Risk… what does it mean?
For some, it is crossing the street. For others, it is starting a company with the last of their own money, or money from an expectant and hopeful investor.
But, what does it mean for companies/customers? Ultimately, I think it drives everything at a company. For some companies, often publicly traded, risk is not an option. Everything they do must have a strong business case to produce more revenue with little or no risk. Smaller companies tend to be much more willing to take risks. Sometimes it’s the only way to get the growth they so desperately want and need. In between you’ll find many companies along the willing-to-take-on-risk spectrum.
How do you convince your company or customer to take a risk?
One way is to downplay the risk. Not a good idea. It can, and likely will, bite you in the end. No, you must address risk head on. You must out weigh the risk with the potential benefits. Show examples of success. Find and present metrics from those that have gone before you. Show the potential benefit the customer/company can recognize if they accept the proposed risk. Even after all that, you may only open the door to considering an improvement project. It does not guarantee a person or company will proceed.
You must address the risk
Address the risk head on. Show how you, or your company, will mitigate risk throughout the venture. Always keep in mind the customer’s or your company’s view on risk. It could be as simple as a loss of the investment into a project. On the other end of the spectrum could be lost customers, lost revenue, or even lost jobs. By not dismissing the risk, but acknowledging it and trying to prevent it, it shows your commitment to the customer, whether internal or external. It shows you are a partner, not just someone trying to sell an idea and run.
In the end, everyone wants to grow. Very few want to take the risks needed to grow. If you’re trying to help your customer or company grow and improve, you must prove you will do everything possible to manage risk, but not dismiss its existence in the first place.
Assessments help organizations avert risk
Are you in the process of accepting risk in order to improve, grow, or move in a new direction? We offer many solutions that can help mitigate risk — solutions and services with proven track records that adhere to best practices. We also offer a Product Development System Assessment (PDSA) and Functional Group Assessment (FGA) to help align organizations, define strategic direction, and help map the best course forward. Download our PDSA brochure or FGA brochure to learn more. Please share your experience and thoughts about accepting and managing risk in the comments below.
When is PDSA season?
We all know when it’s cold and flu season and what precautions to take to get back to health or at least dial down the symptoms. However, do we recognize when it’s time to conduct a Product Development System Assessment (PDSA) to get our organization back to health?
To analogize a real life situation, if someone is sick and goes to the doctor, the doctor would want to treat the immediate sickness and then propose a physical to determine what else is going on within the patient’s body. The doctor then sets a diagnosis for continuous improvement of health. A PDSA lends itself to something close to this from a product development standpoint.
An organization must first acknowledge a problem from a department stakeholder (i.e: Vice President, Director, Manager). They must obtain an understanding of how this problem effects downstream departments and create a sense of urgency that this one problem, is only one problem, and more problems are likely to be a major inhibitor to reaching goals.
Sure, organizations can operate with these inefficiencies and still make products, but we want them to know that they could make even more products or run more projects by taking part in a PDSA, which is when we come in to align an organization’s goals and measure achievement recognition through a secure and obtainable continuous improvement plan. PDSA’s are our way of measuring an organizations pain in their processes and providing a long-term solution to provide continuous improvement and maintain a healthy organization.
PDSA’s are the only way for EAC to truly understand the heartbeat of a company and the only way a customer or prospect can become a partner. Their goals become our goals for that organization.
Why would you want a PDSA?
PDSA’s are valuable for two reasons. First we, EAC, help clients to see their product development operation as a system which is a critical first step in making the operation better (i.e. more systematic). Secondly, we provide, as the output of the assessment, a set of high leverage improvement initiatives that will directly lead to increased productivity of their product development system.
Organizations may know something is not right with their product development operation – maybe for instance due to the number of recurring fires they fight – but they don’t know where to focus their improvement initiatives until they learn to see their operation as a system as opposed to a process.
The PDSA aligns a company’s business strategies and objectives to product development initiatives to determine areas of improvement. This is so valuable to be able to motivate a company or the internal champion to see how an improvement to a product development system would be tied to or contribute to a portion of the company’s objectives.
For example, an organizations objective or value opportunity is to reduce product development cost. Then we would streamline the product development system by making sure the people, process, and technology within a product development process are all working together without disrupting another part of the product development process thus taking waste out of the system enables reduction in cost.
During a PDSA, we engage with multifunctional groups within a company to extract process information and where waste is. Over and above that, a continuous improvement strategy will be set in place for the company to achieve the desired state or desired maturity level. Without an investment in continuous improvement, a one-time fix to a process or system will not sustain in the long term.
What’s so great about PDSA’s?
PDSA’s are learning events and EAC consultants learn something new with every PDSA because of the uniqueness of each client we work with. Beyond spreading our understanding of seeing operations as systems, it is exciting to be able to learn the details of the client’s operations and then provide critical improvement information.
The ability to tell an internal champion or the economic buyer that their organization is “leaking oil” or specifically being able to quantify to them the dollars being wasted, and that we, EAC are here to help reduce that and get them in a better state excites me. The ability to whiteboard the organizations processes and ask them why they would perform a certain task in that fashion. The ability to ask the tough questions, like “what is the biggest headache or challenge they have right now?” and “what is working well for you?” The ability to help the champion to present to their executive board is what is rewarding in the end.
We live and breathe to make a difference for our customers. PDSA’s are a mental marathon that test every part of a person’s attention to detail, savvy, note taking, and overall listening abilities. The challenge is what we get revved up for. We never know what we are going to find.
The saying “nobody is perfect” also applies to companies because no companies are perfect. Many organizations struggle with issues like getting their processes documented and their data management under control. Sometimes it is the members of the team that manage to hold it all together and enable substantial growth. However, this approach typically is neither scalable nor sustainable.
At EAC, we have a service called the Product Development System Assessment (PDSA). In short, the assessment helps identify areas within an organization that could improve — whether it be processes, data management, communication, or organizational change. We have helped companies across the country identify areas of their organizations that may not be reaching their full potential and provide them with a personalized roadmap for improvement.
One such company, Thermos (yes, Thermos — the company that made your really cool Spiderman lunchbox as a kid), has worked with EAC to identify areas where their organization could improve. “Hot Matters. Cold Matters. It Matters,” Thermos’s corporate mantra, not only identifies with their well-known product, but also refers to their high standards of quality, safety, living green, and giving back.
Over the last decade, Thermos has experienced tremendous growth. But as VP of Marketing Julie Ryan said, “We’ve got a great team and what we’ve been doing for the last 10 years has been working. But what’s making it work is the people — not the process.”
EAC was able provide a roadmap that included implementation of a project management system. This would allow Thermos to begin building a foundation that will support and sustain growth. Because let’s face it — Hot Matters. Cold Matters. It Matters.
When contemplating the idea of writing a blog, I challenged myself to justify why it would be both worth my time to write, and worth yours to read. The hope is that working through self-justification will result in a blog of greater interest and value.
Sharing the motives behind this blog through self-introduction seems the right place to start. By self-introduction, I don’t mean telling you about myself — you can find all that on LinkedIn — but rather about EAC and our shared view of product development. EAC was founded and operates on a fundamental belief that the way we (you) execute product development is fundamentally flawed. We further believe that this deteriorates America’s competitive position and unnecessarily, unacceptably demotivates the expert knowledge workers who operate within the functions critical to product success.
As an achievement-focused organization, EAC seeks first to understand the drivers and root causes of the positive and negative behaviors typical of product development environments. We then engage in the competition of ideas to produce an array of countermeasures to bring to common product development problems. One output of this internal collaboration is the Product Development Operating System (PDOS), a framework for the conduct of successful product development published on the EAC website.
An element of the PDOS gets to the heart of justifying this blog. In the PDOS, we use a maturity model to articulate an important aspect of improvement efforts within product development. Limited by flawed management habits many companies become trapped at what we call Level 2 operation, “Silo’ed”. During the maturation of a product development system, the gap from Level 2 to Level 3, “Systematic”, is the most difficult to bridge. It is EAC’s mission to help product development organizations, to borrow a phrase, cross this chasm.
Siloes are interesting. In companies, they are at first a sign of progress. The generalist of entrepreneurship reforms into specialized functional areas, enabling further growth and maturation. But they eventually become a barrier to further organizational progress. That’s not surprising; Peter Senge tells us in the first law of systems thinking that “today’s problems come from yesterday’s solutions”. For these maturing companies, getting beyond the silo mentality is one important key to progress.
Earlier in my career, I spent several years working in Japan at a global manufacturing company. Japan during the course of its history had periodically shut itself off from the rest of the world. The Japanese talked about their resulting global naivety — knowing and caring about only what happened within their limited domain – as ‘ii no kaeru’, a ‘frog in a well’. A well is just an upside down silo. For functional groups, understanding their own bigger picture – the landscape in which the well or silo exists – is the first step in the work of connecting the silos and fostering systematic operation.
EAC conducts Voice-of-Customer interviews, performs Product Development System Assessments, and provides consulting services. During these events, when we visit prospects and customers, it is startling to see how hungry each company’s product development thought leaders are for stimulating and informative ideas and discussions about what can be done to improve product development operation. And that is how we justify this blog. To all of you who from time to time feel like a frog, this blog is aimed at letting you know what’s going on outside of your well.