversation? It’s going to be time intensive.

And most people still prefer to be paid for their time.