Week 9

Learnt

What Do You Know About Strategic Risks?
(Source: Early Warning by Ben Gilad)

Robert Simons defines strategic risk as "an unexpected event or set of conditions that significantly reduces the ability of managers to implement their intended business strategy". Strategic risk is the risk that the strategy itself is misaligned with market conditions.

3 main types of strategic risk: operational, asset-impairment, and competitive. Strategic risk from competitive environment, term as "industry dissonance" is much more difficult to manage.

Competitive Early Warning (CEW) relies on 3 steps (triangle):

1. Risk(or opportunity) identification - indicators (mostly from informal discussions, market research, scenario development and war gaming)
2. Intelligence monitoring - alerts
3. Management action - feedbacks

What creates risk? Uncertainty. What creates uncertainty? Change.

Industry change drivers are events or variables that drive the evolution of industries.

In most industries, 4 classes of drivers drive the most of the change:

1. New technology/science - can affect buyers' power or barriers to entry
2. Regulatory change/government action - can impact entry barriers
3. Social and demographic changes
4. Competitive action - buyers' hidden preferences

Unlearn

Learn to understand the 3 various types of risk. Competitive risk is the weakest link for many companies. I may have to change in response to a change in buyers' preference if a company's strategy no longer fits the emerging reality of the industry and the market. This can be achieved through intelligence monitoring.

Relearn

The sales team has regularly apply CEW by identifying the territory risks (usually through market observation and feedbacks) and gather market intelligence via sharing and feedback. All these reports will alert me as NSM or management should we take a precautonary actions or plan for strategy to counter attack (war game). Eg: competitor revise price or positioning.